Why Natural Disasters Might Not Lead to a Fall in Exports in Developing Countries?

Abstract

This paper tries to identify the different channels through which natural disastersaffect exports of agricultural products in developing countries. It begins by presentinga simple theory set-up that highlights the different mechanisms at work. It then takessome predictions of this theory to the test. Matching different sets of disaster variables(occurrence and intensity) from EM-DAT and GeoMet datasets with trade data at the 6digit-HS level, our first estimate point to a negative but statistically non-robust relationbetween disasters and agricultural exports. Following our theory set-up, we attribute thisresult to mixing three confounding effects with different magnitudes and opposite signs ontrade. Using other sources of data, we could then identify two of the effects: a negativeand statistically significant effect of disasters on exports when they occur in rural areasand at growing seasons times; and a positive and (very) robust relation with exportstowards culturally close partners and where an important diaspora is settled. This pointsto show that disasters are redistributing exports across partners. However, the ’solidarity’-consistent effect does not seem to last over time. All in all, notably due to the limitedphysical impact of most of the disasters over time and space and thanks to the pain reliefprovided by culturally close importers, natural disasters do not appear to make smalldeveloping countries suffer that much economically