Regional Guidance from the PRIF

With country level data on 13 PICs over 1981–2014, this study assesses the effectiveness of green finance, namely foreign development assistance, in mitigating natural disasters’ impact on Pacific economic growth. With the application of panel integration tests and the system generalized method of moments (GMM) estimator, this study provides a non-spurious and consistent empirical estimation of a growth model. It is found that while natural disaster greatly hinders economic growth in this region, official development assistance significantly mitigates such adverse effects. To our knowledge, this is the first study that examines the effectiveness of foreign development assistance in mitigating natural disasters' impact.