Long-term economic impact of hurricanes Ivan and Dean on Jamaica
Keywords:
Economic Growth, Natural disasters, synthetic controlAbstract
Jamaica has exhibited very slow economic growth over the last three decades, with disruptions in 2004 and 2007 when the island was impacted by hurricanes Ivan and Dean respectively. This research paper estimates the long-run effect of both hurricanes on Jamaica's GDP per capita using the synthetic control method proposed by Abadie et al. (2010). From the panel data of predictor variables for the donor pool countries, the synthetic trajectories of the island's economic growth were constructed for the periods prior to the events: (1994-2004) and (1994-2007), for hurricanes Ivan and Dean, respectively. In both cases, the trajectories of Jamaica's real per capita GDP overlapped with their synthetic counterfactuals. In this sense, it was estimated that in the ten years following the event there was a decrease in average GDP per capita of US$ 737 and 1 403 for hurricanes Ivan and Dean, respectively. And converging both effects yields an average total negative effect of US$ 2 140 during the period 2007 -2017. With this study we contribute to the empirical evidence that natural disasters have negative and persistent effects on Jamaica's economic growth, since this in the time interval analyzed failed to recover the level of growth it had before the events.
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