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Shaken, Not Stirred: The Impact of Disasters on International Trade

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  • Martin Gassebner
  • Alexander Keck
  • Robert Teh

Abstract

This paper examines the impact of major disasters on import and export flows using a gravity model (170 countries, 1962-2004). As a conservative estimate, an additional disaster reduces imports on average by 0.2% and exports by 0.1%. Despite the apparent persistence of bilateral trade volumes, we find that the driving forces determining the impact of disastrous events are the level of democracy and the geographical size of the affected country. The less democratic and the smaller a country the greater is its loss due to a catastrophe. In autocracies, exports and imports are significantly reduced. Had Togo been struck by a major disaster in 2000, it would have lost 6.2% of its imports and 3.7% of its exports. While democratic countries' exports suffer identical decreases, imports increase. Copyright © 2010 Blackwell Publishing Ltd.

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Article provided by Wiley Blackwell in its journal Review of International Economics.

Volume (Year): 18 (2010)
Issue (Month): 2 (05)
Pages: 351-368
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Handle: RePEc:bla:reviec:v:18:y:2010:i:2:p:351-368

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Cited by:
  1. Bjørnskov, Christian & Dreher, Axel & Fischer, Justina A.V., 2010. "Formal institutions and subjective well-being: Revisiting the cross-country evidence," European Journal of Political Economy, Elsevier, vol. 26(4), pages 419-430, December.
  2. Axel Dreher & Peter Nunnenkamp & Hannes Öhler & Johannes Weisser, 2009. "Acting Autonomously or Mimicking the State and Peers? A Panel Tobit Analysis of Financial Dependence and Aid Allocation by Swiss NGOs," Kiel Working Papers 1486, Kiel Institute for the World Economy.
  3. Eliza M. Lis & Christiane Nickel, 2009. "The Impact of Extreme Weather Events on Budget Balances and Implications for Fiscal Policy," Working Paper Series 1055, European Central Bank.
  4. Paul Raschky, 2007. "Estimating the effects of risk transfer mechanisms against floods in Europe and U.S.A.: A dynamic panel approach," Working Papers 2007-05, Faculty of Economics and Statistics, University of Innsbruck.
  5. Paul A. Raschky & Manijeh Schwindt, . "Aid, Catastrophes and the Samaritan's Dilemma," Working Papers 2008-06, Faculty of Economics and Statistics, University of Innsbruck.
  6. Diego Hernandez & Alexandra Rudolph, 2011. "Modern Day Slavery: What Drives Human Trafficking in Europe?," Courant Research Centre: Poverty, Equity and Growth - Discussion Papers 97, Courant Research Centre PEG, revised 23 Nov 2011.
  7. Hernandez, Diego & Rudolph, Alexandra, 2011. "Modern Day Slavery: What Drives Human Trafficking in Europe?," Proceedings of the German Development Economics Conference, Berlin 2011 83, Verein für Socialpolitik, Research Committee Development Economics.
  8. Gabriel J. Felbermayr & Jasmin Gröschl, 2011. "Natural Disasters and the Effect of Trade on Income: A New Panel IV Approach," CESifo Working Paper Series 3541, CESifo Group Munich.
  9. Eliza Lis & Christiane Nickel, 2010. "The impact of extreme weather events on budget balances," International Tax and Public Finance, Springer, vol. 17(4), pages 378-399, August.
  10. Ilan Noy, 2012. "Natural Disasters and Economic Policy for the Pacific Rim," Working Papers 201201, University of Hawaii at Manoa, Department of Economics.

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