Institutions and Disaster Losses in Lower-Middle-Income Countries: A Dynamic Panel Data Approach Bengal
Abina V P and Meenakshi Rajeev
Abstract
With the growing global concern over disaster risks, research on disaster vulnerability has expanded significantly. However, much of the existing literature continues to focus on development indicators as the primary determinants of vulnerability, often overlooking the critical role of institutions in shaping disaster outcomes. This gap is particularly evident in the context of lower-middle-income countries (LMCs), which are among the most affected in terms of human losses from natural disasters. Therefore, this study seeks to address this gap by examining the role of institutions in determining disaster impacts in LMCs by employing annual data of 47 countries for the period 2000 to 2023. Using a system GMM approach, this study reveals that while exposure remains a critical factor in exacerbating human losses from natural disasters, institutional effectiveness can significantly offset these adverse effects. In particular, strong governance, active civil society participation and effective foreign aid can substantially reduce disaster impacts, even in highly exposed contexts. In this context, the findings underscore that disaster mitigation in LMCs is not merely a technical challenge, but fundamentally a matter of governance and institutional capacity. Building resilient communities requires a holistic approach that integrates sound economic policies, institutional reforms, active community participation, and the strategic use of international assistance.