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RESEARCH AND ANALYSIS: WORKING PAPERS

The Impact of Disasters on International Trade

In this paper we examine the impact of major disasters on international trade flows using a gravity model. Our panel data consists of more than 170 countries for the years 1962-2004 yielding approximately 300,000 observations. We find that the driving forces determining the impact of such events are the democracy level and, to a lesser extent, the area of the affected country. The less democratic and the smaller a country the more are its trade flows reduced in case it is struck by a disaster. We are also able to distinguish between the effect of a disaster on an importing and an exporting country.

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No: ERSD-2006-04

Author:

Martin Gassebner — ETH Zurich
Alexander Keck — WTO
Robert Teh — WTO

 

Manuscript date: March 2006

Key Words

International trade, disasters, gravity model, governance

JEL classification numbers

F14, P52, P48, C23

 

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This is a working paper, and hence it represents research in progress. This paper represents the opinions of the authors, and is the product of professional research. It is not meant to represent the position or opinions of the WTO or its Members, nor the official position of any staff members. Any errors are the fault of the authors. Copies of working papers can be requested from the divisional secretariat by writing to: Economic Research and Statistics Division, World Trade Organization, Rue de Lausanne 154, CH 1211 Geneva 21, Switzerland. Please request papers by number and title.

Download paper in pdf format (26 pages, 104KB)