Natural Disasters and Foreign Aid Allocation: How Much, How Quickly, and to Whom?

Natural disasters provide quasi-experimental variation to study how foreign aid responds to shocks. Using data for 20 bilateral donors for the period going from 1995 to 2021 and a local-projection difference-in-differences design, we estimate the dynamic effects of disasters on aid commitments. Foreign aid rises significantly in the aftermath of shocks, but the response is short-lived and disproportionately benefits middle-income countries. Humanitarian aid reacts quickly, while development aid adjusts more slowly. The findings reveal persistent inequities in global disaster relief.