Topic the impact of natural disasters on frequently affected countries over the period from 2012 to 2019

2.1 Short-term impacts of natural disasters on the economic 10 2.2 Long-term impacts of natural disasters on the economic 11 4.1 How the number of affected people in natural disasters in

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2.1 Short-term impacts of natural disasters on the economic 10 2.2 Long-term impacts of natural disasters on the economic 11

4.1 How the number of affected people in natural disasters influence the labor markets,

4.2 Case studies of countries with high frequency of floods and storms: 14 4.3 Vulnerability and socio-economic inequalities in disaster impact: 16

7.1 Cumulative Effects of Frequent Natural Disasters on Economic Performance

I Testing the statistical significance of the regression coefficients of the independent variables: 32

Natural disasters have long been significant challenges to the economicdevelopment of a country, disrupting economic stability, hindering developmentprogress, and posing persistent challenges to short-term recovery This paperexamines the impact of highly frequent natural disasters such as floods and storms

on Gross Domestic Product per capita growth of 9 countries, analyzing the term economic repercussions We use data varying from 2012 to 2019, collectedfrom mainstream websites including EM-DAT and World Bank Open Data Alongwith statistical data, we also adapt economic theories used in previous researches,Ordinary Least Square (OSL) method, STATA software, and hypothesis testing toevaluate how damages caused by natural disasters affect the GDP per capitagrowth of Vietnam The findings indicate that while the total damage from floodsand storms significantly decreases the GDP per capita growth rate, the death tollfrom these events has no substantial effect on annual growth, and the number ofpeople affected by natural hazards has a slight but positive impact on the economy.Overall, this study not only sheds light on the dynamics between high frequency ofnatural disasters and economic behavior, but also contributes to a deeperunderstanding regarding the importance of building resilient economies andimplementing proactive disaster risk management strategies to safeguard GDP percapita growth and ensure sustainable development in disaster-prone regions

short-Keywords: Natural disasters, impacts, GDP per capita growth

INTRODUCTION Object and Scope of the study:

● Object of the research:

○ The impacts of the death toll, number of affected people, and totaldamage on Gross Domestic Product per capita growth of countrieswith a high frequency of storm and flood

● Scope of the research:

○ Location: Vietnam, Philippines, Thailand, Indonesia, Bangladesh,

Japan, Mexico, India and China

○ Duration: 2012-2019

Research Methodology:

Our research study adopts a quantitative approach for its ability to offer acomprehensive understanding as it allows for the collection of numerical data thatcan be analyzed using statistically based methods The dataset in this research iswell-founded and highly accurate, collected from reputable data sources includingEM-DAT and World Bank Open Data In order to achieve the examination andaccurate measure of the effects of natural disasters on the economy, our team usedthe Ordinary Least Squares method (OLS) and Microsoft Excel to sort data Wealso used STATA software to run the regression model and test the hypothesis

Structure and Content of the report:

Applying the knowledge of Econometrics and the understanding of the researchteam to real-world situations, the content of this research paper is divided into 3sections:

● Section 1: Overview of the topic

This section presents the related definitions, concepts and theoreticalframework as a basis for the research, while also providing a literature

review of previous related studies that have been conducted and proposingresearch hypotheses.

● Section 2: Model specification and data

This section will present the research methodology used, build thetheoretical model, and describe the data in the research

● Section 3: Estimated model and statistical inferences

The estimation results and statistical inference aim to provide an estimatedmodel, test and correct the model's defects, and check whether the model fitsthe previously proposed hypothesis Hence, the discussion will connect toreal-world situations and the characteristics of the data sample to explain thecalculated results and propose recommendations and solutions

RATIONALE

Throughout history, it could be claimed that natural disasters have a huge impact

on people Natural disasters could be perceived in different perspectives: from a physical perspective they are attached with the damage of human lives and properties, from a psychological perspective they are uncontrollable and

threatening events, and from an economic perspective they are associated with negative impact on assets, production factors, output, employment etc In general,

no matter what viewpoints, the impact of natural disasters are considered negative

During the past decades, the situation of weather- and climate-driven natural disasters including flooding, storms, earthquakes, droughts, etc has become more and more hazardous due to the impact of climate change as they lead to the death

of 40,000 to 50,000 people per year (Our world in data) According to The World Bank’s data, disasters caused by natural hazards cost an annual $520 billion in consumption loss, this amount includes the decrease of the production in the main economic sectors, construction damage, recovery cost, labor loss, etc

Due to the nature of each geographical environment, natural disasters are more likely to occur with high intensity and frequency in some regions, causing welfare loss and large-scale damage to the economic outputs Disaster statistics show that Asia accounts for around 62% of the total number of people killed by natural disasters over the past quarter century Since being situated along the Ring of Fire, Japan is vulnerable to natural disasters like earthquakes, tsunamis, and volcanic eruptions, which escalates the cost of damage caused by natural disasters to 414 billion Japanese yen in 2021 In India, the economic loss is $56 billion between

2019 and 2023 In Vietnam, this figure is estimated to be about 102.000 billion VNĐ since 2018 (National Centre for Hydro - Meteorological Forecasting of Vietnam) For the case of Mexico, since 1980, the country has suffered from 79 major natural disaster events and lost $160 million of economic production as a result of the September 2017 earthquake

Based on the initial facts, a grand question "How do natural disasters affect the economic growth in some countries with a high frequency of disaster” arises By working on this question, our team could provide an in-depth understanding of to what extent natural disasters affect the economy and by this way, proper

preparations could be made for future natural disasters events Besides, the found data could also be used to assist the government in the process of creating policies both pre and post natural disasters, especially distributing reasonable funds for each sector in order to lower economic damage In addition, our research will be a solid foundation for future research related to this topic

There have been multiple researches done on this subject in the world However, these researches mainly focus on the impact of natural disasters in one country or

in one economic sector but the whole economy, so that it is hard to take an overall look of the effect Moreover, not much research concerned the frequency or intensity of the natural disasters when considering their impacts

The research topic “The relationship of natural disasters and the economics of some countries with a high frequency of disaster” in the period 2012 - 2019 will not only provide valuable knowledge about the impact of natural disasters but also

a solid dataset to facilitate the policy-making process with a view to minimizing

their negative influences This research will also be an important resource for further investigations on the topic.

RESEARCH OBJECTIVE

The main objective of our research is to investigate the impact of natural disasters

on the economy of countries which suffer a high frequency of natural disasters, including Vietnam, Philippines, Thailand, Indonesia, Bangladesh, Japan, Mexico, India and China from 2012 to 2019

To be more specific, the research calculates the impact of each factor which are thetotal death toll, the number of people affected, the total damage caused by natural disaster to see the level of impact and determine whether the impact is negative or positive By this way, a thorough understanding of the relationship between these factors and the economic output could be formed The findings of our research could be used as a strong database to help the policy makers implement more effective measures to deal with natural hazards and they could also be valuable resources for future related research topics

SECTION I: OVERVIEW OF THE TOPIC

A Literature Review

1 Natural Disasters: Definition and Classification

Natural disasters are extreme, sudden events caused by environmental factors that significantly damage life, property, and infrastructure They are typically classifiedbased on their origin, impact, and the affected area According to Teh and Khan,

2021, there are numerous definitions of a disaster, but none are universally accepted However, disasters can be classified into three types: man-made, hybrid, and natural - it is believed that these three disaster types cover all disastrous events

Natural disasters can be land based (e.g., earthquakes), water based (e.g., river foods), atmospheric (e.g., tornadoes), biological (e.g., pandemics), extraterrestrial based (e.g., comet strikes), or any combination of these (e.g., undersea earthquake and tsunami), stated by Caldera, 2022 Moreover, Pisarenko, 2010, proposed to classify the events into natural, man-made, and mixed, into fast and slow, by loss

or energy, by the state of the operating agent (air, water, or rocks), and by the character of action (mechanical, thermal, chemical, or others) The evolution of classification systems reflects an ongoing effort to better understand and manage natural disasters

By categorizing these events based on their causes, effects, and characteristics, researchers and policymakers can develop more effective strategies for disaster risk reduction and resilience building This comprehensive understanding is crucialfor minimizing the impact of disasters on communities and ensuring that

appropriate resources and interventions are in place

2 Short term and Long-term Economic Impact

2.1 Short-term impacts of natural disasters on the economic

Natural disasters often cause immediate and severe disruption of economic activity According to Noy (2009), in the short term, disasters can significantly reduce GDP due to destruction of infrastructure, loss of human lives and disruption

of industries such as agriculture and manufacturing (Hallegatte & Dumas, 2009)

In addition to physical devastation, natural disasters disrupt supply chains, affecting local and global markets Cavallo and Noy (2011) highlighted that short-term effects include business closures, job losses and increased government expenditure on emergency relief These effects can lead to short recessionary periods, especially in communities that rely on hazardous industries such as tourism and fishing

However, there are also some other studies that have different insight about the short-term impact, for instance, Cavallo et al (2013) stated that only extremely large disasters have a negative effect on output, both in the short and long run Furthermore, some studies did not refer about the impact of natural disasters on

economic in term of time period, such as Cavallo et al (2021) highlighted that the negative impacts of natural disasters on economic growth are larger for poorer countries, suggesting that the impact of natural disasters on growth is an economic development issue.

2.2 Long-term impacts of natural disasters on the economic

The long-term economic consequences of natural disasters are complex and depend on a variety of factors including government capacity to recover and rebuild Raddatz (2007) notes that disasters can cost a country a lot of money and affect development by depleting a country’s capital stock and diverting resources from productive investments to reconstruction efforts

However, some scholars say that natural disasters can delay economic adjustment Skidmore and Toya (2002) argue that although disasters initially slow down economic growth, they may eventually lead to increased investment in

infrastructure, which can increase future productivity known as "creative

destruction” impact, this process enables the economy to replace older

infrastructure more with modern resilient systems, the result is likely to be term growth Any catastrophic shock—for instance, civil wars or natural disasters

long-—has an adverse immediate effect on the capital stock of a country; however, suchdestruction is recovered in the long-run (Mill, 1848)

The effects of recurring natural disasters such as floods and typhoons in Vietnam have proven to hinder poverty reduction efforts especially in rural areas, Noy and

Vu (2010) found that despite the country’s economy was growing rapidly, frequentdisasters had a lasting negative impact on human capital development to the extent

of affecting labor productivity and economic growth

3 Geographic, Economic And Climatic Vulnerability

Asian countries' exposure to natural disasters is influenced by its geographic location, economic conditions, and climate This review examines these factors andtheir impact on the country's vulnerability to disasters, drawing insights from recent research

3.1 Geographic Vulnerability

The geography of Vietnam significantly contributes to its disaster susceptibility According to the World Bank (2023), the country's long coastline along the South China Sea and the low-lying deltas of the Mekong and Red Rivers are particularly prone to typhoons, storm surges, and flooding These geographical features expose extensive areas to severe weather events Additionally, the mountainous regions in the west are vulnerable to landslides caused by heavy rainfall, which disrupts infrastructure and transportation (ADB, 2023) According to a World Bank (2013) report, rising sea levels pose a significant threat to densely populated coastal cities

in Vietnam, Bangladesh, and China The report also highlights that Bangladesh is among the most vulnerable countries to sea-level rise due to its low elevation and large delta system

3.2 Economic Vulnerability

The economic impact of natural disasters is substantial The Conversation (2021) points out that frequent flooding and storm damage negatively affect agricultural production, a crucial part of the economy This not only threatens food security butalso reduces farmers' income Moreover, damage to infrastructure incurs

significant costs, straining financial resources and impeding economic progress, especially in less affluent regions (World Bank, 2023) The financial burden of rebuilding and recovery can slow down development and exacerbate economic challenges

Indonesia's vulnerability to natural disasters is a result of its geographic features, economic conditions, and climatic factors The combination of an extensive coastline, river systems, and mountainous terrain, coupled with a monsoon climate and the impacts of climate change, creates a high-risk environment The economic effects, including disruptions to agriculture and infrastructure, further compound these challenges Effective management of these vulnerabilities requires integrated strategies that address geographic, economic, and climatic risks to enhance resilience and disaster preparedness.

3.4 Key sectors which are affected by natural disasters

Natural disasters in Asia impact several crucial sectors Agriculture is heavily affected, as floods and typhoons can devastate crops and farmland, leading to significant food production losses and reduced income for farmers (The

Conversation, 2021) Infrastructure also suffers, with damage to roads, bridges, and buildings causing disruptions in transportation and incurring high repair costs, which affect economic stability and growth (World Bank, 2023) The overall

economy feels the strain as well, with increased financial burdens from disaster response and reconstruction slowing economic progress (GFDRR, 2023) Housing and urban development face challenges too, with damage to residential areas and

urban infrastructure leading to displacement and difficulties in rebuilding (Asian Development Bank, 2023) Finally, environmental damage from disasters, including deforestation and soil erosion, exacerbates the impacts of floods and landslides, with long-term effects on biodiversity and natural resources (UNDRR, 2023)

4 Human Impact on Economic Outcomes

4.1 How the number of affected people in natural disasters influence the labor markets, productivity and recovery:

Several researches have pointed out that the number of people affected by naturaldisasters can influence the labor force in various ways One of the most immediateeffects of natural disasters on the labor market is the disruption of employment.Studies by Cavallo et al (2013) and Boustan et al (2017) illustrate that naturaldisasters can lead to significant job losses, particularly in affected areas Forinstance, after Hurricane Katrina, employment fell sharply in New Orleans due to

the destruction of businesses and infrastructure (Easley et al., 2008) The number

of people affected directly correlates with the extent of job losses, as larger-scaledisasters tend to displace more workers The impact also varies across sectors Forexample, construction and agriculture are often hit hard, as reported by Cavalloand Noy (2011), due to damage to physical assets Conversely, sectors such asemergency services and healthcare may see increased demand The differentialimpact across sectors can lead to shifts in labor demand, affecting wage structuresand employment opportunities in both short and long terms

The impact of natural disasters on economic productivity is also well-documented.The literature indicates that the greater the number of people affected, the largerthe productivity loss For instance, studies by Skidmore and Toya (2002) highlightthat natural disasters disrupt labor markets by directly affecting workers' health anddisplacing them from their jobs This disruption leads to a reduction in both thequantity and quality of labor, thereby decreasing overall economic output

The recovery trajectory of an economy is influenced by the number of peopleaffected and the scale of destruction Research by Noy (2009) suggests thateconomies with larger affected populations face slower recovery due to prolongeddisruptions in labor markets and reduced investment Conversely, economies withfewer affected individuals may recover more swiftly, benefiting from quickerrestoration of human capital and infrastructure

4.2 Case studies of countries with high frequency of floods and storms:

Case studies:

● Vietnam: The severe floods that struck northern Vietnam in 2017 had

significant economic repercussions, particularly in agricultural andrural areas Research by Bangalore et al (2019) shows that the flood’simpact was exacerbated by the high population density in vulnerableareas and inadequate infrastructure The study highlights how humanfactors such as local population density and socio-economic statusinfluenced the severity of economic losses Communities with lowersocio-economic status suffered disproportionately due to limitedresources for recovery and rebuilding

● India: A study on Indian states from 1981 to 2011 indicates that

recurrent floods reduce economic growth, particularly affecting agriculture sectors such as manufacturing and services The loss ofinfrastructure and agricultural productivity delays recovery anddepresses GDP growth (Padli et al., 2009) Furthermore, sub-nationalstudies highlight that flood impacts are often worsened in regions withweaker disaster management systems, thereby extending recoverytimes and increasing fiscal pressure (Park & Wang, 2017)

non-● Japan: The 2011 Tohoku Earthquake and Tsunami serves as a

contrast to the aforementioned cases, highlighting how human factorssuch as technological preparedness and community resilience caninfluence economic outcomes According to a study by Shimizu andWang (2013), Japan’s advanced technology and effective emergencymanagement systems mitigated some economic losses, although thescale of the disaster still had substantial impacts The researchemphasizes the role of preparedness and resilience in shapingrecovery, showing how proactive measures can influence economicrecovery trajectories

Case studies from Mexico:

● The agricultural sector, which is highly vulnerable to storms andfloods, has repeatedly suffered heavy losses in Mexico For example,hurricanes like Hurricane Wilma (2005) caused substantial cropdestruction, leading to food shortages, reduced exports, and incomelosses for farmers This, in turn, hindered the growth of GDP percapita, particularly in rural regions that rely heavily on agriculture(Rodríguez-Oreggia et al., 2013) In some cases, the recovery time canextend over multiple agricultural seasons, further delaying theeconomic rebound in affected areas

● Mexico's tourism sector, particularly in coastal areas like Cancún andthe Yucatán Peninsula, has been hit hard by frequent hurricanes.Research shows that tourism revenue declines sharply in the aftermath

of major storms, as infrastructure is damaged, and tourist arrivalsdrop For instance, Hurricane Wilma caused extensive damage tohotels, airports, and beaches, leading to a significant reduction in

tourism-related income, which forms a substantial part of the regionalGDP (Charvériat, 2000) The loss of revenue from this sector furtherdepresses GDP per capita growth as recovery efforts take years.

4.3 Vulnerability and socio-economic inequalities in disaster impact:

Income Inequality: Income inequality significantly influences disaster

impacts Research by Tierney (1999) shows that lower-incomecommunities are more likely to experience higher levels of damageand slower recovery This is partly due to inadequate housing andinfrastructure, which are often less resilient to disasters Moreover,lower-income individuals may lack the financial resources to evacuate

or repair damaged property

Education and Information Access: Educational attainment and

access to information also play crucial roles in shaping disastervulnerability Studies by Peacock et al (2010) demonstrate thatindividuals with lower levels of education often have less access toinformation about disaster preparedness and response, which canexacerbate their vulnerability This lack of information can lead toinadequate preparation and increased risk during disasters

Social Networks and Support Systems: Social networks and

community support systems are vital for disaster resilience Aldrich(2012) finds that communities with strong social ties and supportnetworks are better able to mobilize resources and aid during and afterdisasters In contrast, isolated and marginalized groups often facegreater difficulties in accessing support, leading to heightenedvulnerability and prolonged recovery periods

 Discrimination and Marginalization: Discrimination and

marginalization exacerbate socio-economic inequalities and increasevulnerability According to Enarson and Morrow (1998), marginalizedgroups, including racial minorities and women, often facecompounded risks due to systemic inequalities and discrimination

These groups may experience more severe impacts and slowerrecovery due to barriers in accessing resources and support.

5,.Infrastructure and Economic Resilience

Both The World Development Report published in 1994 and DR K A

FAMILONI (2006) had the similar finding that infrastructure stocks expand with output growth across the countries However, in more recent research, Hanifatul Khurriah and Nurul Istifadah (2019) pointed out sign of crowding out the effect of private capital if the infrastructure investment is too dominant and that could potentially reduce economic growth in the case of Indonesia, similar to the findings

of Shi et al (2017) in the case of China

F Taghizadeh-Hesary et al (2019) stated that the empirical results suggest increasing the quality of infrastructure may have a large impact on decreasing costsarising from natural disasters Both McDaniels et al (2015) and Havko et al (2017) highlighted the need to make cities more resilient to disasters In the case ofVietnam, it is found that the level of damage to irrigation works after storms and floods is relatively serious Large floods are the cause of damage to construction works, causing flooding High-speed flow from a breach has the potential to devastate structures and life where it passes Overflows caused by floods often carry soil, sand, and gravel to bury fields, houses, and irrigation works, Đ^ng Thanh B_nh – Phan Tha Hobn (2020)

6 Intensity of Disasters and Economic Impact

The intensity of natural disasters plays a critical role in determining their economicimpact Intensity refers to the severity and scale of a disaster event, which can varywidely depending on its type, origin, and duration Different types of disasters havedistinct measures of intensity, often involving metrics such as magnitude, wind speed, or duration

Understanding disaster intensity is essential for evaluating its economic

repercussions Intensity metrics, which vary depending on the type of disaster, directly influence the extent of economic damage Intensity is often quantified using scales that measure the energy or force of the disaster Research has shown

that even marginal increases in intensity can significantly amplify the economic impact (Kanamori & Anderson, 1975; Emanuel, 2005).

The length of time a disaster lasts and the extent of its impact are key factors in evaluating its consequences Disasters that are prolonged and severe generally result in greater damage and more significant disruptions to economic activities Studies highlight that prolonged or extreme events lead to higher repair and recovery costs, and can severely disrupt local and national economies (McKee et al., 1993; Noy, 2009)

Severe disasters disproportionately affect different economic sectors, influencing both short-term and long-term economic outcomes

● Agriculture: Agricultural sectors are highly vulnerable to disasters,

particularly those involving extreme weather conditions High-intensity events can lead to crop failures, livestock losses, and long-term soil degradation The resulting impact on food production and agricultural livelihoods can be severe, with significant implications for food security andlocal economies (Dasgupta et al., 2010)

● Industry: Industrial sectors often face significant disruptions during and

after high-intensity disasters Damage to facilities, supply chain

interruptions, and production halts can lead to considerable financial losses The recovery process for industries affected by severe disasters can be lengthy and costly, impacting overall economic performance (Latham, 1997;World Bank, 2011)

● Infrastructure: Infrastructure damage from severe disasters can have

extensive economic consequences The cost of repairing and rebuilding infrastructure such as roads, bridges, and utilities can be immense

Moreover, damaged infrastructure disrupts economic activities and can hinder recovery efforts, exacerbating the overall economic impact (New Zealand Treasury, 2011)

Vietnam’s experience with various disasters provides valuable insights into how disaster intensity impacts economic outcomes The country has faced numerous high-intensity events, which have had significant economic repercussions.

● Economic Disruption: Studies have shown that severe disasters in Vietnam

lead to substantial economic losses, affecting agriculture, infrastructure, and industrial sectors For example, high-intensity floods and storms have caused widespread damage to infrastructure and agriculture, resulting in significant economic costs and recovery challenges (UNDP, 2014)

● Recovery and Resilience: The economic recovery process in Vietnam often

involves substantial investment in rebuilding infrastructure and supporting affected communities Research indicates that effective disaster managementand resilience strategies can mitigate some of the economic impacts, but high-intensity events continue to pose significant challenges (MARD, 2000)

7 Frequency of Disasters and Economic Growth

7.1 Cumulative Effects of Frequent Natural Disasters on Economic Performance

Several studies have investigated how frequent natural disasters impact long-term economic performance The overarching consensus is that recurrent disasters can have significant negative effects on economic growth For instance:

● Cavallo and Noy (2011) find that frequent natural disasters tend to slow

down economic growth by damaging infrastructure, disrupting production, and diverting resources from productive uses to disaster recovery Their analysis highlights that while immediate impacts are severe, the long-term effects on economic performance can be equally detrimental, leading to prolonged periods of slow growth

● Hallegatte et al (2013) further explore this relationship, emphasizing that

the cumulative impact of frequent disasters can lead to persistent economic vulnerabilities Their study suggests that repeated disruptions not only damage physical capital but also erode human capital and institutional capacities, which hinders long-term development

7.2 Historical Data

Japan provides a pertinent case study for examining the impact of frequent natural disasters on economic growth due to its high exposure to such events Historical data reveals a pattern of economic slowdowns correlating with periods of frequent natural disasters:

● World Bank (2020) reports that Japan has experienced a substantial number

of natural disasters over recent decades, including typhoons, floods, and droughts These disasters have led to significant economic disruptions, including damage to infrastructure, reduced agricultural output, and increased poverty rates The data show that regions frequently hit by disasters often experience slower economic growth compared to less affected areas

● Nguyen et al (2018) analyzes Thailand economic performance in relation to

disaster frequency Their research highlights a clear inverse relationship between disaster frequency and economic growth rates The study finds that frequent disasters contribute to economic slowdowns by causing recurrent damage to infrastructure and reducing investment in development projects

● Pham and Nguyen (2019) provide a historical perspective, linking

Vietnam’s economic performance with disaster frequency data They note that major economic slowdowns since Bangladesh often coincide with years

of high disaster activity Their analysis indicates that while recovery efforts can mitigate some immediate effects, the long-term economic impacts are substantial, including diminished growth rates and increased economic instability

The literature consistently underscores the negative cumulative impact of frequent natural disasters on long-term economic growth For Vietnam, historical data corroborates the broader findings, illustrating that frequent natural disasters lead to significant economic challenges The recurrent damage to infrastructure,

disruptions to production, and the high costs of recovery contribute to slower economic growth and increased vulnerability

The cumulative effect of frequent natural disasters on economic performance is a well-documented phenomenon with significant implications for Asian countries