Advertisement

Natural Disasters and Firm Resilience in Italian Industrial Districts

  • Giulio Cainelli
  • Andrea Fracasso
  • Giuseppe Vittucci Marzetti
Chapter
Part of the Advances in Spatial Science book series (ADVSPATIAL)

Abstract

We carry out a firm-level empirical analysis to evaluate the economic impact of the sequence of earthquakes that occurred in 2012 in the Italian region of Emilia-Romagna and to address the question of whether the localization of a firm within an industrial district mitigated or exacerbated this impact. We estimate the effect of the earthquake on firms’ performance via two alternative methods: Difference-in-differences and propensity score matching in levels and first-differences. Our findings suggest that the earthquake reduced turnover, production, value added, and return on sales of the surviving firms, at least in the short term. In addition, the debt over sales ratio grew significantly more in the firms located in the areas affected by the earthquake. The empirical evidence also suggests that the negative impact of the earthquake was slightly higher for the firms located in industrial districts, thereby suggesting that, at least in the short term, the usually positive cumulative processes associated with localization within an agglomerated area could have reversed and magnified the negative impact of a disruptive exogenous supply shock.

Keywords

Agglomeration economies Natural disaster Resilience Industrial districts 

References

  1. Ahlerup, P. (2013). Are natural disasters good for economic growth? (Working Papers in Economics 553). Department of Economics, University of Gothenburg.Google Scholar
  2. Barone, G., & Mocetti, S. (2014). Natural disasters, growth and institutions: A tale of two earthquakes. Journal of Urban Economics, 84, 52–66.CrossRefGoogle Scholar
  3. Becattini, G. (1989). Sectors and/or districts: Some remarks on the foundations of industrial economies. In E. Goodman & J. Bamford (Eds.), Small firms and industrial districts. London: Routledge.Google Scholar
  4. Belasen, A., & Dai, C. (2014). When oceans attack: Assessing the impact of hurricanes on localized taxable sales. The Annals of Regional Science, 52(2), 325–342.CrossRefGoogle Scholar
  5. Bianchi, G. (1994). Tre e più Italie: Sistemi Territoriali di Piccola Impresa e Transizione Post-Industriale. In F. Bortolotti (Ed.), Il Mosaico e il Progetto: Lavoro, Imprese, Regolazione nei Distretti Industriali della Toscana. Milan: Franco Angeli.Google Scholar
  6. Brioschi, F., Brioschi, M. S., & Cainelli, G. (2002). From the Industrial District to the district group. An insight into the evolution of local capitalism in Italy. Regional Studies, 36(9), 1037–1052.CrossRefGoogle Scholar
  7. Brusco, S. (1982). The Emilian model: productive decentralisation and social integration. Cambridge Journal of Economics, 6(2), 167–184.Google Scholar
  8. Brusco, S., Cainelli, G., Forni, F., Franchi, M., Malusardi, A., & Righetti, R. (1996). The evolution of industrial districts in Emilia Romagna. In: F. Cossentino, F. Pyke, W. Sengenberger (Eds.), Local response to global pressures: The case of Italy and its industrial districts (Research Series n. 103). Geneva: International Labour Office (ILO).Google Scholar
  9. Cainelli, G. (2008a). Agglomeration, technological innovations and firm productivity. Evidence from Italian Industrial District. Growth and Change, 39(3), 414–435.CrossRefGoogle Scholar
  10. Cainelli, G. (2008b). Industrial districts. Theoretical and empirical insights. In C. Karlsson (Ed.), Handbook of research on cluster theory (pp. 189–202). Cheltenham: Edward Elgar Publishing.Google Scholar
  11. Cainelli, G., Montresor, S., & Vittucci Marzetti, G. (2012). Production and financial linkages in inter-firm networks: Structural variety, risk-sharing and resilience. Journal of Evolutionary Economics, 22(4), 711–734.CrossRefGoogle Scholar
  12. Cainelli, G., & Zoboli, R. (2004). The evolution of industrial districts. Changing governance, innovation and internationalization of local capitalism in Italy, contributions to economics. Heidelberg: Physica Verlag.Google Scholar
  13. Carvalho, V. M., Makoto, N., & Yukiko, S. (2014). Supply chain disruptions: Evidence from the Great East Japan Earthquake (Discussion Papers 14035). Research Institute of Economy, Trade and Industry (RIETI).Google Scholar
  14. Cavallo, E., Galiani, S., Noy, I., & Pantano, J. (2013). Catastrophic natural disasters and economic growth. The Review of Economics and Statistics, 95(5), 1549–1561.CrossRefGoogle Scholar
  15. Cavallo, E., & Noy, I. (2009). The economics of natural disasters: A survey (Research Department Publications 4649). Inter-American Development Bank, Research Department.Google Scholar
  16. Coelli, F., & Manasse, P. (2014). The impact of floods on firms’ performance (Working Paper DSE 946). Department of Economics, University of Bologna.Google Scholar
  17. Cole, M. A., Elliott, R. J. R., Okubo, T., & Strobl, E. (2013). Natural disasters and plant survival: The impact of the Kobe earthquake (Discussion Papers 13063). Research Institute of Economy, Trade and Industry (RIETI).Google Scholar
  18. Cole, M. A., Elliott, R. J. R., Okubo, T., & Strobl, E. (2015). Natural disasters, industrial clusters and manufacturing plant survival (Discussion Papers 15008). Research Institute of Economy, Trade and Industry (RIETI).Google Scholar
  19. Cunado, J., & Ferreira, S. (2014). The macroeconomic impacts of natural disasters: The case of floods. Land Economics, 90(1), 149–168.CrossRefGoogle Scholar
  20. Dei Ottati, G. (1994). Trust, interlinking transactions and credit in the Industrial District. Cambridge Journal of Economics, 18(6), 529–546.CrossRefGoogle Scholar
  21. Fabling, R., Grimes, A., & Timar, L. (2014). Natural selection: Firm performance following the canterbury earthquakes (Working Papers 14 08). Motu Economic and Public Policy Research.Google Scholar
  22. Fomby, T., Ikeda, Y., & Loayza, N. V. (2013). The growth aftermath of natural disasters. Journal of Applied Econometrics, 28(3), 412–434.CrossRefGoogle Scholar
  23. Hallegatte, S., & Dumas, P. (2009). Can natural disasters have positive consequences? Investigating the role of embodied technical change. Ecological Economics, 68(3), 777–786.CrossRefGoogle Scholar
  24. Hayakawa, K., Matsuura, T., & Okubo, F. (2015). Firm-level impacts of natural disasters on production networks: Evidence from a flood in Thailand. Journal of the Japanese and International Economies, 38, 244–259.CrossRefGoogle Scholar
  25. Henriet, F., Hallegatte, S., & Tabourier, L. (2012). Firm-network characteristics and economic robustness to natural disasters. Journal of Economic Dynamics and Control, 36(1), 150–167.CrossRefGoogle Scholar
  26. Hosono, K., Miyakawa, D., Uchino, T., Hazama, M., Ono, A., Uchida, H., & Uesugi, I. (2016). Natural disasters, damage to banks, and firm investment. International Economic Review, 57, 1335–1370.CrossRefGoogle Scholar
  27. Imaizumi, A., Ito, K., & Okazaki, T. (2016). Impact of natural disasters on industrial agglomeration: The case of the great Kantō earthquake in 1923. Explorations in Economic History, 60(C), 52–68.CrossRefGoogle Scholar
  28. Kousky, C. (2014). Informing climate adaptation: A review of the economic costs of natural disasters. Energy Economics, 46, 576–592.CrossRefGoogle Scholar
  29. Lazzaroni, S., & van Bergeijk, P. A. (2014). Natural disasters’ impact, factors of resilience and development: A meta-analysis of the macroeconomic literature. Ecological Economics, 107, 333–346.CrossRefGoogle Scholar
  30. Leiter, A., Oberhofer, H., & Raschky, P. (2009). Creative disasters? Flooding effects on capital, labour and productivity within European firms. Environmental & Resource Economics, 43(3), 333–350.CrossRefGoogle Scholar
  31. Loayza, N. V., Olaberría, E., Rigolini, J., & Christiaensen, L. (2012). Natural disasters and growth: Going beyond the averages. World Development, 40(7), 1317–1336.CrossRefGoogle Scholar
  32. Marshall, A. (1920). Principles of economics. London: Macmillan.Google Scholar
  33. Martin, R. (2012). Regional economic resilience, hysteresis and recessionary shocks. Journal of Economic Geography, 12, 1–32.CrossRefGoogle Scholar
  34. Mel, S. D., McKenzie, D., & Woodruff, C. (2012). Enterprise recovery following natural disasters. Economic Journal, 122(559), 64–91.CrossRefGoogle Scholar
  35. Merz, M., Hiete, M., Comes, T., & Schultmann, F. (2013). A composite indicator model to assess natural disaster risks in industry on a spatial level. Journal of Risk Research, 16(9), 1077–1099.CrossRefGoogle Scholar
  36. Noy, I. (2009, March). The macroeconomic consequences of disasters. Journal of Development Economics, 88(2), 221–231.CrossRefGoogle Scholar
  37. Raddatz, C. (2007). Are external shocks responsible for the instability of output in low-income countries? Journal of Development Economics, 84(1), 155–187.CrossRefGoogle Scholar
  38. Reggiani, A., De Graaff, T., & Nijkamp, P. (2002). Resilience: An evolutionary approach to spatial economic systems. Network and Spatial Economics, 2, 211–229.CrossRefGoogle Scholar
  39. Rose, A. (2004). Defining and measuring economic resilience to disasters. Disaster Prevention and Management: An International Journal, 13, 307–314.CrossRefGoogle Scholar
  40. Simmie, J., & Martin, R. (2010). The economic resilience of regions: Towards an evolutionary approach. Cambridge Journal of the Regions, Economy and Society, 3, 27–43.CrossRefGoogle Scholar
  41. Skidmore, M., & Toya, H. (2002). Do natural disasters promote long-run growth? Economic Inquiry, 40(4), 664–687.CrossRefGoogle Scholar
  42. Strobl, E. (2011). The economic growth impact of hurricanes: Evidence from U.S. coastal counties. The Review of Economics and Statistics, 93(2), 575–589.CrossRefGoogle Scholar
  43. Todo, Y., Nakajima, K., & Matous, P. (2013). How do supply chain networks affect the resilience of firms to natural disasters? Evidence from the Great East Japan Earthquake (Discussion Papers 13028). Research Institute of Economy, Trade and Industry (RIETI).Google Scholar
  44. Tokui, J., Kawasaki, K., & Miyagawa, T. (2017). The economic impact of supply chain disruptions from the great East-Japan earthquake. Japan and the World Economy, 41, 59–70.CrossRefGoogle Scholar
  45. Uchida, H., Miyakawa, D., Hosono, K., Ono, A., Uchino, T., & Uesugi, I. (2013). Natural disaster and natural selection (Working Paper 25). Institute of Economic Research, Hitotsubashi University: Center for Interfirm Network.Google Scholar
  46. Vu, T. B., & Noy, I. (2018). Natural disasters and firms in Vietnam. Pacific Economic Review (In Press).Google Scholar

Copyright information

© Springer International Publishing AG, part of Springer Nature 2018

Authors and Affiliations

  • Giulio Cainelli
    • 1
  • Andrea Fracasso
    • 2
  • Giuseppe Vittucci Marzetti
    • 3
  1. 1.Department of Economics and ManagementUniversity of PadovaPadovaItaly
  2. 2.Department of Economics and Management, School of International StudiesUniversity of TrentoTrentoItaly
  3. 3.Department of Sociology and Social ResearchUniversity of Milano-BicoccaMilanItaly

Personalised recommendations