The impacts of disaster on international trade

The impacts of disaster on international trade

Published Jan 2006

Authors

M. Gassebner, A. Keck, R. Teh

Publisher

Focus themes

Open full report
How democracy levels affect trade flows if a country is struck by a disaster

This paper examines the impact of major disasters on international trade flows using a gravity model. The analysis is based on data of more than 170 countries for the years 1962-2004 yielding approximately 300,000 observations.

The paper finds that the driving forces determining the impact of such events are the democracy level and, to a lesser extent, the area of the affected country:

  • the less democratic and the smaller a country the more are its trade flows reduced in case it is struck by a disaster
  • this result is stable across different countries and the most conservative estimate implies that, for a given democracy level, an additional major disaster reduces imports on average by 0.3% and exports by 0.1%
  • there are also differences in impact on an importing and an exporting country, with production capacity in small exporting countries being particularly vulnerable to external shocks.

  1. How good is this research?

    Assessing the quality of research can be a tricky business. This blog from our editor offers some tools and tips.

    Read now

Related content

  • Document

    How Biden Can End Vaccine Apartheid

    , / Center for Global Development, USA, 2021
    Building on spectacular scientific achievements, the rich world’s vaccine response to the pandemic within its borders has been (with notable exceptions) commendable. But the response of the international community has been mystifyingly myopic and unconscionably delinquent. We’re headed toward global vaccine apartheid.
  • Document

    Impact of COVID-19 on RMG Sector: The False Narrative

    Fairooz Subaita / BRAC Institute of Governance and Development, 2021
    The ready-made garments (RMG) sector is by far the most important contributor to the economy of the country, amounting to 15 per cent of the gross domestic product (GDP) and employing nearly four million people. There is no denying that the main driving force behind the RMG sector is the vast quantity of workers that it employs.
  • Document

    The New Era of Unconditional Convergence

    D. Patel, J. Sandefur, A. Subramanian / Center for Global Development, USA, 2021
    The central fact that has motivated the empirics of economic growth—namely unconditional divergence—is no longer true and has not been so for decades. Across a range of data sources, poorer countries have in fact been catching up with richer ones, albeit slowly, since the mid-1990s.
  • Document

    Tracking the Scale and Speed of the World Bank’s Covid Response: April 2021 Update

    , , / Center for Global Development, USA, 2021
    In 2020 the World Bank announced its intention to provide $104 billion in financing to developing country governments to help them respond to the COVID-19 crisis. We took stock of those efforts seven months ago in a Center for Global Development working paper and accompanying blog post.
  • Document

    Challenges and Prospects of Youth Employment in the Post-COVID Scenario

    , , / BRAC Institute of Governance and Development, 2021
    Public health measures taken to contain the spread of COVID-19 have caused massive shocks to the global economy and all aspects of human lives. The pandemic is disproportionately affecting the youths, particularly in countries like Bangladesh where youths already struggle in the labour market because of limited experience and skills and with poor quality of education (World Bank, 2019).
More like this