The impact of climate change on the economies of developing countries

This study investigates the impact of climate change on the economies of developing countries, focusing on its effects on Gross Domestic Product (GDP) and other economic indicators. Employing a Panel Autoregressive Distributed Lag (ARDL) regression model, specifically the Pooled Mean Group (PMG) estimation, the analysis reveals both long-run and short-run relationships between climate variables and economic growth. The results indicate that rising temperatures and carbon emissions negatively influence economic growth in the long term, with temperature exhibiting a coefficient of -0.031 (p = 0.000) and carbon emissions showing a coefficient of -0.003 (p = 0.001). Conversely, energy consumption and population growth are identified as significant positive drivers of economic development, highlighting their roles in enhancing economic performance. Interestingly, the study also finds that short-term increases in temperature can temporarily boost economic activity, with a coefficient of 0.109 (p = 0.000), while rainfall has a marginally positive impact. However, these short-term benefits do not mitigate the long-term adverse effects of climate change, underscoring the vulnerability of developing economies reliant on climate-sensitive sectors. The findings emphasize the necessity for targeted policies aimed at fostering resilience to climate change, enhancing energy infrastructure, and promoting sustainable development. By addressing these challenges, developing countries can better safeguard their economic prospects amid an increasingly volatile climate.