An empirical analysis of economic growth in countries exposed to coastal risks: Implications for their ecosystems

Abstract

Using a novel database on countries exposed to coastal risks (CR), this paper estimates an augmented neoclassical growth model that encompasses eight other new growth models. To account for uncertainty related to the number of models and choice of growth determinant proxies, we use a Bayesian averaging of classical estimates (BACE) approach. A preliminary examination of the data reveals that a country that faces coastal risks is likely to be a former British colony characterized by a common law legal framework, a parliamentary political system, a high degree of international trade openness, little language and ethnic fractionalization, a low level of public sector corruption, and a high rate of fertility. The BACE-based model selection procedure shows that, in CR countries, the growth determinant proxies typically used in the neoclassical, macroeconomic policy, natural resources, and institutions theories are significantly correlated with growth. These results suggest two implications related to these countries’ coastal ecosystems. First, because they are heavily dependent on natural resources and have high fertility rates, these countries might seek short-term economic gains at the expense of deterioration in their ecosystems. Second, these countries’ good institutions and low levels of ethnic division might be conducive to sustainable management of these ecosystems.