Geography, Depreciation, and Growth
Solomon M. Hsiang, Amir S. Jina
American Economic Review · 2015 · Volume 105 · Issue 5
Abstract
It has been proposed that geography influences economic growth for many reasons. Previous analyses of comparative development seem to have sidestepped the question of location-dependent depreciation. However the construction of new measures of tropical cyclone exposure enables us to consider the potential impact of this single source of capital depreciation. Using an estimate of asset destruction due to tropical cyclones, we identify the "sandcastle depreciation" rate, and find support for location-dependent depreciation by looking at average growth rates. This leads us to propose that heterogeneous and geographically-dependent depreciation rates may play an important role in global patterns of economic development.
Keywords
Investment, Capital, Intangible Capital, Capacity, Macroeconomics: Production, Economic Development: Agriculture, Natural Resources, Energy, Environment, Other Primary Products, Empirical Studies of Economic Growth, Aggregate Productivity, Cross-Country Output Convergence, Climate, Natural Disasters and Their Management, Global Warming, Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
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