Shaken,Not Stirred: The Impact of Disasters on International Trade |
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| Authors: | Martin Gassebner Alexander Keck Robert Teh |
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| Institution: | 1. ETH Zurich, KOF Swiss Economic Institute, Switzerland;2. World Trade Organization, Switzerland;3. The opinions expressed in this paper are strictly those of the authors. They are not meant to represent the positions or opinions of the WTO and its Members and are without prejudice to Members' rights and obligations under the WTO. The authors wish to thank James Anderson, Michael Lamla, Patrick Low, Jan‐Egbert Sturm, Jose Tavares, James Vreeland, and the participants of the European Public Choice Society Meeting, Turku, Finland, the Meeting of the German Economic Association, Bayreuth, Germany, and the International Political Economy Society Meeting at Princeton University, USA, for helpful comments. All remaining errors are the fault of the authors. |
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| 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. |
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