Estimating the Impact of Natural Disasters on Caribbean Exports

Eleni Sandi
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Eleni Sandi: University of Warwick

Warwick-Monash Economics Student Papers from Warwick Monash Economics Student Papers

Abstract: This paper aims to estimate the impact of natural disasters on exports in the Caribbean countries using a panel fixed effects regression. The paper’s main contribution lies in identifying the manufacturing industries that are disproportionately affected by natural disasters in the given region. It finds that an additional natural disaster in the Caribbean leads to a significant short-run decrease in total exports, whilst mineral, chemical, paper, textile and metal industries suffer the most. Using alternative disaster measures reveals that deaths have the largest impact on exports, emphasising the Caribbean’s high vulnerability to natural shocks. Interestingly, a dynamic model reveals a long-term negative effect on exports that strengthens over time. The main results remain robust to a variety of alternative model specifications. Total disaster effects seem to be driven by disasters in Haiti, although further research on country heterogeneity is recommended. Taken together, these findings are especially alarming in the context of climate change and global warming, as natural disasters are expected to increase in intensity and frequency. Drawing on these results, the policy implication is decreasing the Caribbean’s vulnerability by tackling the moral hazard problem of unconditional donor aid.

Keywords: Natural Disaster; Climate Change; Exports; Industry-level JEL Classification: Q54; F14; O10 (search for similar items in EconPapers)
Date: 2021
New Economics Papers: this item is included in nep-env and nep-int
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Persistent link: https://EconPapers.repec.org/RePEc:wrk:wrkesp:03

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