The Effect of Rainfall on Economic Growth in Thailand: A Blessing for Poor Provinces

Siriklao Sangkhaphan and Yang Shu
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Siriklao Sangkhaphan: School of Economics, Huazhong University of Science and Technology, 1037 Luoyu Road, Wuhan 430074, China
Yang Shu: School of Economics and Trade, Hunan University, 2 Lushan S Rd, Changsha 410008, China

Economies, 2019, vol. 8, issue 1, 1-17

Abstract: Rainfall is related to economic growth and generally has beneficial impacts on dry and poor areas that are mostly dependent on rainfed agriculture. Thailand is a service-based, upper middle-income country with a tropical climate although rainfall varies regionally. The volume of precipitation in the northern and northeastern regions is rather low while the southern region has the highest rainfall due to its narrow topography running north-south bordering the Andaman Sea to the west and the Gulf of Thailand to the east. The present study explored the effect of rainfall on the growth of the gross provincial product (GPP) by economic sector and subsector using provincial-level panel data from 1995 to 2015. The feasible generalised least squares (FGLS) estimator with fixed effect was used in the regression models. We found that the main impacts of the weather occurred through rainfall and reduced GPP growth at the national level. For the sector level, the results showed that rainfall had a significant negative impact on the agricultural and service sectors while it had a positive but not significant impact on the industrial sector. However, rainfall remains vital in poor regions although it could be detrimental to certain subsectors in those regions. The results confirmed that the positive effects of rainfall mostly affected the economies of poor provinces and suggested that average rainfall could be the key climate effect on economic growth in Thailand.

Keywords: rainfall; economic growth; economic sector; economic subsector; panel data; the FGLS estimator; JEL Classification: O44; O47; Q54 (search for similar items in EconPapers)
JEL-codes: E F I J O Q (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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