Economic impact of natural disasters, spillovers, and role of human development: case of Indonesia

• Main Authors: Asyahid, Esa Azali, Pekerti, Immanuel Satya
• Format: Article PeerReviewed
• Language: English
• Published: Springer Online 2022
• Subjects: Economics and Business
• Online Access: https://repository.ugm.ac.id/278719/1/Asyahid_EB.pdf; https://repository.ugm.ac.id/278719/; https://link.springer.com/article/10.1007/s12076-022-00307-7; https://doi.org/10.1007/s12076-022-00307-7
• Institution: Universitas Gadjah Mada

We investigate how natural disaster damages affect regional economic growth and their spatial spillover effect in various human development (HDI) level settings by utilising a panel annual district-level dataset from Indonesia. We employ Spatial Durbin Model to achieve these objectives. We find that disaster damage to houses has a negative effect on district-level per capita output growth. Meanwhile, the effect of disaster damage to people on economic growth depends on their HDI level, with low-HDI districts affected negatively and high-HDI districts positively. Our analysis also finds spatial spillover effects on neighbouring regions’ growth, and heterogeneous effects across economic sectors.