HOT AND HUMID ECONOMIES: UNDERSTANDING THE TROPICAL CLIMATE PARADOX

Abstract

Historically, economists have overlooked the influence of geographical factors on economic development, yet early scholars like Montesquieu and Huntington recognized the potential correlation between climate and prosperity. This study delves into the specific aspects of climate, particularly temperature and rainfall, to explore their impact on productivity and per capita income variation among nations. Drawing from prior research in economics and ecology, we aim to identify the key climate attributes that underpin this connection. Pioneering works in this field, such as Kamarck (1973) and the economic historian Landes (1998), laid the foundation for investigating the interplay between geography, climate, and economics. Furthermore, scholars from diverse fields, including historian Crosby (1986) and biologist Diamond (1997), offered compelling explanations spanning centuries and millennia regarding these interconnected factors. Recent economists, starting with Gallup et al. (1999), have conducted extensive cross-country analyses, revealing a negative relationship between tropical climates and both current and future per capita output. However, as Sachs (2001) aptly noted, the enduring phenomenon of tropical regions remaining relatively impoverished begs further exploration