An economic growth model for disaster risk reduction in developing countries

This paper presents a dynamic stochastic macroeconomic model to investigate the long-term effect of the investment in disaster risk reduction on economic growth of developing countries. The model describes the possibility of a disaster-induced poverty trap, particularly caused by disasters that hinder investment in human capital such as education. This study pays attention to the possibility that disaster risk reduction (DRR) investment has the potential for enhancing economic growth and improving equality within a society. The study further demonstrates the numerical simulation developed for analyzing the economy of Pakistan to investigate that DRR investment motivates households to increase investment in human capital and enhances economic growth.