Publication: The Fragility and Resilience of Nations
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2023-03
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2023-03
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Climate change will impose large and differentiated tolls across countries. This paper suggests that economic fragility and resilience against climate change-driven natural shocks are shaped by: (i) the elasticity of input substitution in resource-intensive sectors, (ii) the trade regime, and (iii) the property rights regime in nature-based assets. Using a structural transformation model, the paper shows, inter alia, that openness increases resilience against natural shocks, regardless of the property right regime. Additionally, openness reduces fragility when a social planner internalizes the social cost of natural resource degradation. However, it increases fragility in a decentralized economy with incomplete property rights in nature-based assets.
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“Karayalcin, Cem; Onder, Harun. 2023. The Fragility and Resilience of Nations. Policy Research Working Papers; 10362. © World Bank. http://hdl.handle.net/10986/39542 License: CC BY-NC 3.0 IGO.”
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