Importing Inputs for Climate Change Mitigation: The Case of Agricultural Productivity

Abstract

This paper investigates the effects of temperature on agricultural TFP growth rates during the period 1992-2015. We argue that higher temperatures impede TFP growth, particularly in low-income countries (LICs) using less imported inputs. Our estimates imply that a one degree Celsius rise in annual average temperatures reduces TFP growth rates by 5.2 percentage points in the LICs in question. However, LICs using greater amounts of imported inputs are less affected by temperatures, suggesting a new source of gains from imported inputs mitigating the adverse effects of rising temperatures.

Keywords: Agricultural Productivity, TFP, Imported Inputs, Weather Shocks

JEL Classification: F14, F18, Q17, Q54