Why Are Cold Countries Richer?

Whenever we dream of a luxurious and elegant life, countries like Germany, United Kingdom, United States, Switzerland and Sweden spring to our mind. Agreeably, all of these countries have cold climates. Is there a link between economic growth and temperature? Or is it really a coincidence?

While developed countries lie farther from the equator, Asian and African countries and other poverty-stricken countries, on the other hand, are centralised around the geographic tropics. It is also necessary to note that there are some outliers to this observation. Even though countries such as North Korea, Russia and Mongolia have bitter cold climates, they are not well-off. This can be attributed to the fact that these countries faced several years of mismanagement under communist rule. By contrast, countries like Singapore, UAE, and Hong Kong are hot while still being rich. It is because they are trade centres that do not depend upon local resources for their prosperity. So, why is it that when we go farther from the equator, the more developed and wealthier countries are?

The average income per capita drops roughly by 9% as we move close to the tropics. For every decrease in one degree Celcius, the GDP per capita increased by $762. The plot of climatic temperatures versus economic growth has a linear, negative slope.

There is a range of theories that try to explain the phenomena. Let us take a glance at the more bizarre ones before moving on to those that make sense.

One of the claims is that people of the colder regions are peace-loving and calm. Even while saying it, it sounds far-fetched and downright foolish. You wouldn’t believe me if I told you that a popular economic YouTube channel stated this reason.

The other claim is that people living in colder regions tend to be more innovative. Agin this is true as numerous contributions to mathematics and sciences were made by Ancient Greece and Mesopotamia. Medieval Europe was lagging in development until the late nineteenth century.

The reason is, however, lies far from these claims. In ancient times, the hotter regions were highly prosperous. They were the cause of envy for the cold dwellers who did not have appropriate weather conditions, fertile soil or plenty of water for growing their crops.

However, after the industrial revolution, agriculture was no longer the deciding factor for economic growth. While political stability, social rules and availability of natural resources are also important, it was the industrialisation of agriculture and farming that determined the wealth of the cold countries. The warmer countries started to fall behind as they were still dependent on climatic conditions for their farming. Conversely, their colder counterparts were technologically and innovatively equipped to advance their nations. Even to this day, the gap remains undeterred.

It also goes without saying that the colonisation by the European vastly contributed to the exploitation of the rampant and plentiful resources in the hotter regions. The cold also offered another major advantage. The people of the cold countries had fewer diseases to deal with. They could easily battle against the diseases and eradicate them.

Every year, India faces an enormous brain drain to other countries such as Germany as they provide countless opportunities for growth and development. To try and catch up to the wealth of the colder countries, India still has a long way to go.