The Relationship Between Health aid and Health Outcomes and the Role of Domestic Healthcare Expenditure in Developing Countries

Abstract

Foreign aid is a controversial tool for helping developing countries achieve economic growth and welfare. Nevertheless, the early 2000s saw a rise in development assistance dedicated to the health sector. The concept of sustainable development highlights the importance of a healthy population to achieve overall development. Using a dataset containing Official Development Assistance channelled towards 100 countries between 2002 and 2020, this paper studies the effect of health aid on health outcomes. To test aid effectiveness, regression models are estimated using infant mortality and life expectancy as proxies for health outcomes. The analyses show that health aid has a positive effect on population health. Moreover, this study tests whether domestic government health expenditure can give further insights into the complex relationship between aid and health improvements. Results yield no significant effect of health aid on public health expenditure; hence no mediation effect can be found. Findings are robust to varying controls and an instrumental variable approach, where two-year lagged health aid is used as instrument. Results also suggest that socioeconomic factors like urbanisation have a positive effect on health outcomes, which implies that population health depends on many factors besides monetary resources.

Keywords:

• health aid
• development aid
• infant mortality
• life expectancy
• public healthcare spending

Disclosure statement

No potential conflict of interest was reported by the author(s).

Additional information

Notes on contributors

Isabelle Leunig

Isabelle Leunig is a PhD student in Social and Political Sciences at Università Bocconi in Milan. She holds an M.Sc. in Public Policy from Erasmus University Rotterdam, where she conducted the research of this paper together with Geske Dijkstra and Pieter Tuytens, and a B.Sc. in Economics and Management from Università Bocconi.

Geske Dijkstra

Geske Dijkstra is Professor of Governance and Global Development at Erasmus University Rotterdam. She has always combined research and teaching with carrying out studies and consultancies for organisations involved in development cooperation, such as the World Bank, the Swedish International Development Agency (Sida) and the Dutch Ministry of Foreign Affairs. She has published extensively on aid and debt issues, on gender equality measures, and on economic policies and economic reforms in developing countries.

Pieter Tuytens

Pieter Tuytens is an Assistant Professor at the Erasmus School of Social and Behavioural Sciences in the Public Administration department and holds a PhD in Economics from the London School of Economics. He also worked as a policy consultant (Technopolis Group and IDEA Consult) and completed a traineeship at the European Commission (DG ENTR). His research focus lays on pensions, welfare, finance, insurance, and economic insecurity.