Foreign Development Assistance and Economic Resilience: Mitigating the Impact of Natural Disasters in Africa

Abstract

Natural disasters are increasingly common and intense events that disproportionately impact developing countries due to global climate change, resulting in significant economic and human losses. This study utilized panel data from various African nations from 1971 to 2020, employing Panel ARDL to examine the effects of these disasters. The primary objective was to assess whether foreign development assistance effectively promotes economic growth in regions hit by natural disasters. The analysis revealed that natural disasters negatively affect economic growth significantly. Conversely, foreign development assistance has a positive and substantial impact on economic growth. Causality tests further identified a bidirectional relationship between these variables, indicating that while natural disasters impede growth, the adverse effects can be somewhat alleviated through foreign development assistance. These findings carry crucial policy implications for government officials and planners. They suggest that strategic deployment of foreign aid can significantly mitigate the economic setbacks triggered by natural disasters. This insight is vital for effective planning and resource allocation in disaster management and economic recovery initiatives. The study underscores the importance of international aid as a critical component of support for vulnerable economies facing the challenges of natural disasters. Such support not only aids in immediate disaster response efforts but also contributes to longer-term economic stability and growth.