Interaction Between Natural Disasters and Economic Growth: ARDL Approach

India, one of the emerging economies with huge demographic dividend, has been constantly facing the effects of natural disasters. Frequently, the devastating costs associated with natural disasters are considered as exogenous and outside the domain of mainstream economics. In a developing country li...

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Bibliographic Details
Published in:The ICFAI journal of applied economics 2018-10, Vol.17 (4), p.65-81
Main Authors: Bhat, Aaqib Ahmad, Mishra, Prajna Paramita
Format: Article
Language:English
Subjects:
Catastrophes
Developing countries
Disasters
Drought
Earthquakes
Economic growth
Economic models
Economic performance
Emerging markets
Fatalities
GDP
Gross Domestic Product
LDCs
Macroeconomics
Natural disasters
Population
Prone
Robustness
Tsunamis
Vulnerability
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Summary:India, one of the emerging economies with huge demographic dividend, has been constantly facing the effects of natural disasters. Frequently, the devastating costs associated with natural disasters are considered as exogenous and outside the domain of mainstream economics. In a developing country like India with greater vulnerability, the exogeneity issue becomes more suspicious, and low economic performance at present may lead to occurrence of greater damage of future disasters. By employing ARDL model of cointegration, the study analyzes the decimate role played by natural disasters in short-run and long-run growth dynamics, thereby overcoming the problem of considering natural disasters as purely exogenous. The results indicate that natural disasters have a significant negative impact on GDP growth both in short run and long run in India. Similar retarding impact was found for per capita GDP growth which was taken as a robustness parameter. The natural negative effect is due to India being more prone to droughts and greater exposure and vulnerability of general masses to natural disasters.
ISSN:0972-6861