Honors College | Scholars Week Theses Presentations

Title

Disaster and Recovery - The Effects of Post-Disaster Aid on Economic Development

Academic Level at Time of Presentation

Senior

Major

Economics with a double major in Mathematics

Minor

Political Science

List all Project Mentors & Advisor(s)

Dr. David Eaton, PhD

Presentation Format

Oral Presentation

Abstract/Description

An analysis of various charities, NGOs, and foreign aid and their effects on economic development in areas affected by them. We observe the changes in areas before and after natural disaster. By drawing on the comparison’s we can empirically analyze the Samaritan’s Dilemma put forth by James Buchannan. We can observe through the data that while charity actions can help in the short term, they can lead to long term dependencies. By providing necessary services for free, charities undermine local entrepreneurs and hinder industry and business creation. Without businesses to sustain a community, people are unemployed and, hence, cannot purchase goods. Subsequently, charities see this hardship that people are facing and seek to help them, and so the cycle continues. While we may assume that charities act with benevolent intent and without corruption, we can still see this issue arising. There is an optimum point of aid in which communities can survive hardship just enough to recover and begin sustaining themselves, but any aid beyond this point removes profits from the markets and dissuades entry. Thus, the optimum point of aid is the point in which local individuals can realize the profits and obtain them, without removing the profits. This problem is exacerbated by the substantial need that is created by natural disasters. The effects of short-term aid may help revive an economy, but too much may be detrimental.

Affiliations

Honors Thesis

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Disaster and Recovery - The Effects of Post-Disaster Aid on Economic Development

An analysis of various charities, NGOs, and foreign aid and their effects on economic development in areas affected by them. We observe the changes in areas before and after natural disaster. By drawing on the comparison’s we can empirically analyze the Samaritan’s Dilemma put forth by James Buchannan. We can observe through the data that while charity actions can help in the short term, they can lead to long term dependencies. By providing necessary services for free, charities undermine local entrepreneurs and hinder industry and business creation. Without businesses to sustain a community, people are unemployed and, hence, cannot purchase goods. Subsequently, charities see this hardship that people are facing and seek to help them, and so the cycle continues. While we may assume that charities act with benevolent intent and without corruption, we can still see this issue arising. There is an optimum point of aid in which communities can survive hardship just enough to recover and begin sustaining themselves, but any aid beyond this point removes profits from the markets and dissuades entry. Thus, the optimum point of aid is the point in which local individuals can realize the profits and obtain them, without removing the profits. This problem is exacerbated by the substantial need that is created by natural disasters. The effects of short-term aid may help revive an economy, but too much may be detrimental.