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Aid, Catastrophes and the Samaritan's Dilemma

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  • Paul A. Raschky

    ()

  • Manijeh Schwindt

    ()

Abstract

This paper discusses the impact of expected foreign aid in case of catastrophic events on the level of mitigative activities in aid-receiving countries. The theoretical model shows that the anticipation of foreign aid partly crowds out preventive collective action. The crowding-out effect can result in both a lower probability of surviving an disaster and an increase in an event's proportion. In order to test the theoretical propositions we analyse the effect of foreign aid dependence on a) ex-ante risk-management activity proxied by the death toll from 317 major earthquakes occurring worldwide between 1980 and 2002 and b) the likelihood of cholera epidemics between 1980 and 2001. Our estimates suggest that foreign aid in previous years is crowding out ex-ante risk-management activities in recipient countries. The paper concludes with propositions on the deployment of foreign aid.

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  • Paul A. Raschky & Manijeh Schwindt, "undated". "Aid, Catastrophes and the Samaritan's Dilemma," Working Papers 2008-06, Faculty of Economics and Statistics, University of Innsbruck.
  • Handle: RePEc:inn:wpaper:2008-06
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    Cited by:

    1. Oscar Becerra & Eduardo Cavallo & Ilan Noy, 2014. "Foreign Aid in the Aftermath of Large Natural Disasters," Review of Development Economics, Wiley Blackwell, vol. 18(3), pages 445-460, August.
    2. Fiala, Oliver & Wende, Danny, 2016. "The impact of trust, risk and disaster exposure on microinsurance demand: Results of a DCE analysis in Cambodia," Dresden Discussion Paper Series in Economics 01/16, Technische Universität Dresden, Faculty of Business and Economics, Department of Economics.
    3. Ruerd Ruben, 2012. "Dimensionner l'aide au développement : ce que nous enseigne l'évaluation. Dimensioning Development Aid: Some Lessons from Evaluation," Revue d’économie du développement, De Boeck Université, vol. 20(4), pages 95-123.
    4. repec:eee:eecrev:v:101:y:2018:i:c:p:441-458 is not listed on IDEAS
    5. Jesus Crespo Cuaresma & Andreas Breitenfellner, "undated". "Crude Oil Prices and the Euro-Dollar Exchange Rate: A Forecasting Exercise," Working Papers 2008-08, Faculty of Economics and Statistics, University of Innsbruck.
    6. Rodolfo Manuelli, 2017. "Natural Disasters and Growth: The Role of Foreign Aid and Disaster Insurance," 2017 Meeting Papers 1118, Society for Economic Dynamics.
    7. repec:eee:jeeman:v:87:y:2018:i:c:p:150-164 is not listed on IDEAS

    More about this item

    Keywords

    Foreign Aid; Samaritan's Dilemma; Catastrophes;

    JEL classification:

    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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