Description: How Might Climate Change Affect Economic Growth in Developing Countries? A Review of the Growth Literature with a Climate Lens

How Might Climate Change Affect Economic Growth in Developing Countries? A Review of the Growth Literature with a Climate Lens

This paper reviews the empirical and theoretical literature on economic growth to examine how the four components of the climate change bill, namely mitigation, proactive (ex ante) adaptation, reactive (ex post) adaptation, and ultimate damages of...

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Bibliographic Details
Main Authors:	Lecocq, Franck, Shalizi, Zmarak
Language:	English
Published:	World Bank, Washington, DC 2012
Subjects:	ADVERSE CONSEQUENCES ADVERSE IMPACTS AGGREGATE LEVEL AGGREGATE OUTPUT AGRICULTURAL PRODUCTIVITY AGRICULTURE ATMOSPHERE BANKING CRISIS BIODIVERSITY CAPITAL STOCK CLIMATE CLIMATE CHANGE CLIMATE CHANGE MODELS CLIMATE CHANGE RESEARCH CLIMATE PROTECTION CLOSED ECONOMY CO2 CO2 EMISSIONS COMMODITIES COMPARATIVE ADVANTAGE COMPETITIVE ADVANTAGES CONSTANT RATE CONSTANT RETURNS CONSTANT RETURNS TO SCALE CONSUMPTION GOODS CONSUMPTION INCREASES COUNTRY REGRESSIONS CYCLICAL VOLATILITY DAMAGES DECREASING RETURNS DEFORESTATION DEPRECIATION RATE OF CAPITAL DEVELOPED COUNTRIES DEVELOPING COUNTRIES DEVELOPMENT RESEARCH DEVELOPMENT STRATEGIES DIMINISHING RETURNS DISCOUNT RATE DISEASES ECONOMIC ACTIVITIES ECONOMIC ACTIVITY ECONOMIC AGENTS ECONOMIC CONSEQUENCES ECONOMIC DEVELOPMENT ECONOMIC GEOGRAPHY ECONOMIC GROWTH ECONOMIC MODELS ECONOMIC PERFORMANCE ECONOMICS ECONOMIES OF SCALE ELASTICITY ELASTICITY OF SUBSTITUTION ELECTRICITY EMISSIONS EMPIRICAL EVIDENCE EMPIRICAL LITERATURE EMPIRICAL RESULTS EMPIRICAL STUDIES ENDOGENOUS VARIABLES EQUATIONS EQUILIBRIUM EXCHANGE RATE EXCHANGE RATES EXPORTS FACTOR ACCUMULATION FACTOR PRICES FACTORS OF PRODUCTION FINANCIAL CRISES FLOODING FOREIGN INVESTMENT FORESTRY FORESTS FOSSIL FUELS FRAMEWORK CONVENTION ON CLIMATE CHANGE FUTURE RESEARCH GDP GDP PER CAPITA GEOGRAPHIC CONCENTRATION GHGS GLACIERS GLOBAL LEVEL GREENHOUSE GASES GROSS OUTPUT GROWTH ACCOUNTING GROWTH EQUATION GROWTH LITERATURE GROWTH MODEL GROWTH OF LABOR GROWTH PATH GROWTH PROCESS GROWTH RATE GROWTH RATE OF OUTPUT GROWTH RATES GROWTH REGRESSION GROWTH REGRESSIONS GROWTH THEORY HUMAN CAPITAL INCREASING RETURNS INCREASING RETURNS TO SCALE INDIVIDUAL WELFARE INFANT INFANT MORTALITY INFANT MORTALITY RATE INTERNATIONAL TRADE INVENTORIES INVESTMENT IN EDUCATION IPCC IRRIGATION KYOTO PROTOCOL LABOR FORCE LANDLOCKED COUNTRIES LDCS LEVEL OF CAPITAL LEVEL OF TECHNOLOGY LEVELS OF CAPITAL LONG RUN LONG-TERM GROWTH MACROECONOMIC POLICIES MACROECONOMIC POLICY MALARIA MARGINAL PRODUCT MARGINAL PRODUCTIVITY MARGINAL UTILITY MIDDLE EAST MIGRATION NATIONAL AUTHORITIES NATURAL DISASTERS NATURAL RESOURCES NEOCLASSICAL GROWTH MODEL NEOCLASSICAL GROWTH MODELS NEOCLASSICAL GROWTH THEORY NETWORK EXTERNALITIES NUCLEAR ENERGY OUTPUT GROWTH OUTPUT PER CAPITA OUTPUT RATIO OUTPUT STRUCTURE OVERVALUATION PER CAPITA GROWTH POLICY CONCERN POLICY DEBATE POLICY DECISIONS POLICY MEASURES POLICY OPTIONS POLICY RESEARCH POLICY RESEARCH WORKING PAPER POLICY VARIABLES POPULATION DENSITY POPULATION INCREASES POTENTIAL IMPACTS POVERTY TRAPS PRECIPITATION PRODUCTION FUNCTION PRODUCTION FUNCTIONS PRODUCTIVITY OF CAPITAL PROGRESS PROPERTY RIGHTS PUBLIC SECTOR PUBLIC TRANSPORTATION RATE OF GROWTH RATE OF POPULATION GROWTH RATE OF RETURN REAL GDP RELATIVE IMPORTANCE RENEWABLE ENERGY RESOURCE ALLOCATION RESPECT RIVERS RULE OF LAW SAVING RATE SAVINGS SECTOR MODEL SHORT SUPPLY SIGNIFICANT IMPACT STRUCTURAL CHARACTERISTICS STRUCTURAL POLICIES SUB-SAHARAN AFRICA TECHNICAL CHANGE TECHNOLOGICAL CHANGE TEMPERATURE TFP THEORETICAL MODELS TOTAL FACTOR PRODUCTIVITY TOTAL FACTOR PRODUCTIVITY GROWTH TOTAL OUTPUT TRADE BALANCE TRADE SHOCKS TRANSACTION COSTS TRANSPORTATION UNDERESTIMATES UNEMPLOYMENT URBAN DEVELOPMENT UTILITY FUNCTION UTILITY FUNCTIONS VULNERABILITY WEALTH
Online Access:	http://documents.worldbank.org/curated/en/2007/08/8088977/might-climate-change-affect-economic-growth-developing-countries-review-growth-literature-climate-lens http://hdl.handle.net/10986/7260

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Summary:	This paper reviews the empirical and theoretical literature on economic growth to examine how the four components of the climate change bill, namely mitigation, proactive (ex ante) adaptation, reactive (ex post) adaptation, and ultimate damages of climate change affect growth, especially in developing countries. The authors consider successively the Cass-Koopmans growth model and three major strands of the subsequent literature on growth: with multiple sectors, with rigidities, and with increasing returns. The paper finds that although the growth literature rarely addresses climate change per se, some issues discussed in the growth literature are directly relevant for climate change analysis. Notably, destruction of production factors, or decrease in factor productivity may strongly affect long-run equilibrium growth even in one-sector neoclassical growth models; climatic shocks have had large impacts on growth in developing countries because of rigidities; and the introducing increasing returns has a major impact on growth dynamics, in particular through induced technical change, poverty traps, or lock-ins. Among the most important gaps identified in the literature are lack of understanding of the channels by which shocks affect economic growth, lack of understanding of lock-ins, heavy reliance of numerical models assessing climate policies on neoclassical-type growth frameworks, and frequent use of an inappropriate "without climate change" counterfactual.

How Might Climate Change Affect Economic Growth in Developing Countries? A Review of the Growth Literature with a Climate Lens

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