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CHAPTER 3
GLOBAL PRODUCTIVITY
global warming and to better protect vulnerable areas and populations against natural hazards, as well as to encourage relocation from, and hazard-resistant building in, disaster-prone areas. Enhanced regulatory frameworks can help to reduce the likelihood of financial crises, as well as to mitigate their harm. Appropriate institutional and business climates, including good governance, can also alleviate the initial effects of adverse events and increase the pace of economic recovery. Fiscal space and transparent governance enable reconstruction efforts, after a natural disaster or armed conflict, to get under way in a timely and effective fashion as well as help to prevent financial crises. Future research could explore in greater detail the relationship between country characteristics and vulnerability to adverse events. This chapter found that countries with rising government debt tend to suffer more from financial crises. A deeper dive could reveal more information about the importance of characteristics such as governance, infrastructure quality, and regulatory quality for mitigating the impact of disasters, and could provide insights to build greater resilience to these types of negative shocks. Unexpected adverse events are generally considered short-term shocks to the economy. However, longer-term productivity is also affected, especially by repeated events, which will impede the convergence of economies, as examined in the next chapter.
ANNEX 3A Data, sources, and definitions Identification of natural disasters. The data are taken from the Emergency Events Database (EM-DAT) for the period 1960-2018. There are two main categories in the EM-DAT database: (1) natural and (2) technological or human-caused hazards. Our analysis is solely based on natural disasters. Natural disasters are split into six categories in EM-DAT. Two of these are used as defined in EM-DAT: (1) biological (diseases and epidemics) and (2) geophysical (earthquakes, tsunamis, and volcanic activity) disasters. Three are used as one combined climate category in our analysis: (1) climatological (extreme heat and cold, droughts), (2) hydrological (floods), and (3) meteorological (cyclones and storms). The sixth category of natural disasters is not included in our analysis because of limited observations: extraterrestrial, defined as hazards caused by asteroids, comets, or meteoroids, or changes in interplanetary conditions that affect the earth’s magnetosphere, ionosphere, and thermosphere. The following inclusion criteria are used: (1) 10 or more people reported killed, (2) 100 or more people affected, (3) an official declaration of a state of emergency, or (4) a call for international assistance.30 Seventy percent of natural disasters were climate disasters, whereas biological and geophysical disasters were much less frequent (tables 3A.1 through 3A.3, figure 3A.1). There were 3,897 climate, 1,003 biological, and 830 geophysical disasters over 196030 These selection criteria may, to some extent, bias the estimates toward natural disasters with larger socioeconomic impacts. The number of affected people is determined by the sum of injured, homeless, and those who required immediate assistance during the state of emergency.
