Whose Aid is Beneficial to Firms' Exports? Evidence from a Post‐disaster Aid Experiment in China

Abstract

Post‐disaster aid is widely regarded as important in helping local recovery and development. This paper examines the effectiveness of post‐disaster aid on exports, which are a driving factor of economic development. It reports a natural experiment in China – the case of post‐disaster aid following the Wenchuan earthquake in 2008 – to examine how donors' experiences affected the exports of manufacturing firms in disaster‐stricken counties. The export experience of the donor was important. Aid coming from donors with more export experience was more beneficial to the exports of firms in recipient counties than aid from less experienced donors. “Learning from the donor” is a potential channel through which this effect occurred. That is, firms in recipient counties learned from donors' export experience by exporting more products similar to those of donors, exporting more to the destination countries of donors, and participating in the donors' supply‐chain networks by exporting more of the donors' exports. Such “learning from the donor” effects show that knowledge spillover can occur between spatially distant parties, which complements the literature.