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Resilient Economy after a Natural Disaster

Japan is a nation that always generates interest because it has been a pioneer in introducing technological advances to the world over the years. But this island nation, nestled on the boundaries of tectonic plates in the sea and on land, has historically faced various natural disasters due to its geographical location. Earthquakes, tsunamis, and typhoons have marked the history of this country since ancient times. 

By: Seleny Santamaria, Research Assistant CCJCI

Photos of Sona Area Tokyo (top left); Honjo Lifesaving Learning Center (bottom left/top right); and Motoshiro Elementary School, Toyota City (bottom right). 

What impresses us most is the extraordinary resilience of the Japanese people, who rise with determination after each natural disaster to overcome the economic consequences of these events and highlight the effectiveness of their prevention strategies. Despite the challenges, the Japanese people have shown an amazing ability to recover and rebuild, and it is this tenacity that we want to highlight. 

Our blog has previously discussed the topic of preventing natural disasters in Japan. We invite you to consult the corresponding article, available on our website, where you will be able to delve deeper into this topic and better understand how Japan has developed effective strategies to protect its population from natural disasters. 

 Kobe earthquake 1995. Tomado de:

We will begin our analysis by focusing on the 1995 Kobe earthquake, one of the most economically shocking modern seismic tragedies. With a magnitude of 6.9, its epicenter directly impacted a large modern urban area, claiming the lives of more than 6,500 people. This disaster left a trail of destruction in its wake, paralyzing communications, roads, railroads, water supply and other essential infrastructure. With more than 150,000 buildings destroyed and another 180,000 damaged, the catastrophe left more than 600,000 people homeless. 

However, the devastation was not limited to human lives and buildings; damage to Kobe's physical capital reached a staggering $114 billion, representing 2.3% of Japan's GDP and about 0.8% of the country's total physical capital at the time. These figures were three times the costs of any other catastrophe in history. Making harrowing calculations on the loss of human and physical capital. It is estimated that the Kobe earthquake resulted in a capital loss of $127 billion, equivalent to at least 0.08% of all of Japan's physical and human assets at the time. 

2011 earthquake. Tomado de: ISSAC Antisismica

On the other hand, the earthquake and tsunami that struck Japan on March 11, 2011, followed by the nuclear crisis in Fukushima, left a permanent mark on the Japanese economy. This catastrophic event demonstrated Japan's resilience and ability to recover, despite domestic challenges, highlighting its crucial role in effectively managing crises of this magnitude. Japan faced the loss of considerable physical and human capital, with damages estimated at between $195 billion and $305 billion. The human toll is equally heartbreaking, with some 23,000 people dead or missing, and more than 400,000 homes and buildings affected in whole or in part. The continuing crisis at the Fukushima nuclear reactors intensified the negative effects, generating massive evacuations, radioactive contamination, and electricity shortages. Continuous aftershocks and extensive damage to infrastructure, housing, manufacturing plants and other buildings prolonged Japan's economic agony in the years following this tragedy. 

Examining the two cases above, it is evident that the infrastructure of cities is left vulnerable after natural disasters, underscoring the crucial importance of rebuilding affected areas to ensure inhabitants' access to essential services. The task of reconstruction presents significant challenges for authorities, as they must create efficient infrastructures that protect citizens from future natural disasters. Economic recovery is a gradual process, as it involves resolving emergencies and assisting the affected population before restoring normalcy to these areas and enabling economic recovery. A fundamental aspect is the strong citizen awareness of prevention because the population is trained to know how to act during disasters. 

The reconstruction of Kobe after the devastating earthquake reveals a remarkable redesign of the city, characterized by excellent urban infrastructure and improved resilience to future earthquakes. Lessons learned from this experience have generated significant awareness of the risks associated with poorly engineered infrastructure such as roads, water, sewerage, transportation, and communications systems. This learning has translated into the gradual implementation of safer designs in major urban areas throughout Japan. Visitors to Tokyo, for example, can appreciate the meticulous reinforcements made to its road system over the past 15 years, evidencing a strategy to withstand earthquakes and strengthen the resilience of infrastructure. 

[The two shaking tables of the Advanced Earthquake Engineering Laboratory, the E-Beetle (foreground) and the E-Spider (background)]. Taken from: Earthquake-Resistant Architecture and City Building Advanced Earthquake-Resistance Research by a Construction Company. 

Effective disaster prevention strategies are essential, and Japan has led this initiative through various measures implemented by its government. From early warning systems to evacuation protocols, Japan has established a comprehensive network to prevent and mitigate the impacts of adverse natural events. The Asian country has developed disaster prevention centers accessible to the public, such as the "Honjo Life Saving Learning Center", under the aegis of the Tokyo Fire Department, or the Yokohama Disaster risk reduction learning center. These centers offer the public, especially students, the opportunity to participate in simulations that teach how to act in emergencies, contributing to society's response to potential disasters and, ultimately, to saving lives. This pioneering approach underscores the crucial importance of prevention in reducing economic and human losses. If you would like to learn more about these strategies, we invite you to read our article, where we expand on this topic. 

Photo: APA Group. Apple Towers Sendai 

The Role of the Business Community 

 Japanese companies have implemented disaster prevention measures ranging from designing safer buildings to diversifying supply chains to ensure effective business continuity. Crucially, economic resilience is built on prevention. In this context, it is essential to recognize that resilient industry is founded on the ability of companies, sectors, and industrial parks to strengthen their competitiveness through sustaining operations and growth, even during increasingly frequent and intense disasters and other unprecedented events (World Bank, 2020). This proactive approach not only demonstrates the adaptability of Japanese companies, but also highlights the urgent need to integrate prevention strategies into the business fabric to meet the current challenges of the global business environment. 

Video: Seleny Santamaria. Simulator at the Yokohama Disaster risk reduction learning center. 

In the Japanese context, resilience to natural disasters is based on the ability of governments, businesses, and industrial parks to understand and mitigate risks, respond quickly, and recover, maintaining and improving competitiveness. Understanding risk is essential, requiring a clear assessment of exposures to catastrophes and climate change. Action plans are then developed based on planning and prioritization, followed by mitigation and preparedness measures to reduce damage, and facilitate recovery. 

Disaster response and recovery involves the activation of pre-established plans, with training and information management procedures to estimate the scope of the crisis. Industrial activities, fundamental to the Japanese economy, may experience significant disruptions due to the impact on infrastructure and services. In this regard, eight key approaches to promote a resilient industry are highlighted: 

  1. Integrate resilient industry into policy and institutional frameworks.   

  1. Promote business continuity planning and management at various levels. 

  1. Identify win-win collaborations for a resilient industry through pre-established agreements between stakeholders.  

  1. Minimize the impacts of infrastructure disruptions through new technologies.  

  1. Encourage public-private partnerships for disaster mitigation infrastructure at industrial sites. 

  1. Use of Big data and data visualization technologies for evidence-based resilient industrial policy making.  

  1. Providing safety nets and financial mechanisms to small and medium enterprises to secure their cash flow against disaster-induced disruptions.  

  1. Address the challenges of empowering women in industry in the aftermath of a disaster. 

Japanese economic production, especially concentrated in coastal municipalities, faces significant risks from tsunamis and storm surges. The direct impacts of catastrophes, such as physical damage and infrastructure disruptions, can lead to the paralysis of business operations and the possible need for closure for companies without adequate financial resources to persevere under financial constraints. 


Taken from: Resilient Industries in Japan 

Future Perspectives and Lessons Learned 

Although industrial activity plays a crucial role in generating employment, catalyzing investment, and contributing to technological advances in a country, it faces a growing threat from risks associated with catastrophes and climate change. Phenomena such as earthquakes, extreme weather events and disease outbreaks are increasingly disrupting industrial operations, thus undermining sustainable economic development in several countries. In this context, business awareness is on the rise, as companies recognize the critical importance of implementing resilience measures to ensure the continuity, competitiveness, and survival of their businesses in an environment marked by increasing risks to industries. 

Analysis of the recent disasters in Japan highlights that the effects go beyond physical damage to business assets, severely impacting operations due to repercussions on employees, infrastructure, supply chains and business partners. This impact is reflected in significant cost to manufacturing companies, as response, recovery and reconstruction require substantial funding. The manufacturing industry faces risks of disruption from natural catastrophes, while the loss of vital infrastructure services amplifies the economic effects. Disaster-related bankruptcies have an expansive spatial and temporal scope. Although SMEs face greater challenges in recovery, it is noted that preparedness can enable the recovery of business and economic competitiveness even after large-scale disasters. 

In summary, Analyzing the Economic Impact of Natural Disasters in Japan not only focuses on understanding the economic past in the face of natural adversity, but also highlights the critical importance of prevention. In a country where nature is unpredictable, investment and planning in preventive measures emerge as the fundamental key to building a more robust economy resilient to the onslaught of nature. This article not only seeks to examine the economic effects of past disasters, but also invites reflection on the need to anticipate and prevent. 


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  2. Drysdale, P., & Drysdale, P. (2023, 7 diciembre). Japan’s earthquake and its economic impact | East Asia Forum. East Asia Forum.  

  3. Educación sobre desastres en Japón: Preparándonos ante catástrofes naturales para proteger la vida de los niños | Web Japan. (s. f.). Web Japan.  

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  5. Japan’s 2011 earthquake and Tsunami: economic effects and implications for the United States. (2011). En CRS Reports.  

  6. Japonesa, C. C. (2022, 29 septiembre). Estrategia de prevención de desastres naturales en Japón. CCJIC.  

  7. MOFA: Disasters and disaster prevention in Japan. (s. f.).  

  8. Understanding natural disasters | TIPS. (s. f.). TIPS.  

  9. World Bank. (2020). Resilient Industries in Japan: Lessons learned on enhancing competitive industries in the face of disasters caused by natural hazards. World Bank, Washington, DC. 

  10. 山田. (2015, 3 noviembre). Earthquake - Resistant Architecture and City Building Advanced Earthquake-Resistance research by a construction company | 公益財団法人フォーリン・プレスセンター (FPCJ). 公益財団法人フォーリン・プレスセンター(FPCJ) | 「日本の今」を、世界のメディアへ。取材と広報を支援する情報発信サイト. 

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