Climatic Shocks and Food Security: The Role of Foreign Aid

Abstract

Little is known about the role that foreign aid can play in dampening the effect of climate change. This paper investigates the role of aid in mitigating the adverse effect of climatic shocks on food security in developing countries. Because foreign aid is an important source of revenue for developing countries, it can enable them to face climatic shocks by mobilizing or stabilizing resources for the financing of agriculture production or food imports. Our results show that foreign aid dampens the effect of climatic shocks on food security. Moreover, the dampening effect is higher for countries that are vulnerable to food price shocks.

Keywords: Food prices vulnerability, foreign aid, food security, climatic shocks

JEL Classification: F35, Q17, Q18, Q54