Economics of natural disasters and technological innovations in Africa: an empirical evidence

Abstract

This study provides an empirical analysis of the impact of the disaster on technological innovation by employing the instrumental variable (2SLS) method and instrumental variable fixed-effect method in a panel of 45 African economies from 1990 to 2019. The empirical results confirm disaster’s negative and significant impact on innovation. A 1% increase in a disaster will lead to about − 13.750% decrease in scientific journals, − 3.302% decrease in R&D, and − 3.644% decrease in the TFP, respectively. These findings are supported by panel quantile regression. The study identifies four possible channels through which disaster lowers innovation in African economies: (i) reducing trade, (ii) total investment opportunities, and (iii) human capital. Various robustness tests support our findings. Finally, the study bolsters historical capital models for the adoption of cutting-edge technology in the building, provides critical policy recommendations on environmental laws, and advocates for disaster-response policies; decentralization of the energy industry away from disaster-affected areas for greater private sector participation; financial incentives for start-ups to facilitate trade and investment; creating a culture of prevention, preparation, and resilience at all levels via knowledge and innovation; and reconstruction as a method of establishing disaster-resistant structures and habitat to offer a safer living environment.

Comments on “Economics of natural disasters and technological innovations in Africa: an empirical evidence” by Okolo, Chukwuemeka et al., DOI (10.1007/s11356-022-22989-8)

“…Okolo and Wen ( 2023 ) empirically examined how natural hazards (also known as natural disasters) impact technological innovation using a case study in Africa. They extensively analyzed the relationship between the two variables in 45 African countries (between 1990 and 2019) using the quantile regression method (Okolo and Wen 2023 ). They concluded that natural hazards negatively and significantly affected technological innovation in the region.…”

“…Two opposing groups have continued to discuss how natural hazards influence technological innovation in emergency management. One group has advocated the negative role of natural hazards in technological innovation, as in the case of Okolo and Wen ( 2023 ), Chen et al ( 2021 ), and Haddad and Teixeira ( 2015 ). For this group, natural hazards, such as earthquakes, floods, and droughts, generally upset government policies, key infrastructure, and business activities.…”