Over the past 50 years, Australia has maintained a labour productivity level of around 80 per cent of that of the United States. To explain this gap, there is growing interest in the hindrances that might be imposed by Australia’s geographic isolation. Bryn Battersby provides an initial investigation of the link between distance and labour productivity levels, and find that Australia’s isolation from world economic activity accounts for around 45 per cent of the gap in labour productivity between Australia and the United States.