Abstract
This paper explores the impact of foreign on economic growth using variation in inflows from natural disasters. Because using a country's own disaster exposure as an instrument for inflows violates exogeneity assumptions, I instead use the disaster exposure of a country's aid neighbors, defined as its competitors for from donors. Using neighbor droughts to instrument for aid, I show that inflows significantly increase per capita GDP growth in the short to medium run due to increased household consumption, while physical capital investment actually falls. I find no evidence of any long-run aid-growth effects.
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