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Earthquakes and Economic Growth

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  • Peter Simonsen

    (Institute for Advanced Development Studies)

Abstract

This study explores the economic consequences of earthquakes. In particular, it is investigated how exposure to earthquakes aects economic growth both across and within countries. The key result of the empirical analysis is that while there are no observable eects at the country level, earthquake exposure signicantly decreases 5-year economic growth at the local level. Areas at lower stages of economic development suer harder in terms of economic growth than richer areas. In addition, the analysis proposes an explanation to the paradox that there is a pronounced negative eect at the regional level while no eect appears at the country level. To this end, the eects of earthquake exposure is investigated not only for the impact zones, but also for areas with an average distance to the epicenter of around 100 km. The results indicate that the decrease in production in one part of a country is (partially) o-set by an increase in production in the surrounding regions.

Suggested Citation

  • Peter Simonsen, 2012. "Earthquakes and Economic Growth," Development Research Working Paper Series 01/2012, Institute for Advanced Development Studies.
    • Handle: RePEc:adv:wpaper:201201
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    Cited by:

    1. Vu, Tam Bang & Noy, Ilan, 2013. "Regional Effects of Natural Disasters in China," Working Paper Series 18776, Victoria University of Wellington, School of Economics and Finance.
    2. Holger Strulik & Timo Trimborn, 2019. "Natural Disasters and Macroeconomic Performance," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 72(4), pages 1069-1098, April.
    3. Peter A. G. van Bergeijk & Sara Lazzaroni, 2015. "Macroeconomics of Natural Disasters: Strengths and Weaknesses of Meta‐Analysis Versus Review of Literature," Risk Analysis, John Wiley & Sons, vol. 35(6), pages 1050-1072, June.
    4. Jeanet Sinding Bentzen, 2019. "Acts of God? Religiosity and Natural Disasters Across Subnational World Districts," The Economic Journal, Royal Economic Society, vol. 129(622), pages 2295-2321.
    5. Vu, Tam Bang & Noy, Ilan, 2013. "Regional Effects of Natural Disasters in China," Working Paper Series 2812, Victoria University of Wellington, School of Economics and Finance.
    6. Matthew A. COLE & Robert J R ELLIOTT & Toshihiro OKUBO & Eric STROBL, 2013. "Natural Disasters and Plant Survival: The impact of the Kobe earthquake," Discussion papers 13063, Research Institute of Economy, Trade and Industry (RIETI).
    7. Matthew A. COLE & Robert J R ELLIOTT & Toshihiro OKUBO & Eric STROBL, 2015. "Natural Disasters, Industrial Clusters and Manufacturing Plant Survival," Discussion papers 15008, Research Institute of Economy, Trade and Industry (RIETI).
    8. Lochan Kumar Batala & Wangxing Yu & Anwar Khan & Kalpana Regmi & Xiaoli Wang, 2021. "Natural disasters' influence on industrial growth, foreign direct investment, and export performance in the South Asian region of Belt and road initiative," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 108(2), pages 1853-1876, September.
    9. Tam Vu & Ilan Noy, 2015. "Regional effects of natural disasters in China: investing in post-disaster recovery," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 75(2), pages 111-126, February.
    10. Tam B. Vu & Ilan Noy, 2018. "Natural Disasters and Firms in Vietnam," Pacific Economic Review, Wiley Blackwell, vol. 23(3), pages 426-452, August.
    11. Tam B. Vu & Ilan Noy, 2018. "Natural Disasters and Firms in Vietnam," Pacific Economic Review, Wiley Blackwell, vol. 23(3), pages 426-452, August.
    12. Klomp, Jeroen, 2020. "Do natural disasters affect monetary policy? A quasi-experiment of earthquakes," Journal of Macroeconomics, Elsevier, vol. 64(C).
    13. Lazzaroni, Sara & van Bergeijk, Peter A.G., 2014. "Natural disasters' impact, factors of resilience and development: A meta-analysis of the macroeconomic literature," Ecological Economics, Elsevier, vol. 107(C), pages 333-346.
    14. Henny Rydberg & Gaetano Marrone & Susanne Strömdahl & Johan von Schreeb, 2015. "A Promising Tool to Assess Long Term Public Health Effects of Natural Disasters: Combining Routine Health Survey Data and Geographic Information Systems to Assess Stunting after the 2001 Earthquake in," PLOS ONE, Public Library of Science, vol. 10(6), pages 1-11, June.
    15. Matthew A. Cole & Robert J R Elliott & Toshihiro Okubo & Eric Strobl, 2014. "Natural Disasters and the Birth, Life and Death of Plants: The Case of the Kobe Earthquake," Working Papers 2014-114, Department of Research, Ipag Business School.
    16. BAIG Nida & KHAN Shahbaz & GILAL Naeem Gul & QAYYUM Abdul, 2018. "Do Natural Disasters Cause Economic Growth? An Ardl Bound Testing Approach," Studies in Business and Economics, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 13(1), pages 5-20, December.
    17. Jeroen Klomp & John Sseruyange, 2021. "Earthquakes and Economic Outcomes: Does Central Bank Independence Matter?," Open Economies Review, Springer, vol. 32(2), pages 335-359, April.

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    More about this item

    Keywords

    Economic growth; naturaldisasters; spatial distribution;
    All these keywords.

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O49 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Other
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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