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The contribution of economic geography to GDP per capita

Author

Listed:
  • Hervé Boulhol
  • Alain de Serres
  • Margit Molnár

Abstract

This article examines how much of the dispersion in economic performance across OECD countries can be accounted for by the proximity to areas of dense economic activity. To do so, various indicators of distance to markets and transportation costs are added as determinants in an augmented Solow model, which serves as a benchmark. Measures of distance to markets are found to have a statistically significant effect on GDP per capita. And the estimated economic impact is far from negligible. The reduced access to markets relative to the OECD average could contribute negatively to GDP per capita by as much as 11% in Australia and New Zealand. Conversely, a favourable impact of around 6-7% of GDP is found in the case of two centrally-located countries: Belgium and the Netherlands. The paper provides also some tentative evidence that spending on R&D and human capital might have a stronger effect on GDP per capita in countries with a higher degree of urban concentration.

Suggested Citation

  • Hervé Boulhol & Alain de Serres & Margit Molnár, 2008. "The contribution of economic geography to GDP per capita," OECD Journal: Economic Studies, OECD Publishing, vol. 2008(1), pages 1-37.
  • Handle: RePEc:oec:ecokac:5kz9l4rz66ls
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    File URL: http://dx.doi.org/10.1787/eco_studies-v2008-art9-en
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    Cited by:

    1. Sylvanus Kwaku Afesorgbor & Kaleb Girma Abreha, 2015. "Preferential Market Access, Foreign Aid and Economic Development," Economics Working Papers 2015-04, Department of Economics and Business Economics, Aarhus University.
    2. Orsetta Causa & Alain de Serres & Nicolas Ruiz, 2015. "Can pro-growth policies lift all boats?: An analysis based on household disposable income," OECD Journal: Economic Studies, OECD Publishing, vol. 2015(1), pages 227-268.
    3. Mark Obren & Bronwyn Howell, 2014. "The tyranny of distance prevails: HTTP protocol latency and returns to fast fibre internet access network deployment in remote economies," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 52(1), pages 65-85, January.
    4. Ahrend, Rüdiger, 2012. "Understanding Russian regions’ economic performance during periods of decline and growth—An extreme bound analysis approach," Economic Systems, Elsevier, vol. 36(3), pages 426-443.
    5. Sebastian Barnes & Romain Bouis & Philippe Briard & Sean Dougherty & Mehmet Eris, 2013. "The GDP Impact of Reform: A Simple Simulation Framework," OECD Economics Department Working Papers 834, OECD Publishing.
    6. Michael Jetter & Saskia Mösle & David Stadelmann, 2017. "Landlockedness and Economic Development: Analyzing Subnational Panel Data and Exploring Mechanisms," CESifo Working Paper Series 6733, CESifo Group Munich.
    7. Jacob Bikker, 2009. "An extended gravity model with substitution applied to international trade," DNB Working Papers 215, Netherlands Central Bank, Research Department.
    8. Andrea Elekes, 2011. "Cohesion and/or Growth?," Public Finance Quarterly, State Audit Office of Hungary, vol. 56(1), pages 108-124.
    9. Dées, Stéphane & Özyurt, Selin, 2015. "Regional dynamics of economic performance in the EU: To what extent spatial spillovers matter?," Working Paper Series 1870, European Central Bank.
    10. Christophe Gouel & Nina Kousnetzoff & Hassan Salman, 2008. "Commerce international et transports : tendances du passe et prospective 2020," Working Papers 2008-28, CEPII research center.
    11. Clovis Kerdrain & Isabell Koske & Isabelle Wanner, 2010. "The Impact of Structural Policies on Saving, Investment and Current Accounts," OECD Economics Department Working Papers 815, OECD Publishing.
    12. Mercedes Delgado & Christian Ketels & Michael E. Porter & Scott Stern, 2012. "The Determinants of National Competitiveness," NBER Working Papers 18249, National Bureau of Economic Research, Inc.
    13. Clovis Kerdrain & Isabell Koske & Isabelle Wanner, 2011. "Current Account Imbalances: can Structural Reforms Help to Reduce Them?," OECD Journal: Economic Studies, OECD Publishing, vol. 2011(1), pages 1-44.
    14. Xingqiang Du, 2016. "Does Confucianism Reduce Board Gender Diversity? Firm-Level Evidence from China," Journal of Business Ethics, Springer, vol. 136(2), pages 399-436, June.
    15. Selin Ozyurt & Stephane Dees, 2015. "Regional dynamics of growth in the European Union: To what extent spatial spillovers matter?," ERSA conference papers ersa15p242, European Regional Science Association.
    16. Orsetta Causa & Alain de Serres & Nicolas Ruiz, 2015. "Structural reforms and income distribution," OECD Economic Policy Papers 13, OECD Publishing.
    17. Bibek Adhikari & Romain A Duval & Bingjie Hu & Prakash Loungani, 2016. "Can Reform Waves Turn the Tide? Some Case Studies Using the Synthetic Control Method," IMF Working Papers 16/171, International Monetary Fund.
    18. Fernando Bruna, 2015. "Why do empirical tests tend to accept the NEG? An alternative approach to the 'wage equation' in European regions," Working Papers 15-11, Asociación Española de Economía y Finanzas Internacionales.
    19. Romain Bouis & Romain Duval & Fabrice Murtin, 2011. "The Policy and Institutional Drivers of Economic Growth Across OECD and Non-OECD Economies: New Evidence from Growth Regressions," OECD Economics Department Working Papers 843, OECD Publishing.

    More about this item

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • Q30 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - General
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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