The ‘Death of Distance’: What does it mean for economic development?

Nicholas Crafts

Published: September 2005

This paper considers the implications of falling transport and communications costs for the spread of economic activity around the world. The evidence suggests that location has been and continues to be an important determinant of income levels. The Information and Communications Technologies (ICT) Revolution has not eliminated the benefits of agglomeration. It has permitted a significant increase in international trade in services but has not made all locations equally attractive. The ‘death of distance’ has been greatly exaggerated and the European welfare state is not being undermined by a ‘race to the bottom’ as capital seeks tax havens in distant locations.

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