Tuesday, October 30, 2012
Natural Disasters Impact on Growth
With Hurricane Sandy in the news everywhere lately, I couldn’t help but think about how such a huge natural disaster could affect the economy, more specifically, economic growth. Obviously, such an extreme disaster would greatly reduce a lot of jobs and general business as many businesses and buildings would be destroyed or would become very inaccessible due to the extreme conditions. According to one news article I read, “The storm may cut output in the world’s largest economy by $25 billion in the fourth quarter”. I would imagine that a huge factor of this loss of output would also be that the area which the hurricane hit is a hugely populated region consisting of approximately sixty million people. Therefore, I would think if it hit an area where the population was much lower and there were not as many businesses, the loss of output would then be much less significant. The fact that this hurricane hit New York, the most populated area in the United States, is incredibly unfortunate and devastating for America’s economy. I didn’t know what to think on Monday when I heard that Wall Street was closed due to the storm as well. At least construction sectors and insurance agencies will have a significant amount to gain from the destruction done by the storm. I also think it may have been kind of interesting if Olson would have included a section of natural disasters’ impact on the growth of economies in the Rise and Decline of Nations. It could be interesting to see if there are records of any great natural disasters that may have occurred before growth in some of the countries he discusses which experiences great economic growth.