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Procedia Engineering 00 (2017) 000–000
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Procedia Engineering 00 (2017) 000–000
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ScienceDirect
Procedia Engineering 212 (2018) 1068–1074

7th International Conference on Building Resilience; Using scientific knowledge to inform policy
and practice in disaster risk reduction, ICBR2017, 27 – 29 November 2017, Bangkok, Thailand
7th International Conference on Building Resilience; Using scientific knowledge to inform policy
and practice in disaster risk reduction, ICBR2017, 27 – 29 November 2017, Bangkok, Thailand
The Relationship between Natural Disaster and Economic
Development:
The Relationship betweenANatural
Panel Data Analysis
Disaster and Economic
Development: A Panel Data Analysis
Karnjana Songwathanaa*
a* Road, Pathum Thani, 12120, Thailand
Karnjana Songwathana
a
School of Economics and Investment, Bangkok University, 9/1 Moo 5 Phahonyothin

a
School of Economics and Investment, Bangkok University, 9/1 Moo 5 Phahonyothin Road, Pathum Thani, 12120, Thailand

Abstract

This study aims to investigate the relationship between natural disaster and economic development across country level. It has
Abstract
always been argued whether developed countries are more disaster resilience compared to developing countries. The factors
influenced
This study the vulnerability
aims include
to investigate income, education,
the relationship betweenland area,disaster
natural population. This studydevelopment
and economic is based on cross-country
across countrydata from
level. It 168
has
countriesbeen
always during
argued1990-2016. The random
whether developed effect are
countries specification
more disaster is found to compared
resilience be the most appropriatecountries.
to developing for capturing these
The factors
interrelationships between natural
influenced the vulnerability includedisaster
income, loss, economic
education, development,
land socio-economic
area, population. This study and geographic
is based factors since
on cross-country datathefrom
random168
countries during 1990-2016. The random effect specification is found to be the most appropriate for capturingin these
effect model considers both country and time characteristics. The results show that higher income can lower disaster loss, term
of the number of affected
interrelationships between people
naturaland total loss,
disaster affected people.development,
economic However, higher income leads
socio-economic andtogeographic
higher the factors
amountsince
of damage from
the random
natural disaster.
effect model In addition,
considers the study
both country andshows the strong negative
time characteristics. relationship
The results between
show that education
higher income canlevellower
and disaster loss and
disaster loss, the
in term
positive relationship
of the number between
of affected the number
people and totalofaffected
urban population and disaster
people. However, loss.
higher income leads to higher the amount of damage from
natural disaster. In addition, the study shows the strong negative relationship between education level and disaster loss and the
positive relationship between the number of urban population and disaster loss.
© 2017 The Authors. Published by Elsevier Ltd.
© 2018 The Authors. Published by Elsevier Ltd.
Peer-review
Peer-review under
under responsibility
responsibility of
of the
the scientific committee of
scientific committee of the
the 7th
7th International
International Conference
Conference on on Building
Building Resilience.
Resilience.
© 2017 The Authors. Published by Elsevier Ltd.
Keywords:
Peer-reviewDisaster
underVulnerability; Disaster
responsibility of theResilience;
scientific Panel Data Analysis;
committee of the 7thAffected People; Conference
International Economic Development
on Building Resilience.

Keywords: Disaster Vulnerability; Disaster Resilience; Panel Data Analysis; Affected People; Economic Development
*Corresponding author: Tel: 662-902-0299 ext 2522
Email: karnjana.s@bu.ac.th
*Corresponding author: Tel: 662-902-0299 ext 2522
Email: karnjana.s@bu.ac.th
1. Introduction

1. Introduction
The adverse impacts of natural disasters on economy such as earthquakes, floods, typhoons, and hurricanes have
been widely known [1]. Disaster resilience is the ability of individuals, communities, organizations and states to
Thetoadverse
adapt impacts
and recover fromof hazards,
natural disasters
shocks oronstresses
economy such ascompromising
without earthquakes, floods, typhoons,
long-term andfor
prospects hurricanes have
development
been widely known [1]. Disaster resilience is the ability of individuals, communities, organizations and states to
adapt to and
1877-7058 recover
© 2017 from Published
The Authors. hazards,byshocks
Elsevieror
Ltd.stresses without compromising long-term prospects for development
Peer-review under responsibility of the scientific committee of the 7th International Conference on Building Resilience.
1877-7058 © 2017 The Authors. Published by Elsevier Ltd.
Peer-review under responsibility of the scientific committee of the 7th International Conference on Building Resilience.

1877-7058 © 2018 The Authors. Published by Elsevier Ltd.

Peer-review under responsibility of the scientific committee of the 7th International Conference on Building Resilience
10.1016/j.proeng.2018.01.138
 Karnjana Songwathana / Procedia Engineering 212 (2018) 1068–1074 1069
2 Karnjana Songwathana/ Procedia Engineering 00 (2017) 000–000

[2]. According to the Hyogo Framework for Action [3], disaster resilience is determined by the degree to which
individuals, communities and public and private organizations are capable of organizing themselves to learn from
past disasters and reduce their risks to future ones, at international, regional, national and local levels. In contrast to
resilience, vulnerability, which means the potential to be harmed, is usually defined as the opposite of resilience.
Disaster vulnerability represents the inability to absorb or remove harms from disaster.
Most previous studies found that the poor tends to suffer worst from disaster [4-6]. Basically, vulnerability is
related to several factors such as physical factors (poor design and construction of buildings, unregulated land use),
social factors (gender, social status, age), economic factors (income, dependence on single industries),
environmental factors (poor environmental management, climate change) [7]. While previous studies suggested that
higher income countries are able to reduce disaster vulnerability [6, 8-9], some studies showed that countries with
rapid economic growth rate still cannot reduce disaster vulnerability. This paper aims to examine the relationship
between natural disaster and economic development across country level both developed and developing countries.

2. Conceptual Framework

This study examines the relationship between disaster loss and economic development. Based on, literature
reviews [4-9], the multiple dimensions of factors influence disaster loss and the amount of total damage included
economic (income), socio-economics (education population density) , geographic factors (land area).

Economic Factors

Natural Disaster Loss

Socioeconomic Factors

Geographic Factors

Figure 1 Conceptual Framework

3. Research Methodology

The empirical model for this study is based on the conceptual framework above. The natural disaster
losses/impacts can be represented by a) affected people who are requiring immediate assistance during a period of
emergency, i.e. requiring basic survival needs such as food, water, shelter, sanitation and immediate medical
assistance. b) total affected people which are the sum of injured, homeless, and affected people. Injured people are
people who suffer from physical injuries, trauma or an illness requiring immediate medical assistance as a direct
result of a disaster; whereas homeless people are people whose house is destroyed or heavily damaged and therefore
need shelter after an event. c) estimated damage which is the amount of damage to property, crops, and livestock.
The value of estimated damage is given in US$ (‘000). For each disaster, the registered figure corresponds to the
damage value at the moment of the event, i.e. the figures are shown true to the year of the event. The data source is
CRED/OFDA International Disaster Database ( EM-DAT database)
These natural disaster losses/impacts (Hi) are expressed as a function of economic factors (Ei), socioeconomic
factors (Wi), and geographic factors (Gi)

H i = f ( E i, W i, G i) (1)
Based on literature reviews [4-9], independent variables that influence disaster vulnerability can be expressed in
Table 1.

Table 1 Definition of Independent Variables and Sources

Variables Definitions Sources
1070 Karnjana Songwathana / Procedia Engineering 212 (2018) 1068–1074
Karnjana Songwathana/ Procedia Engineering 00 (2017) 000–000 3

Variables Definitions Sources

Economic Factors (E)
GDP per capita
(constant 2010 US$)
GDP per capita growth (annual %)
Socioeconomic Factors (W)
School enrollment, secondary (%
gross)
Urban population (people)
Population Density (people per
sq.km.)
GDP per capita is gross domestic
product divided by midyear
population.
Data are in constant 2010 U.S.
dollars.
Annual percentage growth rate of
GDP per capita based on constant
local currency. Aggregates are based
on constant 2010 U.S. dollars.
Gross enrollment ratio is the ratio of
total enrollment in secondary level,
regardless of age, to the population
of the age group.
People living in urban areas as
defined by national statistical
offices.
Population density is midyear
population divided by land area in
square kilometers.
World Bank national accounts data,
and OECD National Accounts data
files.
World Bank national accounts data,
and OECD National Accounts data
files.
United Nations Educational,
Scientific, and Cultural Organization
(UNESCO) Institute for Statistics.
World Bank staff estimates based on
the United Nations Population
Division's World Urbanization
Prospects.
Food and Agriculture Organization
and World Bank population
estimates.

Geographic Factors (G)

Land area (sq. km) Land area is a country's total area, Food and Agriculture Organization,
excluding area under inland water electronic files and web site.
bodies, national claims to
continental shelf, and exclusive
economic zones.

Based on data availability, the dataset consists of the information from 168 countries during 1990-2016. The
empirical models for this study can be expressed as followed.

Affected Peopleit = αit + β1 GDP per capitait + β2 GDP growth + β3 School Enrollment + β4 Population Density + β5
Urban Population + β6 Land Area + eit (2)
Total Affected Peopleit = αit + β1 GDP per capitait + β2 GDP growth + β3 School Enrollment + β4 Population Density
+ β5 Urban Population + β6 Land Area + eit (3)
Estimated Damageit= αit + β1 GDP per capitait + β2 GDP growth + β3 School Enrollment + β4 Population Density +
β5 Urban Population + β6 Land Area + eit (4)

To address this, this study employs panel estimation techniques that allow for possibility of time specific and
company specific effects. For each model, the study estimates the pooled OLS model, the fixed and the random
effect models, then compares the fixed and the random effect models in order to find the most appropriate model.
Theoretically, the fixed effect approach is better suited to cases of unobservable company-effects and unobservable
time-effects. On the other hand, if the unobserved individual heterogeneity is uncorrelated with the explanatory
variable, the random effect model is a better choice [10].
 Karnjana Songwathana / Procedia Engineering 212 (2018) 1068–1074 1071
4 Karnjana Songwathana/ Procedia Engineering 00 (2017) 000–000

4. Results

Table 2 Descriptive Statistics

Variable Mean Std. Dev. Min Max
Affected People (People) 1,930,777.00 16,100,000.00 0 347,000,000.00
Total Affected People (People) 1,972,032.00 16,400,000.00 0 347,000,000.00
Total Damage (Thousand US$) 917,838.30 6,885,857.00 -0 213,000,000.00
GDP per Capita (US$) 10,678.14 16,268.08 115.44 111,069.20
GDP Growth 1.97 5.83 -65.00 92.36
School Enrollment (%) 73.49 31.83 5.13 164.81
Population Density (People per 188.92 692.73 1.41 7,806.77
Sq. Km.)
Urban Population (People) 17,800,000.00 53,900,000.00 14,132.00 763,000,000.00
Land Area (Sq. Km) 741,305.40 1,963,159.00 260.00 16,400,000.00

Table 2 shows that the average affected people are 917,838.30 people; whereas the average total affected people
are 1,930,777.00 people. The average amount of total damage is about 917,838.30 thousand US$. The standard
deviations of these variables are quite varied since the sample size covers both developed and developing countries
during affected and unaffected periods.

Table 3 Correlation between Independent Variables

GDP per GDP School Population Urban Land Area
Capita Growth Enrollment Density Population (Sq. Km)
(People)
GDP per Capita 1
GDP Growth -0.0438 1
School Enrollment 0.5934 -0.0188 1
Population Density 0.1168 0.0262 0.0652 1
Urban Population 0.038 0.1145 0.0567 0.0035 1
(People)
Land Area 0.0834 0.02 0.0876 -0.075 0.5769 1
(Sq. Km)

Table 3 Error! Reference source not found.represents the correlation between independent variables in the
empirical model. The result shows no correlation problem between independent variables as none of correlation
value exceeds 0.80.

Table 4 Impact of Economic Development on Disaster Loss: A Case of Affected People

Affected People Pooled-OLS Fixed Effect Random Effect
GDP per Capita -78.27*** 46.58 -78.27***
(25.24) (120.45) (25.24)
GDP Growth 101,314.60 -28,979.08 101,314.60
(65,329.63) (62,656.05) (65,329.63)
School Enrollment -22,306.93* 3,506.53 -22,306.93*
1072 Karnjana Songwathana / Procedia Engineering 212 (2018) 1068–1074
Karnjana Songwathana/ Procedia Engineering 00 (2017) 000–000 5

Affected People Pooled-OLS Fixed Effect Random Effect

(12,468.50) (31,565.45) (12,468.50)
Population Density 141.51 -4,165.14 141.51
(876.25) (17,063.13) (876.25)
Urban Population (People) 0.15*** -0.10*** 0.15***
(0.01) (0.02) (0.01)
Land Area (Sq. Km) -0.41** -40.07 -0.41**
(0.16) (81.18) (0.16)
Constant 555,085.10 48,500,000.00 555,085.10
(823,852.90) (88,100,000.00) (823,852.90)
Hausman Test 2.53
(0.64)
F-test for Individual Effect 4.40***
(0.00)
Note: *** shows statistical significance at 10%, ** shows statistical significance at 5%,* shows statistical significance at 10%

The steps in this empirical analysis are as follows: pooled OLS, fixed effect and random effect specifications.
Pooled OLS model is estimated with pooled data from all companies and years. Fixed effect and random effect
models are the logical estimation approaches for panel data. The F-test for individual country effect is 4.40 with
Prob > F = 0.00 which represents that there is country-specific effect (See Table 4). Moreover, the Hausman test is
used to check the more efficient random effects model against a less efficient but consistent fixed effects model. The
insignificant p-value of the Hausman test shows that random effect model is preferred.
From the random effect model in Table 4, the result shows that economic development has significant impact on
affected people from natural disaster. There is a significant negative sign on coefficient of GDP per capita. Besides,
the estimated coefficients on school enrollment and land area are negative and statistically significant, representing
that country with better education or larger area has better chance to lower the number of affected people from
natural disaster. Meanwhile, the estimated coefficient of urban population is positive and statistically significant,
indicating that country with more urban population tends to have higher the number of affected people from natural
disaster.

Table 5 Impact of Economic Development on Disaster Loss: A Case of Total Affected People
Total Affected People Pooled-OLS Fixed Effect Random Effect
GDP per Capita -79.30*** 48.19 -79.30***
(25.43) (120.94) (25.43)
GDP Growth 104,123.30 -28,323.41 104,123.30
(65,837.10) (62,914.36) (65,837.10)
School Enrollment -22,837.18* 3,797.48 -22,837.18*
(12,565.36) (31,695.59) (12,565.36)
Population Density 150.13 -3,808.02 150.13
(883.05) (17,133.48) (883.05)
Urban Population (People) 0.15*** -0.11*** 0.15***
(0.01) (0.02) (0.01)

Land Area (Sq. Km) -0.41* -40.44 -0.41*

 Karnjana Songwathana / Procedia Engineering 212 (2018) 1068–1074 1073
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Total Affected People Pooled-OLS Fixed Effect Random Effect

(0.16) (81.51) (0.16)
Constant 589,723.50 49,000,000.00 589,723.50
(830,252.50) (88,500,000.00) (830,252.50)
Hausman Test 2.65
(0.62)
F-test for Individual Effect 4.54***
(0.00)
Note: *** shows statistical significance at 10%, ** shows statistical significance at 5%,* shows statistical
significance at 10%

Similar to affected people model, random effect specification is preferred for total affected people model. The F-
test for individual country effect is 4.54 with Prob > F = 0.00 which represents that there is country-specific effect.
In addition, the p-value of Hausman is insignificant, which represents the accepted of null hypothesis that random
effect is more efficient. From the random effect model in Table 5, the result shows that GDP per capita, school
enrollment, urban population and land area have significant impacts on total affected people from natural disaster.
Similar to affected people model, the estimated coefficients on GDP per capita, school enrollment and land area are
negative and statistically significant. The estimated coefficient of urban population is positive and statistically
significant.

Table 6 Impact of Economic Development on Disaster Loss: A Case of Total Damage

Total Damage Pooled-OLS Fixed Effect Random Effect
GDP per Capita 86.50*** 177.18** 86.50**
(13.94) (72.95) (13.94)
GDP Growth -30,975.32 -5,633.18 -30,975.32
(36,084.41) (37,949.21) (36,084.41)
School Enrollment -14,233.55** -12,504.09 -14,233.55**
(6,886.90) (19,118.41) (6,886.90)
Population Density -386.27 -6,973.91 -386.27
(483.99) (10,334.72) (483.99)
Urban Population (People) 0.04*** 0.06*** 0.04***
(0.00) (0.01) (0.00)
Land Area (Sq. Km) 0.02 -23.82 0.02
(0.09) (49.17) (0.09)
Constant 105,340.70 25,000,000.00 105,340.70
(455,049.90) (53,400,000.00) (455,049.90)
Hausman Test 2.07
(0.73)
F-test for Individual Effect 1.76***

(0.00)
Note: *** shows statistical significance at 10%, ** shows statistical significance at 5%,* shows statistical
significance at 10%

Similar to affected people and total affected people models, random effect specification is preferred for total
1074 Karnjana Songwathana / Procedia Engineering 212 (2018) 1068–1074
Karnjana Songwathana/ Procedia Engineering 00 (2017) 000–000 7

damage model. The F-test for individual country effect was 1.76 with Prob > F = 0.00 which represents that there is
country-specific effect. In addition, the p-value of Hausman is insignificant, which represents the accepted of null
hypothesis that random effect is more efficient. From the random effect model in Table 6, the result shows that GDP
per capita, school enrollment, and urban population have significant impacts on total damage from natural disaster.
In contrast to affected people and total affected people models, the estimated coefficient on GDP per capita is
positive and statistically significant. The positive relationship shows that developed countries possibly have higher
cost of living and consequently have higher the amount of damage cost from natural disaster. The estimated
coefficient on school enrollment is negative and statistically significant; whereas the estimated coefficient on urban
population is positive.

5. Conclusion and Discussion

This study aims to examine disaster resilience or disaster vulnerability in both developed and developing
countries. Although previous studies found that the poor tends to suffer more from disaster, only few studies
analysed in cross country level. Hence, this study bridges the gap of the existing studies and examines the
relationship between disaster and economic development across country. The dependent variables which represent
disaster resilience and disaster vulnerability are affected people, total affect people and the amount of damage from
natural disaster; whereas independent variables are consisted of economic factors, socio-economic factors, and
geographic factors. Using a wide range of regression model for panel data such as pooled-OLS, fixed effect and
random effect specifications, the statistical tests shows that random effect model is the most appropriate model. The
study found that GDP per capita, school enrollment, and land area have negative relationships with the number of
affected people and the number of total affected people. However, both GDP per capita and urban population have
positive relationship with the amount of damage from natural disaster. Although countries with higher income can
lower the number of affected people and the number of total affected people from natural disaster, countries with
higher income also have higher total damage in term of the amount of damage to property, crops, and livestock.
Higher amount of damages probably comes from higher cost of living in high income countries. These results
suggest that the way to attain disaster resilience or minimize disaster vulnerability is through increasing income and
education.

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