Abstract
Located at the intersection of the Eurasian and Indian tectonic plates, Pakistan is one
of the most seismically active countries in the world. This vulnerability is compounded by
the presence of over 7,253 glaciers, the largest number outside the polar regions, making
the country more prone to large scale flooding. In view of the country’s susceptibility to
natural disasters, it is important to understand firm’s existing adaptive capacity in order
to determine the optimal firm and government response.
Research Questions:
1. How did the firms adapt differentially after 2005 earthquake and 2010 and 2022 floods in Pakistan?
2. What drives the differences in adaptation responses across different catastrophes?
3. How do firms that have suffered more than one major shock adapt and respond?
4. How do multiple shocks change drivers of growth?
5. How do firms affected by a single and multiple disasters respond differentially to different recovery stimulus?
This is a follow-up to my earlier paper titled "From Disruption to Resilience: How Firms in Pakistan
Weather Natural Disasters," abstract below:
How do firms react, respond, and adapt in the aftermath of a natural disaster? This paper provides evidence of the impact of the 2005 Pakistan earthquake on firm-level outcomes along three dimensions: the immediate response of firms to disasters, short-term adaptation strategies, and forward-looking actions that firms undertake to enhance resilience. Using a difference-in-differences methodology with a nationally representative panel dataset of 390 firms, the paper evaluates the impact of an earthquake which saw capital stock destroyed, supply chains disrupted, and national supporting infrastructure devastated. This destruction led to a notable decline in sales among affected firms, which, in turn, prompted strategic adaptations to facilitate recovery and build resilience. These adaptations included extended production cycles, diversified utilisation of facilities, and increased reliance on private credit markets. Firms also sought to build forward-looking resilience by diversifying across markets. However, there was no evidence of innovation to build adaptability and little to no government support. Consequently, I conducted a policy simulation exercise to determine the optimal policy response.
( Email for the earlier working paper)