A research project examining the rate of return to capital in and the post-tsunami recovery process of micro-enterprises.

A survey of over 600 micro-enterprises in the Kalutara, Matara and Galle districts was carried out every quarter.

Equipment and cash treatments/ interventions to randomly selected enterprises were administered. Follow-up surveys were conducted after five years to examine post-tsunami recovery of enterprises.


Research Publications

“Mental Health Recovery and Economic Recovery after the tsunami: High frequency longitudinal evidence from Sri Lankan small business owners”

A sample of 561 Sri Lanka microenterprise owners affected to various extents by the December 2004 Indian Ocean tsunami were surveyed five times at quarterly intervals between March 2005 and April 2006. Mental health recovery was measured through questions on return to normalcy and change in life outlook. Business profits were used to measure livelihoods recovery. We find that these mental health process measures are correlated with post-traumatic stress disorder and general mental health in a validation survey, and display similar correlates to both in the cross-section. However, socioeconomic factors are not found to be significant in predicting the dynamics of mental health recovery in a fixed effects logistic regression. Mental health recovery from a given initial level therefore appears to depend largely on time since the disaster, and not on economic recovery of an individual’s livelihood.

Published in Social Science & Medicine, Vol. 66, No. 3, February 2008, pp. 582-595 (Available at  www.elsevier.com/locate/socscimed  )


“Enterprise Recovery following Natural Disasters”

Using unique, panel data and a randomized experiment, we assess the effects of relief aid and access to capital on the recovery of Sri Lankan microenterprises following the December 2004 tsunami.

Our results show that a lack of access to capital inhibits the recovery process; firms receiving randomly allocated grants recover profit levels almost 2 years before other damaged firms. Access to capital is particularly important for the retail sector; the role of capital in recovery for manufacturing and services sectors may be limited by disruptions in supply chains. Our data show that business recovery is much slower than commonly assumed, underscoring the role targeted aid may play in hastening microenterprise recovery following such disasters.

Published in Economic Journal Vol. 122, Issue 559, March 2012, pp. 64-91. See: http://onlinelibrary.wiley.com/doi/10.1111/ecoj.2012.122.issue-559/issuetoc

A previous version of this paper is available as World Bank Policy Research Working Paper No 5269, April 2010 (direct link: http://www-wds.worldbank.org/external/default/WDSContentServer/IW3P/IB/2010/04/13/000158349_20100413103243/Rendered/PDF/WPS5269.pdf)