Economic Geography and GDP per Capita

Distance to global markets can influence GDP per capita through its impact on trade flows, which in turn affect the efficiency of domestic business. Nevertheless, it has been argued that the world is “becoming flatter” – the so-called “death of distance” hypothesis. This chapter reports new transport cost data that show there is little evidence that the cost of transporting goods has declined over time relative to their price. It also suggests that distance to markets has significantly depressed living standards in remote OECD countries and raised them in centrally located countries. In addition, it argues that GDP per capita has been boosted in a few OECD countries by large natural resource endowments.