Working Papers in Economics and Statistics No. 2009-16
University of Innsbruck, Department of Public Finance, Innsbruck
Research suggests that a donor country's decision to provide post-disaster assistance is not only driven by the severity of a disaster and the resulting humanitarian needs in the recipient country but also by strategic considerations. We argue that the identification of the determinants of the size of disaster assistance is a first step in the analysis of the donor's behavior. Since all aid is not motivated by the same reasons, the evaluation of the donor country's behavior requires a second step accounting for the type and the channel of aid provided. Using data on international disaster assistance between 2000 and 2007 one can examine both the donor countries' decision on the channel (bilateral vs. multilateral) and the type of disaster relief (cash vs. in-kind). The empirical results suggest that international disaster relief is not as much driven by the needs of the recipient country but also by strategic interests (e.g. oil, trade relationships) of the donor country. Bilateral and cash transfers are used as a vehicle to signal strategic interests, while multilateral and in-kind transfers are chosen to control for misuse in badly governed recipient countries.
Foreign aid natural disasters bilateral vs. multilateral type of aid