The El Niño Southern Oscillation and economic growth in the developing world. (July 2017)

• Record Type: Journal Article
• Authors: Smith, Sarah C.; Ubilava, David
• Is Part Of: Global environmental change. Volume 45(2017:Jul.)
• Page Start: 151
• Page End: 164
• Publication Date: 2017-07
• Subjects: O44 -- Q54 -- R11; Climate shocks -- Developing countries -- Economic growth -- El Niño Southern Oscillation -- Nonlinear effect; Environmental policy -- Periodicals; Human ecology -- Periodicals; Nature -- Effect of human beings on -- Periodicals; Environment -- Periodicals; Environnement -- Politique gouvernementale -- Périodiques; Écologie humaine -- Périodiques; Homme -- Influence sur la nature -- Périodiques; Environmental policy; Human ecology; Nature -- Effect of human beings on; Periodicals; Electronic journals; 333.7
• DOI: 10.1016/j.gloenvcha.2017.05.007
• Languages: English
• ISSNs: 0959-3780

Abstract

Highlights: Growth effects of ENSO events are asymmetric and heterogeneous across regions. An ENSO shock results in up to two percent growth reduction during the El Niño regime. The effect of El Niño is about twice-as-large in the tropics relative to temperate areas. Economies of Africa and Asia-Pacific are most susceptible to ENSO shocks. Abstract: The El Niño Southern Oscillation (ENSO) affects weather around the globe, particularly in regions where developing countries typically lie. These countries are known to be most vulnerable to weather anomalies, and ENSO thereby has the potential to influence their economic growth. In this study, we investigate the effect of ENSO on economic growth in 69 developing countries, using annual data from 1961 to 2015. We find regime-dependent nonlinearity in the growth response to ENSO shocks. An El Niño event, equivalent to a 1 °C deviation in sea surface temperatures in theNiño3.4 region of the equatorial Pacific, results in one-to-two percent annual growth reduction during the El Niño regime, but the effect is absent during the La Niña regime. In addition, we find that the effect of El Niño is twice-as-large in the tropics relative to temperate areas, and particularly pronounced in Africa and Asia-Pacific. The findings of this study have two important implications. From the modeling standpoint, we find that the growth impacts of ENSO shocks are nonlinear, and vary across regions and climatic zones. From the policy-making standpoint, our findings suggest opportunities for short-term adjustments to climate shock management and international aid programs, depending on the existing state and the intermediate-term patterns of the ENSO cycle.