Capital Investment, Technology Switching and Production after a Natural Disaster

Taiyo Fukai, Masato Oikawa and Takahiro Toriyabe

Discussion papers from Research Institute of Economy, Trade and Industry (RIETI)

Abstract: This study analyzes the effects of natural disasters on capital investment and production. We examined the impact of the 2011 Great East Japan Earthquake, the fourth largest earthquake ever recorded worldwide, on the fishing industry. Rich administrative data from the fishing industry allowed us to identify the impact on output, labor input, capital reinvestment and technology switching caused by the severe damage to fishing facilities and equipment from the tsunami waves. The results show that immediately after the earthquake, the number of fishing boats and sales decreased by 60%. Five years later, the number of boats was still lower by 20% and sales were down by 11%. The negative effects persisted even after 10 years. We also found that high-productivity fishers tended to adopt new fishing technologies due to the reduction in switching costs caused by government financial aid, but we did not find a similar effect for low-productivity fishers.

Pages: 51 pages
Date: 2025-03
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Persistent link: https://EconPapers.repec.org/RePEc:eti:dpaper:25027

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