Medium‐Term growth effects of Disasters‐Empirical analysis based on provincial panel data in China

Abstract

Based on a panel of 31 provinces and cities from 1990 to 2019, we first conduct an empirical analysis using the maximum likelihood (ML) procedure to examine the effects of various disasters (i.e. droughts, floods, earthquakes, storms, typhoons and low and freezing temperatures) on the medium‐term economic growth of China and its three economic regions (i.e. the eastern, central and western regions). We identify the transmission channels through which these disasters affect economic growth by investigating the medium‐term relationships among disasters, capital accumulation, human capital accumulation and total factor productivity. The interprovincial empirical analysis demonstrates that the effects differ across the economic regions. Thus, disasters affect economic growth through different channels but mainly through capital stock. Further research indicates that the growth effect of disasters largely benefits from Chinese government expenditures on disaster relief.