How Does the Earthquake Affect Economic Growth with System Dynamics Approach (Case Study of Tehran)

Document Type : Research Article

Author

• Mitra Seyedzadeh

Department of Management, Faculty of Eqbal Lahoori Institute of Higher Education, Mashhad, Iran.

10.22067/jstinp.2022.77778.1013

Abstract

Natural disasters affect economic growth, and due to the location of Tehran, as the capital of Iran, on the Rey fault, Masha, and North of Tehran, the present research was conducted to investigate the effect of earthquakes on the Rey fault on the economic growth of Iran. The economic growth of Iran has been simulated for 40 years, starting from 2013, and through cause and effect cycles, the long-term economic effects of a possible earthquake have been simulated. The innovation of the current research is the economic growth model is designed in terms of product production, knowledge production, production of intermediate energy goods, and the performance of the insurance industry as a part of the financial sector. Also, the influence channels of the earthquake on Roemer's endogenous economic growth model have been simulated using the system dynamics method. The results show that causalties will lead to a reduction in human resources and, as a result, a slight decrease in Iran's economic growth in the long-term. Secondly, the destruction will lead to the reduction of physical capital and, as a result, the reduction of economic growth in the long term. Thirdly, reconstruction costs will have a negative effect on economic growth, which will diminish in the long run.

Keywords

• Economic growth
• Earthquake
• System dynamics
• Physical capital
• Human capital

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