Natural Disasters and Economic Resilience in Caribbean

Iverson-Love Joseph and Rimvie Enoc Kabore
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Iverson-Love Joseph: Université Gustave Eiffel, ERUDITE - Equipe de Recherche sur l’Utilisation des Données Individuelles en lien avec la Théorie Economique - UPEC UP12 - Université Paris-Est Créteil Val-de-Marne - Paris 12 - Université Gustave Eiffel
Rimvie Enoc Kabore: UNICAEN - Université de Caen Normandie - NU - Normandie Université, CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR - Université de Rennes - CNRS - Centre National de la Recherche Scientifique, Université Daniel Ouezzin Coulibaly

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Abstract: Natural disasters are major threats to economic and human development, often leading to substantial disruptions in growth and welfare, particularly in developing countries. Focusing on twelve small island economies in the Caribbean, this paper examines the effects of natural disasters between 1992 and 2019 on key indicators of economic performance and development. Using a disaggregated empirical approach and satellite-based night-time light data, we estimate fixed-effects OLS models including a full set of country, region, and year effects, as well as country- and region-specific linear trends. The results indicate that natural disasters cause a significant contraction in local economic activity and in the rate of economic development. Complementary estimates from a Panel Vector Autoregression model show that these negative effects persist for up to four years after disaster events. Moreover, countries with higher income per capita, stronger institutions, greater political stability, and a higher degree of trade openness are found to be more resilient to disaster shocks. The study concludes by identifying structural factors that can strengthen macroeconomic resilience and by providing policy-relevant insights for mitigating the economic consequences of natural disasters.

Keywords: panel VAR; Caribbean islands; fixed-effects models; per capita income; economic activity; natural disasters; Night-time lights (search for similar items in EconPapers)
Date: 2026
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Published in The Journal of Development Studies, 2026, pp.1-26. ⟨10.1080/00220388.2026.2632833⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05554399

DOI: 10.1080/00220388.2026.2632833

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