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    Natural Disasters, Public Spending, and Creative Destruction: A Case Study of the Philippines

    Shikha Jha; Arturo Martinez; Pilipinas Quising; Zemma Ardaniel; Limin Wang | March 2018
    Abstract
    Typhoons, floods, and other weather-related shocks can inflict suffering on local populations and create life-threatening conditions for the poor. Yet, natural disasters also present a development opportunity to upgrade capital stock, adopt new technologies, enhance the risk-resiliency of existing systems, and raise standards of living. This is akin to the “creative destruction” hypothesis coined by economist Joseph Schumpeter in 1943 to describe the process where innovation, learning, and growth promote advanced technologies as conventional technologies become outmoded. To test the hypothesis in the context of natural disasters, this paper takes the case of the Philippines—among the most vulnerable countries in the world to such disasters, especially typhoons. Using synthetic panel data regressions, the paper shows that typhoon-affected households are more likely to fall into lower income levels, although disasters can also promote economic growth. Augmenting the household data with municipal fiscal data, the analysis shows some evidence of the creative destruction effect: Municipal governments in the Philippines helped mitigate the poverty impact by allocating more fiscal resources to build local resilience while also utilizing additional funds poured in by the national government for rehabilitation and reconstruction.
    Citation
    Shikha Jha; Arturo Martinez; Pilipinas Quising; Zemma Ardaniel; Limin Wang. 2018. Natural Disasters, Public Spending, and Creative Destruction: A Case Study of the Philippines. © Asian Development Bank Institute. http://hdl.handle.net/11540/8096.
    Keywords
    Alleviating Poverty
    Anti-Poverty
    Extreme Poverty
    Fight Against Poverty
    Global Poverty
    Health Aspects Of Poverty
    Indicators Of Poverty
    Participatory Poverty Assessment
    Poverty Eradication
    Poverty Analysis
    Poverty In Developing Countries
    Poverty Reduction Efforts
    Urban Poverty
    Disaster preparedness
    Disaster prevention
    Disaster management
    Emergency relief
    Flood control
    Fire prevention
    Natural disasters
    Man-made disasters
    Post-conflict recovery
    Fragile states
    Development Indicators
    Environmental Indicators
    Economic Indicators
    Educational Indicators
    Demographic Indicators
    Health Indicators
    Disadvantaged Groups
    Low Income Groups
    Socially Disadvantaged Children
    Rural Conditions
    Rural Development
    Social Conditions
    Urban Development
    Urban Sociology
    Income Distribution
    Demographic Indicators
    Social Justice
    Poor
    Economic forecasting
    Health expectancy
    Social groups
    Political participation
    Distribution of income
    Inequality of income
    Developing countries
    Rural community development
    Mass society
    Social change
    Social policy
    Social stability
    Population
    Sustainable development
    Peasantry
    Urban policy
    Urban renewal
    Social change
    Social accounting
    Inequality of income
    Economic growth
    Quality of Life
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    Citable URI
    http://hdl.handle.net/11540/8096
    Metadata
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    adbi-wp817.pdf (642.3Kb)
    Author
    Shikha Jha
    Arturo Martinez
    Pilipinas Quising
    Zemma Ardaniel
    Limin Wang
    Theme
    Poverty
    Disaster
    Labor Migration
     
    Copyright 2016-2021 Asian Development Bank Institute, except as explicitly marked otherwise
    Copyright 2016-2021 Asian Development Bank Institute, except as explicitly marked otherwise