Assessing the Impact of the Indian Ocean Tsunami on the Economy: Evidence from Indonesia and Thailand

Recent research in developed countries shows an adverse effect of natural disasters on the economy. This paper aims at examining whether this is also relevant for developing countries. Applying a counterfactual approach to provincial data for Indonesia and Thailand, we find that the Indian Ocean tsunami of 2004 negatively affects per capita gross domestic product (GDP) of the exposed provinces. It is also shown that the effect is heterogeneous within the country. These results seem straightforward to reconcile with previous evidence using developed countries data