Natural Disasters as Creative Destruction? Evidence from Developing Countries

13 Pages Posted: 18 Apr 2008

See all articles by Jesús Crespo Cuaresma

Jesús Crespo Cuaresma

University of Innsbruck - Department of Economic Theory, Economic Policy and Economic History

Jaroslava Hlouskova

Institute for Advanced Studies (IHS) - Department of Economics & Finance

Michael Obersteiner

International Institute for Applied Systems Analysis (IIASA); Institute for Advanced Studies (IHS)

Abstract

Recent studies found a robust positive correlation between the frequency of natural disasters and the long-run economic growth after conditioning for other determinants. This result is interpreted as evidence that disasters provide opportunities to update the capital stock and adopt new technologies, thus acting as some type of Schumpeterian creative destruction. The results of cross-country and panel data regressions indicate that the degree of catastrophic risk tends to have a negative effect on the volume of knowledge spillovers between industrialized and developing countries. Only countries with relatively high levels of development benefit from capital upgrading through trade after a natural catastrophe.

JEL Classification: O13, O30, F18

Suggested Citation

Crespo Cuaresma, Jesús and Hlouskova, Jaroslava and Obersteiner, Michael, Natural Disasters as Creative Destruction? Evidence from Developing Countries. Economic Inquiry, Vol. 46, No. 2, pp. 214-226, April 2008. Available at SSRN: https://ssrn.com/abstract=1120566 or http://dx.doi.org/10.1111/j.1465-7295.2007.00063.x

Jesús Crespo Cuaresma (Contact Author)

University of Innsbruck - Department of Economic Theory, Economic Policy and Economic History ( email )

Universitaetsstrasse 15
Innsbruck, A - 6020
Austria

Jaroslava Hlouskova

Institute for Advanced Studies (IHS) - Department of Economics & Finance ( email )

Josefstädter Straße 39
1080 Vienna
Austria
+43 15 999 1142 (Phone)
+43 15 999 1555 (Fax)

Michael Obersteiner

International Institute for Applied Systems Analysis (IIASA) ( email )

Schlossplatz 1
Laxenburg, A-2361
Austria

Institute for Advanced Studies (IHS) ( email )

Josefstädter Straße 39
1080 Vienna
Austria

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