Shaken, Not Stirred: The Impact of Disasters on International Trade

18 Pages Posted: 12 Apr 2010

See all articles by Martin Gassebner

Martin Gassebner

ETH Zurich - KOF Swiss Economic Institute; CESifo (Center for Economic Studies and Ifo Institute)

Alexander Keck

World Trade Organization (WTO)

Robert Teh

World Trade Organization (WTO)

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Abstract

This paper examines the impact of major disasters on import and export flows using a gravity model (170 countries, 1962–2004). As a conservative estimate, an additional disaster reduces imports on average by 0.2% and exports by 0.1%. Despite the apparent persistence of bilateral trade volumes, we find that the driving forces determining the impact of disastrous events are the level of democracy and the geographical size of the affected country. The less democratic and the smaller a country the greater is its loss due to a catastrophe. In autocracies, exports and imports are significantly reduced. Had Togo been struck by a major disaster in 2000, it would have lost 6.2% of its imports and 3.7% of its exports. While democratic countries' exports suffer identical decreases, imports increase.

Suggested Citation

Gassebner, Martin and Keck, Alexander and Teh, Robert, Shaken, Not Stirred: The Impact of Disasters on International Trade. Review of International Economics, Vol. 18, No. 2, pp. 351-368, May 2010. Available at SSRN: https://ssrn.com/abstract=1587139 or http://dx.doi.org/10.1111/j.1467-9396.2010.00868.x

Martin Gassebner (Contact Author)

ETH Zurich - KOF Swiss Economic Institute ( email )

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Zurich, 8092
Switzerland

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CESifo (Center for Economic Studies and Ifo Institute) ( email )

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Alexander Keck

World Trade Organization (WTO) ( email )

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CH-1211 Geneva 21
Switzerland

Robert Teh

World Trade Organization (WTO) ( email )

154 Rue de Lausanne
CH-1211 Geneva 21
Switzerland

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