The World is Different Because of You : Global Warming and Economic Development of Countries

The global temperature has gradually been rising, with different impacts on economic activities in various countries. How to mitigate the negative impact of global climate change on economic development has become an important issue. In this context, this study introduces physiological assumptions into a labor economics model and analyzes the inverted U-shaped relation of temperature with a country's economic development based on the link between temperature and individual labor efficiency. We also use worldwide data to empirically assess the association between temperature and economic development, finding that a rise in temperature can suppress economic activity in countries with high temperatures and promote economic activity to a certain extent in the few countries with low temperatures. That is, the influence of temperature on a country's economy exhibits an inflection point. The average temperature in most countries is above the inflection point of the inverted U-shaped curve, so a temperature increase limits their economic development to a certain extent. The mechanism analysis shows that changes in agricultural development, industrial development and employment are important channels whereby temperature affects growth. Technological progress is introduced in the expansion analysis, the results of which show that the inflection point of the inverted U-shaped curve continues to move to the right. In other words, technological progress can slow the inhibition effect of global warming on the economies of all countries. This study provides new research ideas for analyzing the relationship between global warming and economic growth and a scientific basis and empirical evidence for dynamic regulations to address global warming and support economic growth