Abstract
This study analyzes the effects of climate-related disasters on international trade in Southeast Asia. We use monthly trade data to examine the relationship between disaster shocks and bilateral export flows. The empirical analysis shows that natural disasters have a significant negative effect on exports. The estimation results suggest that floods cause an immediate decrease in exports by 3–5% of monthly mean export values. In addition, the effect persists in the post-disaster period, with floods causing annual export losses of 2% of average export values. We further investigate the impact of disasters by product group, and show that disasters are negatively associated with the exports of agricultural and manufacturing products. The findings suggest that extreme weather events have severe repercussions on Southeast Asia, where exports play an important role in economic development.
Highlights
Natural disasters can cause severe destruction and devastation, leading to significant economic and human damage
This paper examines the effects of natural disaster shocks on exports in Southeast Asia
We investigate the extent to which floods and storms affect bilateral export flows
Summary
Natural disasters can cause severe destruction and devastation, leading to significant economic and human damage. According to the Emergency Events Database (EMDAT), a total of 6,457 weather-related disasters have occurred worldwide between 1995 and 2015 (CRED and UNISDR 2015). These disasters have caused economic damage of USD 1,891 billion and, on average, affected 205 million people every year. Among such disasters, floods are the most frequent type, accounting for 43% of natural disasters. Over the past two decades, 2.3 million people have been affected by floods, causing economic losses of USD 662 billion. The Intergovernmental Panel on Climate Change (IPCC) reports growing economic losses as a result of floods since the 1970s
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