Effects of Climate Change on Economic Growth: A Perspective of the Heterogeneous Climate Regions in Africa

Abstract

Climate change is a negative global externality that threatens economic growth. In our study, we firstly reviewed the transmission mechanisms of climate change affecting economic growth based on existing literature. Secondly, we respectively used the fixed effect method and the panel vector autoregression method to test the short-run and long-run effects of climate change on the economic growth of 44 countries in six climatic zones in Africa, from 2000 to 2019. The results showed that temperature has inverted U-shaped effects on the economic growth of countries in tropical rainforest and tropical dry climate zones, but a U-shaped effect in warm temperate humid regions. The heterogeneity test was based on industrial and geographical perspectives. Climate change has a significant inverted U-shaped effect on agricultural and services output in tropical rainforest and tropical dry climate zones. Moreover, climate change positively impacts economic growth in coastal regions, but has no significant impact on inland countries. Lastly, the long-run results indicate that tropical rainforest and subtropical humid regions show a greater ability to adapt to climate change, while tropical desert regions show greater volatility resilience in response to climate change.