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Foreign Aid in the Aftermath of Large Natural Disasters

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  • Ilan Noy
  • Oscar Becerra
  • Eduardo A. Cavallo

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Abstract

This paper examines Official Development Assistance (ODA) in the aftermath of large natural disasters between 1970 and 2008. Using an event-study approach, the paper finds that while the median increase in ODA is 18 percent compared to pre-disaster flows, the typical surge is small in relation to the size of the affected economies. Moreover, aid surges typically cover only 3 percent of the total estimated economic damages caused by the disasters. The main determinants of post-disaster aid surges are found to be the intensity of the event itself and the recipient country’s characteristics such as level of development, country size and stock of foreign reserves. The paper does not find evidence that political considerations or strategic behavior on the part of donors determine the size of post-disaster aid surges.

Suggested Citation

  • Ilan Noy & Oscar Becerra & Eduardo A. Cavallo, 2012. "Foreign Aid in the Aftermath of Large Natural Disasters," Research Department Publications 4792, Inter-American Development Bank, Research Department.
  • Handle: RePEc:idb:wpaper:4792
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    References listed on IDEAS

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    1. Yang Dean, 2008. "Coping with Disaster: The Impact of Hurricanes on International Financial Flows, 1970-2002," The B.E. Journal of Economic Analysis & Policy, De Gruyter, pages 1-45.
    2. Eric Werker & Faisal Z. Ahmed & Charles Cohen, 2009. "How Is Foreign Aid Spent? Evidence from a Natural Experiment," American Economic Journal: Macroeconomics, American Economic Association, vol. 1(2), pages 225-244, July.
    3. Fink, Guenther & Redaelli, Silvia, 2009. "Determinants of international emergency aid - humanitarian need only ?," Policy Research Working Paper Series 4839, The World Bank.
    4. Auffret, Philippe, 2003. "High consumption volatility : the impact of natural disasters?," Policy Research Working Paper Series 2962, The World Bank.
    5. Stéphane Hallegatte & Valentin Przyluski, 2010. "The Economics of Natural Disasters," CESifo Forum, Ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 11(2), pages 14-24, July.
    6. Thomas Eisensee & David Strömberg, 2007. "News Droughts, News Floods, and U. S. Disaster Relief," The Quarterly Journal of Economics, Oxford University Press, vol. 122(2), pages 693-728.
    7. Eduardo Cavallo & Sebastian Galiani & Ilan Noy & Juan Pantano, 2013. "Catastrophic Natural Disasters and Economic Growth," The Review of Economics and Statistics, MIT Press, vol. 95(5), pages 1549-1561, December.
    8. Mechler, Reinhard, 2009. "Disasters and economic welfare : can national savings help explain post-disaster changes in consumption ?," Policy Research Working Paper Series 4988, The World Bank.
    9. Noy, I, 2012. "Investing in Disaster Risk Reduction: A Global Fund," Working Paper Series 2390, Victoria University of Wellington, School of Economics and Finance.
    10. Yang Dean, 2008. "Coping with Disaster: The Impact of Hurricanes on International Financial Flows, 1970-2002," The B.E. Journal of Economic Analysis & Policy, De Gruyter, pages 1-45.
    11. Charlotte Benson & Edward J. Clay, 2004. "Understanding the Economic and Financial Impacts of Natural Disasters," World Bank Publications, The World Bank, number 15025.
    12. Eduardo Cavallo & Sebastian Galiani & Ilan Noy & Juan Pantano, 2013. "Catastrophic Natural Disasters and Economic Growth," The Review of Economics and Statistics, MIT Press, pages 1549-1561.
    13. Hallegatte, Stephane & Przyluski, Valentin, 2010. "The economics of natural disasters : concepts and methods," Policy Research Working Paper Series 5507, The World Bank.
    14. Seonjou Kang & James Meernik, 2004. "Determinants of Post-Conflict Economic Assistance," Journal of Peace Research, Peace Research Institute Oslo, vol. 41(2), pages 149-166, March.
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    Cited by:

    1. Cécile Couharde & Rémi Generoso, 2015. "Hydro-climatic thresholds and economic growth reversals in developing countries: an empirical investigation," EconomiX Working Papers 2015-26, University of Paris Nanterre, EconomiX.
    2. Eiji Yamamura & Yoshiro Tsutsui & Fumio Ohtake, 2017. "Altruistic and selfish motivations of charitable giving:Case of the hometown tax donation system in Japan," ISER Discussion Paper 1003, Institute of Social and Economic Research, Osaka University.
    3. Diana De Alwis & Ilan Noy, 2016. "Sri Lankan Households a Decade after the Indian Ocean Tsunami," CESifo Working Paper Series 6136, CESifo Group Munich.
    4. Juncal Cunado & Susana Ferreira, 2014. "The Macroeconomic Impacts of Natural Disasters: The Case of Floods," Land Economics, University of Wisconsin Press, vol. 90(1), pages 149-168.
    5. Kim, Youngwan & Nunnenkamp, Peter & Bagchi, Chandreyee, 2014. "Natural disasters and private donations to NGOs: The effects of being present after the Tsunami in the Indian Ocean," Kiel Working Papers 1890, Kiel Institute for the World Economy (IfW).
    6. Joanne Linnerooth-Bayer & Stefan Hochrainer-Stigler, 2015. "Financial instruments for disaster risk management and climate change adaptation," Climatic Change, Springer, vol. 133(1), pages 85-100, November.
    7. Goetz von Peter & Sebastian von Dahlen & Sweta C Saxena, 2012. "Unmitigated disasters? New evidence on the macroeconomic cost of natural catastrophes," BIS Working Papers 394, Bank for International Settlements.

    More about this item

    JEL classification:

    • F35 - International Economics - - International Finance - - - Foreign Aid
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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