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The International Journal of Applied Economics and Finance

Year: 2011 | Volume: 5 | Issue: 3 | Page No.: 213-225
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Authors

Senadjki Abdelhak

Jamalludin Sulaiman

Saidatulakmal Mohd

Keywords

Research Article

A Bounds Testing to Cointegration: An Examination of Natural Disasters and GDP Relationship in Southern Africa Region

Senadjki Abdelhak, Jamalludin Sulaiman and Saidatulakmal Mohd
The spillover affects due to calamities caused by climate change has been distressing especially in the African countries and particularly in the Southern Africa states. The rising degree of calamities in this region affects not only the agricultural sector but also erodes the economic resources of families and communities. Previous studies have focused on the economic effects of natural disasters without differentiating neither between the types of disasters nor between the sectors of the economy. Pooling all natural disasters together would fail to consider the vast range of possible effects and could be misleading. Using the bonds testing or the Autoregressive Distributed Lags (ARDL) approach, this study investigated the long run effects of four types of natural disaster on the proportional GDP from three different sectors for five selected Southern Africa countries (Botswana, Lesotho, Namibia, South Africa and Swaziland). The results showed that drought, epidemic and storm have a negative effect on the agricultural GDP while flood affects positively the agricultural and manufacturing GDP in the long run. Meanwhile, the epidemic has a positive effect on the proportional GDP from services and negative sign with manufacturing sector in the long run. The estimated results suggested that the selected countries need to invest in developing and structuring flood protection systems as well as building water storage for water supply in drought periods as well as developing water resource management. The type of natural disasters is important key in determining the losses or gain of natural disasters in the long run.
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