IMF Working Papers

Foreign Aid and (Big) Shocks: Evidence from Natural Disasters

By Rabah Arezki, Youssouf Camara, Patrick A. Imam, Kangni R Kpodar

January 10, 2025

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Format: Chicago

Rabah Arezki, Youssouf Camara, Patrick A. Imam, and Kangni R Kpodar. "Foreign Aid and (Big) Shocks: Evidence from Natural Disasters", IMF Working Papers 2025, 006 (2025), accessed January 11, 2025, https://doi.org/10.5089/9798400299117.001

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Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

We explore the effect of (big) shocks on the allocation of (bilateral) aid using natural disasters as natural experiments. We find that aid commitment statistically significantly increases following natural disasters, and that humanitarian aid precedes structural aid. While we find that the average effect is quantitatively significant, poorest countries or countries faced with most damaging natural disasters do not receive the most aid. We find no evidence that foreign aid commitment disburses faster following natural disasters. Further explorations into the mechanisms driving aid in disaster countries point to the importance of political alignment with (major) donors in recipient countries with low state capacity.

Subject: Bilateral aid, Disaster aid, Environment, Foreign aid, Natural disasters

Keywords: Absorptive Capacity, Aid Allocation, Bilateral aid, Disaster aid, Global, Natural disasters, Natural Disasters, Political Alignment

Publication Details

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