Working Paper Series no. 355: Firm-Network Characteristics and Economic Robustness to Natural Disasters

Abstract

This article proposes a theoretical framework to investigate economic robustness to exogenous shocks such as natural disasters. It is based on a dynamic model that represents a regional economy as a network of production units through the disaggregation of sectorscale Input-Output tables. Results suggest that disaster-related output losses depend on direct losses heterogeneity and on the economic network structure. Two aggregate indexes, concentration and clustering, appear as important drivers of economic robustness, offering opportunities for robustness-enhancing strategies. Modern industrial organization seems to reduce short-term robustness in a trade-off against higher efficiency in normal times.

Fanny Henriet, Stéphane Hallegatte, and Lionel Tabourier
December 2011

Classification JEL : C63 ; D85 ; L14 ; Q54

Keywords : Natural disasters, Economic impacts, Economic Network