Publication: The Fragility and Resilience of Nations
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.
“Karayalcin, Cem; Onder, Harun. 2023. The Fragility and Resilience of Nations. Policy Research Working Papers; 10362. © World Bank, Washington, DC. http://openknowledge.worldbank.org/handle/10986/39542 License: CC BY-NC 3.0 IGO.”