Shifting resources

Development activity can also be negatively impacted by interrupting ongoing programs to allow a shift in resources from long-term programs to highly visible short-term recovery and emergency response programs.

The secondary effects of a major disaster also disrupt the development process. These secondary effects of direct economic impact include inflation, balance of payment problems, increase in fiscal expenditures and decreases in monetary reserves. An increase in the country’s debt means that as the debt service burden increases, countries have fewer resources available to invest in productive enterprises. The outcome is usually the lowering of economic growth, delays to development programs, cancellation of programs and disincentives to new investment.