The Effects Of Natural Disasters On Long-Run Economic Growth

Major catastrophes such as the Southeast Asian tsunami, hurricane Katrina, and the Haiti earthquake have recently spurred research regarding the relationship between natural disasters and long-run economic growth. This study examines the conjecture that disaster risks can promote economic growth through the process of Schumpeterian creative destruction, utilizing the method developed in Skidmore and Toya (2002), for the 1990-2004 period. The channels whereby disaster risks affect economic growth are also identified using the Solow model framework developed in Dacy and Kunreuther (1969) and Okuyama (2003). My study finds continuing evidence to support that climatic disasters contribute to human capital accumulation while geologic disasters lead to human capital destruction.