Hot countries tend to be poorer, but debate continues over whether the temperature-income relationship is simply a happenstance association. This column uses within-country estimates to show that higher temperatures have large, negative effects on economic growth – but only in poor countries. The findings are big news for future global inequality.
Personally, I'd think that the temperature-income relationship is happenstance, especially when one looks at Southeast Asian countries like Singapore, Malaysia, Thailand and Indonesia. All of these countries are hot year-round, but that hasn't stopped any of these countries from progressing economically.
The authors wrote:
First, higher temperatures have large, negative effects on economic growth, but only in poor countries. In poor countries, we estimate that a 1ºC temperature increase in a given year reduced economic growth in that year by about 1.1 percentage points. In rich countries, changes in temperature had no discernable [sic] effect on growth.
Presumably, in hot poor countries the economy should remain poor year-in and year-out if this theory holds. Thus, a hot poor country should remain poor with little to no chance of growing economically.
But this flies in the face of the economic histories of Southeast Asian countries. Of the four countries I mentioned above, Singapore, by far, has grown the most over time, despite an average daily high temperature of 88° Fahrenheit (31° Celsius) year-round. In 1960, the nominal GDP per capita for Singapore was a mere US$427. (In comparison, the U.S.'s nominal GDP per capita in 1960 was US$2,912.) By 2008, Singapore's nominal GDP per capita had risen to US$37,597 (with the U.S.'s nominal GDP per capita being US$46,841). That's an annual growth rate over 48 years of 9.78% for Singapore and 5.96% for the U.S.
Now, granted, you won't find as strong of numbers for the other Southeast Asian nations, but if you look at the GDP per capita graphs since 1980 for Indonesia, Malaysia and Thailand, you will see a fairly steady upward climb in the GDPs per capita with the only exceptions being in the late 90s due to the Asian financial crisis. (One could probably make a similar case for the State of Arizona if State Domestic Product numbers were available.) These growth rates can't be explained due to moderate daily temperatures; this region has a tropical climate.
It seems to me that this theory has a limited value due to its inability to explain the economic success of countries like Singapore. The authors need to explain a case like Singapore, which went from a poor country to a rich country over the past fifty years despite the hot climate here.
Singapore GDP Source
U.S. GDP Source