From Catastrophe to Recovery: The Impact of Natural Disasters on Economic Growth in Developed and Developing Countries

Abstract

The study investigates the impact of severe natural disasters on agriculture growth and GDP growth in both developed and developing countries using panel data from 1970 to 2019 with data from the EM-DAT database and the IMF World Economic Outlook database. The results of this study indicate that natural disasters have a detrimental impact on GDP growth and agricultural growth in both developed and developing countries. However, the impact is found to be greater in developing countries, despite having lower total damage costs as a percentage of GDP. The findings suggest that developing countries are more vulnerable to the economic impact of severe natural disasters compared to developed countries and can benefit from disaster risk financing tools. The current research highlights the urgency for governments to prioritize disaster preparedness and risk reduction measures, particularly in developing countries. Findings suggest that a higher proportion of educated individuals in a country can mitigate the impact of natural disasters. Additionally, the impact of population density on the cost of post-disaster reconstruction must also be considered by policymakers when allocating resources for disaster preparedness and recovery.