Disaster Impact, National Aid, and Economic Growth: Evidence from the 2008 Wenchuan Earthquake

Renjie Zhao, Shihu Zhong and Aiping He
Additional contact information
Renjie Zhao: School of Public Economics and Administration, Shanghai University of Finance and Economics, Shanghai 200433, China
Shihu Zhong: School of Public Economics and Administration, Shanghai University of Finance and Economics, Shanghai 200433, China
Aiping He: School of Economics and Management, Northwest University, Shaanxi 710000, China

Sustainability, 2018, vol. 10, issue 12, 1-22

Abstract: How disasters have affected economic growth has often been a subject for economic debate, and empirical studies of the experience in China are clearly inadequate. Using the panel data from 181 county-level cities in Sichuan province from 2003 to 2013, this paper investigates the direct and dynamic effects of the Wenchuan earthquake disaster on economic growth, as well as how national rescue affected postdisaster economic recovery. The econometric results show that earthquakes significantly reduce real GDP in the affected areas after controlling for the national rescue variables, and this negative effect exists in the affected area over a long time. In addition, our empirical findings suggest that the postdisaster national rescue can promote economic recovery in the affected areas by increasing government expenditure, improving traffic conditions, and enhancing the urbanization process and the level of industrialization. Besides, state financial aid has no obvious effect on the development of tertiary industries and the accumulation of human capital in affected areas. These results were found to be robust after applying several approaches to alleviate the potential endogeneity problem. Findings in this study carry several important policy implications. As well as providing national rescue to promote postdisaster reconstruction, the government should also develop policies that will provide direct aid funding to tertiary industries and boost postdisaster economic reconstruction and human capital accumulation, thus improving the efficiency of relief funding and reducing the long-term adverse effects of the disaster on economic growth.

Keywords: disaster influence; national aid; economic growth; Wenchuan earthquake (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
https://www.mdpi.com/2071-1050/10/12/4409/pdf (application/pdf)
https://www.mdpi.com/2071-1050/10/12/4409/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:10:y:2018:i:12:p:4409-:d:185482

Access Statistics for this article

Sustainability is currently edited by Ms. Alexandra Wu

More articles in Sustainability from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().