Tropical Economics
Solomon M. Hsiang, Kyle C. Meng
American Economic Review · 2015 · Volume 105 · Issue 5
Abstract
Why wealth is systematically lower in the tropics remains a puzzle. We point out that latitude may have fundamental economic consequence because it plays a key role in how countries experience geophysical processes that have economic implications. We demonstrate that annual fluctuations in the El Nino Southern Oscillation (ENSO) leads to hotter and dryer local weather across tropical countries and subsequently to substantial losses in agricultural yields, output, and value-added. If volatility in agricultural production impedes economic growth, the relatively stronger influence of ENSO on the tropics may offer yet another partial explanation for slower historical growth in the tropics.
Keywords
Economic Development: Agriculture, Natural Resources, Energy, Environment, Other Primary Products, Empirical Studies of Economic Growth, Aggregate Productivity, Cross-Country Output Convergence, Agriculture: Aggregate Supply and Demand Analysis, Prices, Climate, Natural Disasters and Their Management, Global Warming
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