Air Conditioning and Economic Development

I teach Business English to senior executives and entrepreneurs from around the world. My clients come from all around Europe, Asia and the Middle East. This summer, I have noticed a very specific pattern among the Europeans: they have all been complaining avidly about the heat. On the hottest days, students who are normally sharp and articulate become noticeably slower to find the right word, quicker to lose concentration, and many admit they would rather not be working at all. I have observed no such change from those in the Middle East and Asia, who barely ever mention the weather at all.

In the height of the European heatwave, I came across a quotation from Lee Kuan Yew, Singapore's first prime minister. When asked in 2009 what had enabled Singapore's transformation from a resource-poor, tropical nation into one of the richest countries on earth within a single generation, many expected a lecture about trade policy or education reform. Instead, he pointed to a single invention—air conditioning. "It changed the nature of civilisation by making development possible in the tropics," he said. "The first thing I did upon becoming prime minister was to install air conditioners in buildings where the civil service worked. This was key to public efficiency."

That sent me stright back to my students to ask whether they have air conditioning at home. The answers were split almost exactly along geographic lines. The vast majority of my European clients have no air conditioning at home, whereas all of those from Asia and the Middle East have it, and a gulf has appeared in English performance this summer between those with AC and those without.

An unlikely driver of development

Of course this is far from a scientific study, but it turns out the historical and economic evidence backs it up rather well. When air conditioning spread through American offices in the 1950s and 60s, one study found that employees who moved into cooled buildings saw their productivity rise by 24 per cent. In addition, office productivity starts to wane after temperatures rise above 21°C.

Before air conditioning became widespread, the cities that led modern economic development — London, Paris, New York, Tokyo — all enjoyed a mild climate. Today, the fastest-growing megacities in the world look very different: Riyadh, Bengaluru, Dubai, all contending with far hotter conditions. What changed was not geography, but the ability to control indoor temperature.

That history feels newly relevant this summer. Europe has been breaking temperature records across the continent, yet only around 20 per cent of European homes have air conditioning, compared to 80 to 90 per cent in the United States. This gulf seems stark alongside joint WMO/Copernicus climate assessments, which claim that Europe’s temperatures are warming around twice as fast as the global average.

It is also worth considering this stat alongside different piece of economic commentary which is often discussed in my lessons. Mario Draghi, former President of the European Central Bank, recently published a report highlighting a widening productivity gap between the EU and the US, and a complete absence of prominent European companies reaching the scale of America's tech giants. Other economic pundits, as well as my own clients, claim that Europe is fast falling behind in artificial intelligence, defence technology and EV technology, the latter of which is sending shockwaves through its automotive industry. Draghi’s proposed solutions centred on breaking down innovation barriers, attracting investment, and improving education. Air conditioning didn't feature in the report at all.

But if heat genuinely stifles cognitive performance and output at the rates the research suggests, a continent that has been so slow to adopt cooling technology is putting itself at a real disadvantage.

Not a silver bullet

None of this means air conditioning is a simple fix, and it would be an oversimplification to suggest that Singapore’s example is a silver bullet for all of Europe’s problems. There are significant environmental issues around AC, plus there is a cultural aspect. Europeans enjoy a vibrant streetlife as they meander through historic avenues in the open air, and dining alfresco in lively plazas. Urban planners suggest that cities built around climate control often lose something in their city vibe.

I didn't set out this summer to run an informal study on air conditioning and performance, but watching the pattern play out in lessons has made me see air-conditioning as an economic investment rather than a comfort. One advantage of my position is that my students talk in great depth about business and the economy from the perspectives of many different industries and cultures. That cross-industry, cross-cultural vantage point is exactly what shapes Fluency Space, the Business English platform I built for senior leaders, executives and entrepreneurs. For those at the top of an organisation, that thinking is distilled into the CEO Package, a programme built around real economic thinking, not only from Draghi’s report, Lee Kuan Yew's Singapore and best-selling business writers, but also insights from executives themselves. I have finally taken the hint myself, and I'm having air conditioning installed at home before next year's heatwave.

An unlikely driver of development