Natural disaster mitigation in developing countries : the role of trade openness
Master thesis
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http://hdl.handle.net/11250/2560018Utgivelsesdato
2018Metadata
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- Master Thesis [4381]
Sammendrag
Employing fixed effects estimations in a panel of 137 countries over 37 years, this study
empirically investigates the relationship between trade openness and natural disaster fatality
rates in developing countries. The findings suggest that trade openness reduces fatality rates
from natural disasters in general in the developing world, and in particular losses resulting
from earthquakes, storms and extreme temperature disasters. Specifically, our estimates
suggest that for developing countries, increasing the trade ratio by 10% is significantly
associated with a 2-3% reduction in subsequent natural disaster fatality rates. Building upon
the initial findings, the analysis further suggests that the mitigating effect of trade openness
on natural disaster losses arises from knowledge- and technology transfers, international
collaboration, and improvements of infrastructure and investment climate. The established
reduction in fatalities from trade openness is robust to various specifications; however, the
extent to which trade openness mitigates losses depends on disaster type and countryspecific
features such as development level, degree of democracy and the efficiency of the
public sector. The central policy implication of our findings is that trade policy may be a
potential tool for developing countries to mitigate natural disaster risk without compromising
economic development.