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Could Weather Fluctuations Affect Local Economic Growth? Evidence from Counties in the People's Republic of China

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  • Chengzheng Li

    (Institute for Economics and Social Research, Jinan University, Guangzhou, People's Republic of China (PRC). E-mail:)

  • Jiajia Cong

    (School of Management, Fudan University, Shanghai, PRC. E-mail:)

  • Haiying Gu

    (Antai College of Economics and Management, Shanghai Jiao Tong University, Shanghai, PRC. E-mail:)

Abstract

This paper uses historical fluctuations of weather variables within counties in the People's Republic of China to identify their effects on economic growth from 1996 to 2012. We find three primary results. First, higher temperatures significantly reduce the growth rate of county-level gross domestic product per capita: an increase in the annual average temperature of 1°C lowers the growth rate by 1.05%–1.25%. The effect of higher temperatures is nonlinear. Second, fluctuations in temperature and precipitation not only have a level effect, they also have a substantial cumulative effect. Third, weather fluctuations have wide-ranging effects. Beyond their substantial effects on the growth rate of agricultural output, they also affect nonagriculture sectors, labor productivity, and investment. Our findings provide new evidence for the impact of weather changes on economic development and have major implications for adaptation policies.

Suggested Citation

  • Chengzheng Li & Jiajia Cong & Haiying Gu, 2020. "Could Weather Fluctuations Affect Local Economic Growth? Evidence from Counties in the People's Republic of China," Asian Development Review, MIT Press, vol. 37(2), pages 201-224, September.
    • Handle: RePEc:tpr:adbadr:v:37:y:2020:i:2:p:201-224
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    RePEc Biblio mentions

    As found on the RePEc Biblio, the curated bibliography for Economics:
    1. > Environmental and Natural Resource Economics > Climate economics > Impacts of climate change > Weather and economic growth

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    Cited by:

    1. Hu, Haiqing & Wei, Wei & Chang, Chun-Ping, 2022. "Examining the impact of extreme temperature on green innovation in China: Evidence from city-level data," Energy Economics, Elsevier, vol. 114(C).
    2. Li, Chengzheng & Cong, Jiajia & Yin, Lijuan, 2021. "Extreme heat and exports: Evidence from Chinese exporters," China Economic Review, Elsevier, vol. 66(C).
    3. Li, Chengzheng & Cong, Jiajia & Gu, Haiying & Zhang, Peng, 2021. "The non-linear effect of daily weather on economic performance: Evidence from China," China Economic Review, Elsevier, vol. 69(C).
    4. Yanyan Ouyang & Chuanwang Sun & Xiaonan Wei & Chuangyu Xie, 2023. "Will Temperature Changes in the Host Country Reduce the Inflow of International Direct Investment? Micro Evidence from Chinese Listed Companies," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 86(4), pages 781-806, December.

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    More about this item

    Keywords

    climate change; economic growth; precipitation; temperature; weather shocks;
    All these keywords.

    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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