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Natural Disasters

04/01/2010

These days, there seems to be more natural disasters than before. Earthquake in Taiwan, Haiti, Chile, Mexico; just in 2010. Numerous earthquakes killed thousands and millions of people and left them nothing but despair. However, you may wonder, “Anyways, how is this related to economics??” Well, it greatly affects the economy all over the world and I will tell you why.

Earthquakes are obviously damaging the facilities and infrastructure of different countries all over the world. The bridges, buildings, highways collapse all the time leaving tremendous amount of work after it. To build these bridges, buildings, highways again, “What do they need?” Yes, they need steel, asphalt, and raw materials. But, in 2010, the countries that supply the raw materials were severely impacted and damaged due  to the natural disasters and are disabled to function properly.

Chile supplies world’s 34% of copper ore which is used to make copper. Because the earthquake struck Chile and destroyed everything, the demand for copper is sky-rocketing while Chile is unable meet the demands. Eventually, according to FT, the copper price has risen about 97% for the past 12 months.

It is not only Chile who is suffering from the natural disasters. Taiwan also is having a hard time because of the destruction of its LCD panel factories. Taiwan, known as the herb of electronics, has great technologies to compete with Korean companies such as Samsung, Hynix, and LG. However, the recent earthquake destroyed their factories and due to the destruction, it is estimated that Korean LCD panel companies are going to benefit. Samsung’s stock price is currently on its roll because of increased revenue and market share.

As such, twisting your thought a little can lead to a whole new interesting topic that’s fascinating. So try to think different when reading newspaper or watching news.

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