The contribution of economic geography to GDP per capita

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.

Does broadband speed really matter as a driver of economic growth? Investigating OECD countries

“…Telecom revenue is also part of GDP and hence the positive relationship is self-explanatory. Negative population growth for GDP growth is also consistent with the study by Boulhol, de Serres and Molnar (2008).…”

“…The coefficient of population density, which is negative for GDP growth, is somewhat surprising. This may be because, as Boulhol, de Serres, and Molnar (2008) found in the case of OECD, population density is a much weaker indicator of GDP than the other geographic variables and therefore does not have a strong link to the GDP per capita. The population and urban density are both negative, as is also supported by similar results in the study by Kolko (2010).…”

The Determinants of National Competitiveness

“…Prior studies have suggested geographic location, natural resource deposits, and country size are endowments that affect prosperity. A country's geographic location can affect the ease with which it can trade, for example, through access to a long coastline for shipping or proximity to large markets (Gallup et al, 1998;Boulhol et al, 2008). Geography can also influence the prevalence of diseases and colonization patterns, which affect historical and current institutional conditions.…”

Geography, market potential and industrialization in Italy 1871–2001

“…The market potential index, proposed by Harris () to explain the distribution of manufacturing industries in the US and their relations with different local markets, has been widely adopted in the analysis of industrial location patterns (Lloyd and Dicken ; Rich ). The theoretical bases of Harris's original market potential function were provided in the NEG framework (Krugman ; Brakman et al ), while the relevance of market in firms' locations has been supported by a large number of empirical studies covering various countries and different time spans (Hanson ; Boulhol et al ; Combes et al ; Paluzie et al ; Martínez‐Galarraga ).…”