Natural Disasters, Industrial Clusters and Manufacturing Plant Survival

Author Name Matthew A. COLE  (University of Birmingham) /Robert J R ELLIOTT  (University of Birmingham) /OKUBO Toshihiro  (Keio University) /Eric STROBL  (Ecole Polytechnique)
Creation Date/NO. January 2015 15-E-008
Research Project Restoration from Earthquake Damage and Growth Strategies of the Japanese Regional Economy
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In this paper, we examine the role of industrial clusters and infrastructure in mitigating or magnifying the impact of the 1995 Kobe earthquake on the survival of manufacturing plants and their post-earthquake economic performance. Our methodological approach is to use information on building-level and infrastructure damages and other plant and building-characteristics including district-level variables to control for spatial dependencies to estimate a cox-proportional hazard model. Our results show that plants that were members of existing clusters were less likely to survive although we found some evidence that damaged plants in stronger clusters had a better survival probability. Further analysis shows that the strength of the cluster had no impact on a number of performance indicators including productivity, employment and output. Road damage in the nearby locality has a negative impact on plant survival.