Australia's position in the world economy has long been a matter of debate. While mainstream economists point to relatively positive GDP figures, a high quality of life and the strong export-position of a number of valuable commodities (such as rich and plentiful mineral deposits), other theorists doubt this optimistic position. Critics point to the systemic problem with the balance of trade, a lack of industry policy, the low amounts of money dedicated to research and development (R&D), Australia's tenuous export position in terms of commodities and the third-world percentage of medium-and high-end value-added goods manufactured in Australia for export markets. They cite an over-reliance on agricultural and mining interests as an effective continuation of the 'farm and quarry' approach, and of political influence from these areas, despite attempted changes. Clearly, there is concern as to Australia's future economic position within the world economy. The nature of small state movement within the World-System is something which has been specifically examined and often described in terms of hegemonic linkage to a core power. This thesis attempts to synthesize two dominant theories in Political Economy, namely World-Systems Theory by Immanuel Wallerstein and Corporatist Small States Theory by Peter Katzenstein, and use these to correctly evaluate Australia's position in the world economy. World-Systems Theory is used to correctly identify Australia's position within the world economy while Corporatist Small States Theory analyses Australia's movement within that same system. This is done through examining Australia's historical position in terms of production. From this, the following conclusion is made: that Australia has historically moved between the Core and Semi-Periphery of the system, with Australia trending toward the core and away from the Semi-Periphery during periods of corporatist governance and with the reverse occurring during periods of economic liberalism. It will be argued that Australia has tended to move between these two economic positions as a result of public policy choices and that it is currently in the latter, moving Australia away from the core.