Abstract
Despite the economic statistics from recent years indicating outstanding economic recovery in disaster-affected areas after the Wenchuan Ms 8.0 Earthquake, the causes of these macro-economic changes remain ambiguous. The Chinese Government set up the counterpart assistance policy to aid post-disaster reconstruction after the Wenchuan Ms 8.0 Earthquake in 2008; however, whether the changes seen in the economic statistics can be attributed to this policy remains unclear. This article uses the difference-in-differences model to evaluate the effects of counterpart assistance on economic development in disaster areas. Thirty-nine severely affected counties were chosen as research objects and divided into a treatment group (18 recipient counties) and a control group (non-recipient counties). Empirical results indicate the counterpart assistance policy helped to significantly improve the real GDP and GDP growth rate per capita in the treatment group. Counterpart assistance influenced the real GDP principally by increasing investment in fixed assets, employment, urbanization level, and fiscal expenditure. The findings of this study deepen our understanding of counterpart assistance within the Chinese context.
Highlights
For the past three decades, the frequency of natural disasters on Earth has increased (Peng et al, 2018)
The Harris Tzavalis (HT) test and Fisher Augmented Dickey Fuller (Fisher-ADF) test applicable to short-panel data were selected for the unit root test to be carried out on the data
The results demonstrated that the p values for the logarithm of real GDP, GDP growth rate per capita, the logarithm for real investment in fixed assets, proportion of the employed population, and the logarithm for real fiscal expenditure were smaller than 0.01, which decidedly rejects the original hypothesis for the unit root
Summary
For the past three decades, the frequency of natural disasters on Earth has increased (Peng et al, 2018). 10,000 natural disasters have occurred worldwide since 1970, affecting 7 billion people and causing an estimated economic loss of 2 trillion dollars. In view of economic growth theory, there is debate as to whether natural disasters severely affect growth and development (Richard, 1996). No consensus has been reached on the positive and negative impacts of natural disasters on economic growth. The disaster has a negative impact on economic growth (Noy, 2009; Raddatz, 2007; Rasmussen, 2004), while in the longer term, these impacts on growth may be different, according to related studies (Caselli & Malhotra, 2004; Hochrainer, 2009; Tavares, 2004)
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