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The OECD has found that Australia’s economic performance is not as strong as might be expected given the strength of its economic policy settings. Differences in geography – distance to world markets, natural resource endowments, and population settlement patterns – help explain differences in economic performance across OECD countries. But these findings reinforce, rather than reduce, the importance of good policy. Economic policy settings affect the extent to which countries exploit their geographic advantages and their ability to adapt to geographic disadvantages. The purpose of this paper is to review the OECD’s recent study of the impact of geography on economic performance and consider the implications for Australia’s economic performance and policy.

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