Temperature Impact On The Economy

Temperature Impact On The Economy
Reading Time: 3 minutes

It is often observed in the present world that most prosperous countries are mainly in the colder regions of the globe. Is this the truth? Or is it just a coincidence?
Are there any valid reasons for this money distribution? Let’s find out together.

Is there a relation between temperature and economy?

If you look at this map, you’ll realize that almost all the developed countries lie outside the tropics.

Temperature Impact On The Economy

This shows that there is some strength in the statement that colder nations are wealthier.

Economic data show that with every one-degree increase in the temperature, GDP per capita of the country decreases by ₹762. Also, research shows that a country’s economy depends 9% on the climate outside. Even if it does not sound much, it is a huge number! Let us dig into the “Why.”


Possible reasons for this money distribution:

There are many theories put forward to explain this, but none was able to explain it perfectly. Some of them are:

  1. Due to colder climates, agriculture is not possible in those countries, and the residents have to be extra conscious about their food. They have to stock food, reserve fuels and build good shelters to survive winters. Compounding over generations, this led to a society that valued storing resources, and this gave them a head start against hot countries where food was always available.

  2. Due to weather conditions, agriculture was not a flourishing field. Cold countries have to focus on industries to survive; they eventually became industrial countries earlier than hotter ones, again giving them a headstart in this richness.

  1. Some people also believe that this is because, in hot weather, the temper of people stays high, while in colder countries, people remain calm. Hence, government and business leaders can make better decisions in colder countries having a calm mind.

Hence, both data and theories could somewhat explain why cold countries are more prosperous, but will this be true for the future?

Will this trend continue in the future?

The answer to that is, not necessarily. Why? Let’s investigate further.

The answer to that is not necessarily. Why? Let us investigate further.

About 2,000 years ago, a country’s wealth was strongly linked to how much food it could produce. These days, the food production and distribution industry is so developed that every country has enough stock to feed its population. Hence, in modern days, wealth is driven by innovation.

Colder countries just got a head start because of a few factors, but some hot countries like Singapore, Dubai, Bahrain, and Qatar have shown that this head start will not last forever. All these countries are in hotter regions but are excelling in terms of development and richness. Also, in ancient times, Egypt, Rome, Mayans, Persians, all these rich countries were in the hot regions. Hence, every country has immense potential irrespective of its temperature. The trend of cold countries being more prosperous is most likely to be broken in the coming few decades. The land which will innovate will be at the top regardless of the weather outside.

Let us talk about India.

As we have seen, the economy depends 9% on temperature, which means almost ten times that economy depends on other factors like governance, innovation, and youth.

We can learn several things from countries that are in the hotter region yet developed, like Singapore.

  • Tax laws and Company policies: Ease of doing business. It attracts foreign companies to come to our country. Although India’s rank improved from 142 to 63 in the past five years under the present government, there is still a long way to go. Singapore stands at second position in this.

  • No tolerance for corruption.

  • Adequate distribution of resources.

So, it is clear that any country can become a developed one bypassing its geographic and climate conditions. Therefore, rather than thinking about the conditions we cannot control, let us focus on some that we can. Let us upskill ourselves. It is our responsibility to help the government in whatever way we can. They are the ones taking India towards development.

Hence, we cannot just say that India is not a developed country due to the hot weather conditions. There is a lot more to be improved upon.

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