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Environmental Vulnerability and Economic Growth: Small States vs Large States

BRITO, JOÃO ANTONIO (2015): Environmental Vulnerability and Economic Growth: Small States vs Large States.

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Abstract

The purpose of this paper is to analyze empirically if the effect of environmental vulnerability on economic growth is conditioned by country size. Two groups of countries, large and small, were set up, and by using the System-GMM estimator and panel data in a 5-year rolling window, from 1970 to 2010, the impact of number of people killed or affected and cost of the disaster on growth rate of GDP per capita of the two groups of states was estimated. Also, the difference between small and large states in terms of the channels of transmission of the variables of interest was analyzed. Many studies consider small countries more vulnerable to natural disasters than large countries but this study indicates that, on average, large countries suffer more natural disasters than small countries and in terms of the effect of environmental vulnerability on growth rate of GDP per capita, there is no difference between small countries and large countries. Productivity is the main channel of transmission for both groups of countries.

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