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The Effect of Natural Disasters on Economic Growth: Does Frequency of Disasters Matter?

Solfelt Frödén, Elin LU (2023) NEKH02 20222
Department of Economics
Abstract
This paper aims to investigate the effect of natural disasters, with regard to frequency of events, on GDP per capita growth. A panel data regression covering 121 countries between 1960 and 2015 in non-overlapping five-year periods is used. The regression contemplates the size of the agricultural sector in each country and the severity of the disasters. The results show a positive effect on economic growth when two disasters, one moderate and one severe, follow each other within ten years. If a country with a large agricultural sector only experiences one moderate disaster in ten years, the immediate effect is positive, but the effect is negative in the following five years. However, countries that do not have large agricultural sectors do... (More)
This paper aims to investigate the effect of natural disasters, with regard to frequency of events, on GDP per capita growth. A panel data regression covering 121 countries between 1960 and 2015 in non-overlapping five-year periods is used. The regression contemplates the size of the agricultural sector in each country and the severity of the disasters. The results show a positive effect on economic growth when two disasters, one moderate and one severe, follow each other within ten years. If a country with a large agricultural sector only experiences one moderate disaster in ten years, the immediate effect is positive, but the effect is negative in the following five years. However, countries that do not have large agricultural sectors do not experience immediate positive effects but negative effects in the following five years. Severe disasters do not show any significance on their own but have positive effects when combined with a moderate disaster. It is concluded that more frequent disasters may lessen the adverse effects on economic growth. Further research is needed to conclude what the different effects stem from, but considering the frequency of events is concluded to be a good path forward. (Less)
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author
Solfelt Frödén, Elin LU
supervisor
organization
course
NEKH02 20222
year
type
M2 - Bachelor Degree
subject
keywords
Economic growth, natural disasters, climate change
language
English
id
9106792
date added to LUP
2023-06-07 10:44:36
date last changed
2023-06-07 10:44:36
@misc{9106792,
  abstract     = {{This paper aims to investigate the effect of natural disasters, with regard to frequency of events, on GDP per capita growth. A panel data regression covering 121 countries between 1960 and 2015 in non-overlapping five-year periods is used. The regression contemplates the size of the agricultural sector in each country and the severity of the disasters. The results show a positive effect on economic growth when two disasters, one moderate and one severe, follow each other within ten years. If a country with a large agricultural sector only experiences one moderate disaster in ten years, the immediate effect is positive, but the effect is negative in the following five years. However, countries that do not have large agricultural sectors do not experience immediate positive effects but negative effects in the following five years. Severe disasters do not show any significance on their own but have positive effects when combined with a moderate disaster. It is concluded that more frequent disasters may lessen the adverse effects on economic growth. Further research is needed to conclude what the different effects stem from, but considering the frequency of events is concluded to be a good path forward.}},
  author       = {{Solfelt Frödén, Elin}},
  language     = {{eng}},
  note         = {{Student Paper}},
  title        = {{The Effect of Natural Disasters on Economic Growth: Does Frequency of Disasters Matter?}},
  year         = {{2023}},
}