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Over the past several years, the OECD has quantified the impact of structural policies on employment, productivity and GDP per capita (e.g. OECD, 2003, 2006). The results from these studies, which have built on a vast academic literature, have contributed to a better understanding of the main channels linking policies to labour and product market outcomes in OECD countries. In doing so, they have also underscored the limits to the understanding of economic growth: only a limited part of the cross-country dispersion in GDP levels and growth rates can be explained by quantifiable policy levers, at least on the basis of standard macro-growth regression analysis.

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ISSN 1995-2848OECD Journal: Economic StudiesVolume 2008 OECD 2008The Contribution of EconomicGeography to GDP per CapitabyHerv Boulhol, Alain de Serres and Margit MolnarIntroduction and main findings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .General empirical framework . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24The basic determinants of GDP per capita . . . . . . . . . . . . . . . . . . . . . . .Benchmark specification and empirical results . . . . . . . . . . . . . . . . . . .Economic distance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Why proximity matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .The distance of OECD countries to world markets . . . . . . . . . . . . . . . .Empirical analysis: Augmented Solow model and proximity . . . . . . . .Transport costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Evolution of transport and telecommunications cost indices . . . . . . .45779131517Impact of transport costs on openness to trade and GDP per capita .Overall economic impact and policy implications . . . . . . . . . . . . . . . . . . . . .Overall impact . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Policy implications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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