For around 40,000 years before European settlement commenced in the late 18th century, the Australian mainland and Tasmania were inhabited by around 250 individual nations of indigenous Australians. After sporadic visits by fishermen from the immediate north, and European discovery by Dutch explorers in 1606, the eastern half of Australia was claimed by the British in 1770 and initially settled through penal transportation to the colony of New South Wales, founded in 1788. The population grew steadily in the following years; the continent was explored, and during the 19th century another five largely self-governing Crown Colonies were established.

No formal territorial claims were made until 1770, when Capt. James COOK took possession in the name of Great Britain. Six colonies were created in the late 18th and 19th centuries; they federated and became the Commonwealth of Australia in 1901. The new country took advantage of its natural resources to rapidly develop agricultural and manufacturing industries and to make a major contribution to the British effort in Country Wars I and II. In recent decades, Australia has transformed itself into an internationally competitive, advanced market economy. It boasted one of the OECD's fastest growing economies during the 1990s, a performance due in large part to economic reforms adopted in the 1980s.

 Long-term concerns include climate-change issues such as the depletion of the ozone layer and more frequent droughts, and management and conservation of coastal areas, especially the Great Barrier Reef.

Australia has an enviable, strong economy with a per capita GDP on par with the four dominant West European economies. Robust business and consumer confidence and high export prices for raw materials and agricultural products are fueling the economy, particularly in mining states. Australia's emphasis on reforms, low inflation, a housing market boom, and growing ties with China have been key factors behind the economy's 16 solid years of expansion. Drought, robust import demand, and a strong currency have pushed the trade deficit up in recent years, while infrastructure bottlenecks and a tight labor market are constraining growth in export volumes and stoking inflation. Australia's budget has been in surplus since 2002 due to strong revenue growth.

Timor-Leste and Australia agreed in 2005 to defer the disputed portion of the boundary for fifty years and to split hydrocarbon revenues evenly outside the Joint Petroleum Development Area covered by the 2002 Timor Sea Treaty; dispute with Timor-Leste hampers creation of a revised maritime boundary with Indonesia in the Timor Sea; regional states continue to express concern over Australia's 2004 declaration of a 1,000-nautical mile-wide maritime identification zone; Australia asserts land and maritime claims to Antarctica; in 2004 Australia submitted its claims to Commission on the Limits of the Continental Shelf (CLCS) to extend its continental margins covering over 3.37 million square kilometers, expanding its seabed roughly thirty percent more than its claimed exclusive economic zone; since 2003, Australia has led the Regional Assistance Mission to the Solomon Islands (RAMSI) to maintain civil and political order and reinforce regional security .

Source: The Country Factbook, CIA.