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The Fragility and Resilience of Nations

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  • Karayalcin,Cem
  • Onder,Harun

Abstract

Climate change will impose large and differentiated tolls across countries. This paper suggeststhat economic fragility and resilience against climate change-driven natural shocks are shaped by: (i) theelasticity of input substitution in resource-intensive sectors, (ii) the trade regime, and (iii) the propertyrights regime in nature-based assets. Using a structural transformation model, the paper shows, inter alia, thatopenness 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 resourcedegradation. However, it increases fragility in a decentralized economy with incomplete property rights innature-based assets.

Suggested Citation

  • Karayalcin,Cem & Onder,Harun, 2023. "The Fragility and Resilience of Nations," Policy Research Working Paper Series 10362, The World Bank.
    • Handle: RePEc:wbk:wbrwps:10362
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    References listed on IDEAS

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    6. Werner Antweiler & Brian R. Copeland & M. Scott Taylor, 2001. "Is Free Trade Good for the Environment?," American Economic Review, American Economic Association, vol. 91(4), pages 877-908, September.
    7. Stuart L. Pimm & Ian Donohue & José M. Montoya & Michel Loreau, 2019. "Measuring resilience is essential to understand it," Nature Sustainability, Nature, vol. 2(10), pages 895-897, October.
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