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The Impact of the Indian Ocean tsunami on Aceh’s Long-Term Economic Growth

Image of The Impact of the Indian Ocean tsunami on Aceh’s Long-Term Economic Growth
Seminar room 5.E4.SR04
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GREEN Seminar Series 2019

Eric Neumayer (LSE)
Co-Author: Martin Philipp Heger (World Bank)


Existing studies typically find that natural disasters have negative economic consequences, resulting in, at best, a recovery to trend after initial losses or, at worst, longer term sustained losses. We exploit the unexpected nature of the 2004 Indian Ocean tsunami for carrying out a quasi-experimental difference-in-differences analysis of flooded districts and sub-districts in Aceh. The Indonesian province saw the single largest aid and reconstruction effort of any developing world region ever afflicted by a natural disaster. We show that this effort triggered higher long-term economic output than would have happened in the absence of the tsunami.