Natural disasters and trade linkages in Asia – the case of Indonesia
Natural disasters and trade linkages in Asia – the case of Indonesia

Summary/Abstract: In the era of globalization, strong trade linkages between countries have become the channels of the immediate transmission of any kind of shock. One of the causes of such a shock may be a natural disaster. Since Indonesia is the country where a lot of natural disasters have taken place in recent years, the purpose of this paper is to investigate the impact of these phenomena on Indonesian trade flows. With the use of the OLS method we estimate the model taking into consideration the Indonesian export and import flows with its main trading partners. Among explanatory variables we have included the number of natural disasters per year, the distance between the capitals of trading partners, their GDP and population. The results show a correlation between trade flows and natural phenomena, visibly stronger as far as the industrialized trading partners of Indonesia are concerned.

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