The Relationship between Natural Disaster and Economic Development: A Panel Data Analysis

Abstract

This study aims to investigate the relationship between natural disaster and economic development across country level. It has always been argued whether developed countries are more disaster resilience compared to developing countries. The factors influenced the vulnerability include income, education, land area, population. This study is based on cross-country data from 168 countries during 1990-2016. The random effect specification is found to be the most appropriate for capturing these interrelationships between natural disaster loss, economic development, socio-economic and geographic factors since the random effect model considers both country and time characteristics. The results show that higher income can lower disaster loss, in term of the number of affected people and total affected people. However, higher income leads to higher the amount of damage from natural disaster. In addition, the study shows the strong negative relationship between education level and disaster loss and the positive relationship between the number of urban population and disaster loss.