What causes nations to recover from disasters? An inquiry into the role of wealth, income inequality, and social welfare provisioning

Abstract

Disasters affect significant numbers of people in the poorest parts of the world. The main impediment to progress in reducing the extent of disaster outcomes appears to come from inabilities to address macro-economic drivers of vulnerability. This study examines the association between three key drivers of vulnerability, i.e. wealth/poverty, income inequality and the absence/presence of social welfare systems, and short-term and long-term disaster outcomes. Drawing on lengthy time-series data, we apply a data driven approach, focusing only on those countries that have experienced major natural or technological disasters, to generate new understanding of these drivers. Our study finds that in relation to natural hazards: less developed countries experience worse human impacts than more developed countries; developed countries suffer larger economic losses; countries with greater levels of income inequality have more people affected than in more equal countries; and social welfare (using both Sen's indexes and public social spending) in OECD countries appears to reduce the human impacts of disasters. We also conclude that the human impacts of natural disasters delay economic growth in poor countries. For the technological hazard-associated disasters, while there is no evidence that national wealth and income inequality determine human impacts, we find that larger human impacts in poor countries undermines economic growth. Our key finding is the unequivocal and central role of income inequality in shaping disaster outcomes. Future research and policy on disaster risk reduction has to acknowledge this ‘elephant in the room’.