This paper summarises recent Treasury work that has sought to quantify the extent to which Australia’s geography explains the productivity gap with the United States. This work has found that Australia’s geography might explain as much as half of the productivity gap with the United States.

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...

This paper examines how distance and economic size influence the level of international trade. Parameters for an international gravity trade model are estimated and used to calculate annual expected aggregate trade for Australia over the last 20 years. This model also includes a new indicator of economic remoteness that statistically identifies each country's distance from...