Global Assessment Report on Disaster Risk Reduction 2013
From Shared Risk to Shared Value: the Business Case for Disaster Risk Reduction


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44
Part I - Chapter 2
concentrated in OECD countries. The value of produced capital in OECD countries increased by about one-fifth from US$75.3 trillion in 1995 to US$93.4 trillion in 2005 (World Bank, 2011

World Bank. 2011.,The changing Wealth of Nations : Measuring Sustainable Development in the New Millennium., Washington DC,. .
).
In relative terms, however, there have been spectacular increases in the value of produced capital in those low and middle-income countries that have been successful in attracting investment. The value of produced capital in East Asia and the Pacific, iii for example, more than doubled from US$4.6 trillion in 1995 to US$10 trillion in 2005.
In contrast, the value of produced capital in regions that have been less successful in attracting investment has grown from a small base and at a slower rate. For example, the value of produced capital in sub-Saharan Africa increased from US$1.1 billion in 1995 to only US$1.3 billion in 2005, representing less than 1% of the world’s total.
Figure 2.2 highlights the contrast between China, where the stock of produced capital has more than quadrupled over the last 20 years, and the United States of America, where it has increased by only
70 percent over the same period (UNU-IHDP and UNEP, 2012).
Since 2009, and as Figure 2.1 previously shows, FDI flows have fallen as a result of the global crisis. FDI flows from countries such as China, however, are growing rapidly, reaching US$77 billion in 2012. Although still relatively small, this trend indicates changes in the direction of capital flows. At the same time, as labour costs increase and access to skilled workers becomes limited in some markets, some previously attractive locations for FDI may lose some of their comparative advantage.
2.2 Increasingexposure
New data confirm that a rapid increase in exposure is a major driver of disaster risk today. Investments in flood plains or on cyclone-prone coastlines lead to spiraling risk levels but are still considered profitable as special industrial zones, a skilled workforce and large markets bring comparative advantages and continue to attract business.
Some regions that are successfully attracting investment and have seen the largest increase in produced capital are also exposed to hazards such as earthquakes, tropical cyclones and tsunamis. As such, benefits to business from globalisation have also been accompanied by major boosts in population and value of assets in hazard-exposed areas. These areas include tsunami and cyclone-prone coastlines, flood-prone river basins and earthquake-prone mega-cities. Seasoned investors have not acted irrationally in flocking to these areas. On the contrary—many such areas offer higher productivity and comparative advantages. For example, export-oriented production and distribution tends to cluster around international ports; tourism is attracted to tropical beaches and islands (Hallegatte, 2011). These areas, however, present disaster risks,
(Source: Adapted from UNU-IHDP and UNEP, 2012)
Figure 2.2 Produced capital growth in China and the United States of America
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