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Why colder countries are richer than hot nations

Economists have been grappling to explain the reason why there is such a big divide in wealth between colder and warmer countries. 

However, the link between temperature and economic prosperity is undeniable. 

Europeans and North Americans suffer through bitterly cold winters but reap the benefit of living in one of the world’s richest regions.

Northern Asian countries also have higher economic output than nations in Asia’s south. 

By contrast, places like Indonesia, Vietnam and Brazil, where residents enjoy toasty temperatures throughout the year, are much poorer.  

While political stability, industry and natural resources are important variables, the geographical pattern is well established.

According to Australia Youtubers, Economics Explained, the main reason is that in the formative years of society, people in colder climates needed much higher levels of planning and co-operation or they would have perished in winter.

Both hunting and foraging were difficult in winter, so food had to be stored, while housing and other buildings had to be well constructed to keep out the cold – requiring co-operation between neighbours to construct them. 

Europeans suffer through bitterly cold winters but reap the benefit of living in one of the world’s richest regions (pictured: Luxembourg)

‘In a country like Norway, people would not survive the harsh winters unless they planned ahead to stockpile food, build good shelters and reserve fuels like oil, coal or wood. This gave these economies a head start,’ they say in the video.

‘It wasn’t so much that people were more industrious because of the cold. It was more so that societies that weren’t industrious just froze and died off.

‘This kind of forced industriousness would compound itself over many generations that values capital goods more so than a society that has had it easy throughout its entire existence.’

In more tropical climates, there was less of a need to build proper dwellings, and hunting and foraging for food was possible year-round.

The theory holds true for Australia, with the two wealthiest capital cities, those being Sydney and Melbourne, experiencing some of the coldest temperatures. 

Darwin, which is one of the poorest capital cities, is also the warmest.

‘Logically speaking, Darwin should be one of the most prosperous. It’s much closer to significant natural resource wealth and it is significantly closer to trading partners like China, Malaysia and Indonesia – but it’s not. 

‘Darwin is the poorest capital city in Australia and it is also the hottest.’

Capital chief economist Shane Oliver said colder climates tend to be more conducive to productive work.

‘Hotter countries tend to have lower living standards. It’s all to do with extreme temperatures making it harder to get work done.’

Places like Indonesia (pictured), Vietnam and Brazil, where residents enjoy toasty temperatures throughout the year, are much poorer

Places like Indonesia (pictured), Vietnam and Brazil, where residents enjoy toasty temperatures throughout the year, are much poorer

The theory holds true for Australia, where the two wealthiest capital cities, Sydney and Melbourne, experience some of the coldest temperatures, compared to Darwin, which is one of the poorest capital cities and the warmest

The theory holds true for Australia, where the two wealthiest capital cities, Sydney and Melbourne, experience some of the coldest temperatures, compared to Darwin, which is one of the poorest capital cities and the warmest

The theory holds true for Australia, with the two wealthiest capital cities, those being Sydney and Melbourne, experiencing some of the coldest temperatures. Darwin (pictured), which is one of the poorest capital cities, is also the warmest

The theory holds true for Australia, with the two wealthiest capital cities, those being Sydney and Melbourne, experiencing some of the coldest temperatures. Darwin (pictured), which is one of the poorest capital cities, is also the warmest

‘Australia is seen as having a fairly temperate climate, especially in Sydney and Melbourne where the bulk of economic activity occurs. The exception would be Darwin which tends to struggle, it doesn’t have a lot of industry.

‘Australia’s moderate climate maybe makes life easier, it may have held back economic active a bit more than other countries because we’re not as motivated.’ 

Critiques of the theory argue that ancient civilizations prove the theory wrong with ancient Egypt, the Mayans and the Persians all calling warmer regions home.

Countries like prosperous and tropical Singapore also appear to contradict the rule, though its commercial sector is dominated by those with ancestry from cool China. 

In the video from Economics Explained, they claimed the link between temperature and economic prosperity would change over time because of changes to how wealth is generated.

About 2,000 years ago, a country’s wealth was strongly linked to how much food it could produce, whereas these days wealth is determined by industry and innovation. 

‘Cold countries got a bit of a head start in the age of innovation, but places like Singapore show that this head start will not last for ever. 

‘Every country has potential regardless what the weather is outside.’ 

No conclusive studies have been done on the subject. 

The theory holds true for Australia, the two wealthiest capital cities, those being Sydney and Melbourne, experience some of the coldest temperatures

The theory holds true for Australia, the two wealthiest capital cities, those being Sydney and Melbourne, experience some of the coldest temperatures

Sydney (pictured) is one of the most prosperous cities in Australia thanks to its moderate climate, economists say

Sydney (pictured) is one of the most prosperous cities in Australia thanks to its moderate climate, economists say 

Economists believe Melbourne (pictured) is one of the most prosperous cities in Australia thanks to its moderate climate

Economists believe Melbourne (pictured) is one of the most prosperous cities in Australia thanks to its moderate climate

Read more at DailyMail.co.uk


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