The Effect of Natural Disasters on International Trade and Countries’ Capital

Abstract

This paper studies the effect of natural disasters on international trade. The panel dataset of natural disaster number and international trade volume in 49 countries from 1990-2010 were used in this study. Four types of natural disasters of interest are Climatological disasters, Geophysical disasters, Meteorological disasters and Hydrological disasters. Only Hydrological disasters are found to be positively associated with the Export and Import volume over time. An important determinant of the impact of natural disasters on international trade is the level of income of the country. Natural disasters could encourage Human capital accumulation, although no association is found with physical capital counterpart.