Quantitative Estimation of the Domestic Economic Ripple Effect of Foreign Disaster: The Case of China

Abstract

In the past, damage from natural disasters was limited to the country directly affected, but as the world becomes one economic community, instances of damage spreading to other countries are increasing. Nonetheless, there has been insufficient research on the ripple effect of foreign disaster. This study thus analyzed the ripple effect on the domestic economy from foreign disaster, using a disaster scenario based on cases of China. The ripple effect was quantitatively calculated using an industry input coefficient. The results show that the direct damage was 0.08% of Gross Domestic Product (GDP), and the total amount of damage (including indirect damage) was 0.39% of GDP, thus demonstrating that foreign disaster could cause great damage to the domestic economy.