2002/09/05 by Mark Skidmore, Hideki Toya · 1,042 citations
Economics, Econometrics and Finance · Agricultural and Biological Sciences · Health Professions · Engineering · #Insurance and Financial Risk Management #Agricultural risk and resilience #Global Health Care Issues #Physical capital #Capital deepening #Economics #Total factor productivity #Human capital #Investment (military) #Capital Consumption Allowance #Capital (architecture) #Return of capital #Economic capital #Capital intensity #Stock (firearms) #Natural disaster #Productivity #Rate of return #Capital accumulation #Financial capital #Return on investment #Capital formation #Macroeconomics #Production (economics) #Investment performance #Finance #Economic growth #Engineering #Geography
paper · doi:10.1093/ei/40.4.664
published in Economic Inquiry 40(4), 664-687 (Wiley)
openalex publication_date 2002/09/05 · openalex created_date 2025/10/10 · openalex updated_date 2026/08/01
In this article, we investigate the long‐run relationships among disasters, capital accumulation, total factor productivity, and economic growth. The cross‐country empirical analysis demonstrates that higher frequencies of climatic disasters are correlated with higher rates of human capital accumulation, increases in total factor productivity, and economic growth. Though disaster risk reduces the expected rate of return to physical capital, risk also serves to increase the relative return to human capital. Thus, physical capital investment may fall, but there is also a substitution toward human capital investment. Disasters also provide the impetus to update the capital stock and adopt new technologies, leading to improvements in total factor productivity.