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THE IMPACT OF DISASTERS ON INTERNATIONAL TRADE

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THE IMPACT OF DISASTERS ON INTERNATIONAL TRADE

 

 

Abstract

In this paper we examine the impact of major disasters on international trade flows using a gravity model.  Our panel data consists of more than 170 countries for the years 1962-2004 yielding approximately 300,000 observations.  We find that the driving forces determining the impact of such events are the democracy level and, to a lesser extent, the area of the affected country.  The less democratic and the smaller a country the more are its trade flows reduced in case it is struck by a disaster.  We are also able to distinguish between the effect of a disaster on an importing and an exporting country.

Keywords:  International trade, disasters, gravity model, governance