The Fungibility of Health Aid: Reconsidering the Reconsidered

Lu et al. found that health aid displaces domestically-raised government health expenditure, which renders health aid at least partially fungible. These findings are questioned in The Fungibility of Health Aid Reconsidered. Van de Sijpe’s emphasis on disaggregating on- and off-budget aid is a valid contribution, although his empirical conclusions are overstated. We re-evaluate the data he criticises and find they sufficiently capture on-budget aid. To re-measure health aid fungibility, we update the Lu et al data, adding 23 countries and four years of data. Despite the confidence we have in these data, we employ two estimation specifications, each of which addresses the measurement error discussed by Van de Sijpe. The extended data and alternative methods show that development assistance for health channelled to governments remains significantly fungible.     

Aid Illusion and Public Sector Behaviour

Conventional treatments of fungibility, such as in Assessing Aid, are concerned with evidence that aid recipients do not increase sufficiently (that is, by the amount of aid) expenditure on specific areas favoured by donors. In other words, fungibility implies that recipients divert aid to expenditure on areas donors do not wish to fund. However, there is evidence that aggregate expenditure, and even spending on donor-supported areas, rises by more than the value of the aid inflow. This contribution, using insights from the public choice research on fiscal illusion, provides a range of theoretical scenarios to explain this outcome. Included are scenarios where, even where all the features of fungibility are present, expenditure on areas favoured by the donor can increase by more than the value of the aid inflow. The study concludes by suggesting new directions for research on aid policy and the impact of aid on the public sector in developing countries.     

Does Health Aid Reduce Infant and Child Mortality from Diarrhoea in Sub-Saharan Africa?

Achieving sustained improvements in health outcomes remains a challenge for sub-Saharan Africa, where diarrhoea remains a leading cause of death in children under the age of five. This paper examines the impact of foreign aid to the health sector on diarrhoea mortality in children under five in 47 sub-Saharan African countries, using panel data on the sectoral allocation of official development assistance in conjunction with country-level data on health outcomes. After controlling for fixed effects and the potential endogeneity of health aid, we find that increased health aid and increased public health expenditure are associated with lower diarrhoea mortality in children under five. In addition, health aid increases government spending on health, suggesting that the overall impact of health aid on diarrheal death rates could exceed the direct effect. Furthermore, increased access to improved sources of water and sanitation are important in reducing child mortality from diarrhoea.     

The Impact of SWAps on Health Aid Displacement of Domestic Health Expenditure

Recent research suggests that an additional $1 of health aid would displace – or crowd out – nearly the same amount in a recipient government’s own health expenditure. Implementing a Sector Wide Approach (SWAp) may exacerbate crowding out because recipient governments should face fewer constraints when allocating health aid. This paper uses rigorous panel data methods to investigate this hypothesised effect of SWAps. We find that SWAps provide not an exacerbating but a potentially protective effect, reducing displacement of government health expenditure. This suggests some aid dollars are more fungible than others, and the mechanism for aid delivery makes a difference.     

When Does Aid Conditionality Work?

Does aid conditionality—the setting of policy goals in exchange for access to aid—promote reform? Many studies on the impact of aid and reform suggest not. However, few explicitly examine whether the impact of aid on reform is mediated by recipient regime type. I argue that conditional aid is effective but its efficacy depends on recipient countries’ level of democracy because the value of aid to governments depends on the degree to which it helps them maintain power, and recent work shows that the marginal impact of aid on political survival increases with level of democracy. I test this argument on data from 68 countries over the period from 1980 to 1999. I focus on the impact of IMF and World Bank aid on fiscal reform, one of the most commonly stipulated conditions in aid-for-policy arrangements. I find that aid from the Bretton Woods institutions promotes fiscal reform, but only in more democratic countries.     

The EU,the United States and Partnership in Development Cooperation: Bridging the Gap?

This paper investigates the degree to which EU and United States development policies reflect partnership, meaning that aid is based on negotiations on an equal basis. It finds that, while the EU has traditionally been more focused on partnership than the United States, in recent years the gap is narrowing. The EU is increasingly providing aid based on a security rationale and has become reluctant to give budget support, while the United States is starting to work more with local actors. Changes in public support for aid, the EU’s growing role as a security provider and institutional changes can explain this trend.     

Aid,Remittances, Medical Brain Drain and Child Mortality: Evidence Using Inter and Intra-Country Data

This article analyses the respective impact of aid, remittances and medical brain drain (MBD) on child mortality using panel and cross-country quintile-level data on respectively 84 and 46 developing countries. Our results show that remittances reduce child mortality while MBD increases it. Health aid also significantly reduces child mortality but its impact is less robust than the impact of remittances. Remittances seem to be more effective in reducing mortality for children belonging to households from the upper classes, whereas neither a pro-poor nor anti-poor effect is found for health aid.     

Policy Making in Foreign Aid: Gender Equality and Danish Development Policy

Since the mid-1980s, gender equality has constituted a major priority in the provision of Danish foreign aid. Seeking to understand policy-making processes in the field of foreign aid, this article analyses three gender policies in relation to Denmark’s official foreign aid published respectively in 1987, 1993 and 2004, examining the degree to which they reflect domestic politics, organisational concerns within Danida and global gender norms. Challenging earlier research, the conclusion is that, while global norms, organisational concerns and the normative environment in Denmark all play important roles, Danish stakeholders have had a limited and decreasing influence over these policies.     

How to Attract Donations: The Case of US NGOs in International Development

We assess the determinants of private donations across a large sample of US based NGOs with foreign aid activities. Our results show that donations do not depend in the expected way on publicly available information on NGO characteristics that reveal an efficient and targeted use of funds, notably the efficiency price of NGO aid and the degree of specialisation. Private donors rather rely on the frequently offered option to designate donations to preferred purposes – even though this is unlikely to tie the NGOs' hands.     

Foreign aid and the economic growth of developing countries (LDCs): Further evidence

The objectives of this article are to revisit the critical role that foreign aid presently plays in the economic growth of the LDCs and to examine the nature of its utilization in those countries which heavily rely on foreign aid. Other sources of economic growth such as capital (physical and human capital), raw labor, technological changes, and the degree of political and civil liberties will also be considered. Using average cross-sectional data for eighty countries over the 1971–1990 period, the study shows that foreign aid has a statistically positive effect on economic growth in developing countries. Lack of political and civil liberties is found to have a negative, but statistically marginal impact on economic growth. A policy implication which may be drawn from the study is that foreign capital inflow can have a beneficial effect by supplementing domestic savings rather than replacing them. Bichaka Fayissa, Ph.D., is Professor of Economics at Middle Tennessee State University, Murfreesboro, TN. He has published in theInternational Journal of Social Economics, World Development, Keil World Economics, Quarterly Review of Economics and Finance, Applied Economics, Economia Internazionale, Journal of Economics and Finance, Journal of Legal Economics, and several other journals.     

The effectiveness of rural versus urban nonprofit organisations in the Democratic Republic of Congo

The Democratic Republic of Congo (DRC) is a country with high natural resources, but it has suffered from decades of civil wars and social turmoil, being heavily aid-dependent. In the DRC, several Nonprofit Organisations (NPOs) are major players in fighting poverty and enhancing welfare. This research aims to analyse the effectiveness of small NPOs in improving poor peoples’ lives through health, education, and economic activities. Two NPOs working in the DRC, one in a rural and the other in an urban area, are compared by researching the aid sites and surveying 201 households (aid beneficiaries). Our case observations and the survey results facilitate analysing the mission accomplishment, effectiveness, and accountability of the NPOs although we admit that the DRC conditions make exact measurements difficult. Multivariate analyses are used to study the differences in aid impacts. There are significant differences in the beneficiaries’ perception of the NPO effectiveness in improving health while no significant differences in education impact were found. This is probably because both case NPOs have succeeded in getting a large proportion of the children of their area registered in the education centres created by the NPOs. Differences were observed in the accountability and reporting style of the NPOs.     

Can Foreign Health Assistance Reduce the Medical Brain Drain?

In this article, we analyse the impact of foreign health aid on the emigration rates of physicians. The analysis is based on a dataset of physician emigration rates from 50 source countries between 1998 and 2004. First, we investigate the direct impact of health assistance using the generalised method of moments estimation, and we highlight the significant negative effect of foreign health assistance on the medical brain drain. Second, we show that this effect results more from technical assistance than from financial assistance. Finally, the robustness of our analysis is verified to confirm the validity of the results.     

Much ado about nothing? The European Union and the global politics of untying aid

This article has two main purposes. The first is that of providing a longitudinal analysis of the global politics of untying aid, by looking at a number of debates that have occurred within the Development Assistance Committee and in the context of a number of high-level forums on aid effectiveness. The second is that of proposing some explanations for the lack of significant progress in these contexts. The focus is on the European Union (EU), which has been widely perceived as one of the most fervent supporters of promoting the aid untying agenda. In all these debates, the EU's leadership aspirations have remained largely unfulfilled. Thus, the EU has failed to adopt a EU-wide vision on aid untying; persuade non-EU donors to untie their aid, even when it has played the reciprocity card; and promote a pro-poor use of foreign aid, by supporting local ownership and facilitating greater access of developing country firms to aid contracts.     

The significance of outcomes within european health sector reforms: towards the development of an outcomes culture

Recently, policy makers, managers and users of health services have focused their attention on questions about service outcomes and effectiveness. However, the stakeholders in health care-communities, patients, clinicians, insurers, purchasers, managers and policy-makers - may, for various reasons, desire different outcomes to be realised over different timescales. Whilst a focus on outcomes forms a key evaluative criteria within the reforms of European health care systems, the significance of information and the priorities given to outcomes vary across Europe. A central tension lies between the pursuit of individual as opposed to population health gain. Other key issues include the need to separate the evaluation tools from their use and the importance of user choice and user involvement. The article outlines a model of the possible roles and needs for outcomes information. It differentiates between the uses of outcomes information at the patient care and population levels and for considering individual and population health gain. The needs to enhance country-based outcomes databases and to aid the development of an outcomes culture across health care systems in Europe are discussed. The article also discusses issues relating to developing an outcomes culture as an essential element of the health care reform process.     

On Aid,Growth and Good Policies

This study provides a critical analysis of the growth regressions in Burnside and Dollar [2000]. First, we analyse the relationship between aid and government expenditure in a modified neo-classical growth model. One of the main results of the analysis is that while good policies spur growths they may at the same time reduce the effectiveness of foreign aid. Second, we show that the econometric results in Burnside and Dollar emphasising the crucial role of interaction between aid and good policies in the growth process are fragile, as they are extremely data dependent. Finally, we demonstrate that the Burnside and Dollar data lend support to the idea that the association between aid and growth can be approximated by decreasing returns to aid. This finding conforms well to regression results in other recent studies.     

What Factors Determine the Allocation of Aid by Arab Countries and Multilateral Agencies?

This article provides a statistical analysis of the determinants of Arab aid allocation using Heckman's two-step estimator. It is found that poorer, Arab, Islamic and Sub-Saharan African countries are more likely to receive some positive amount of Arab aid (gate-keeping stage). The same is true for countries not maintaining diplomatic relations with Israel as well as those with voting patterns in the United Nations General Assembly similar to Saudi Arabia. Arab and more populous countries also receive a higher share of the total aid allocated (level stage). The same is true for Islamic countries in the case of bilateral aid and countries with voting similarity in the case of multilateral aid. Donor interest, in particular Arab solidarity, plays a clear role at both stages, whereas recipient need as measured by a country's level of income only affects the gate-keeping stage, not the level stage.     

Mogadishu: an economy without a state

When analysing links between conflict, trade and foreign aid in Somalia, it is important to examine the role of the Mogadishu-based business class. Mainly urban-based elites benefit from the profitable business activities, such as the charcoal trade. Nevertheless, potential links between conflict, trade and foreign aid are ambiguous. Whereas trade can trigger conflict in producing areas and along transport routes, it can build trust among the business elite in the urban centres. Today there is a thriving economy largely based on trade and arbitrage, rather than on production, without a functioning state in Somalia. This article argues that, in countries where effective government institutions are absent, security and social services, such as education and health care, are often privatised. However, some individuals have an interest in the continuation of violence to engage in lucrative sectors of the economy which would be regulated or banned under a functioning government.     

WTO agricultural trade battles and food aid

Recent agricultural trade battles at the WTO between the US and the EU have important implications for the Global South, in particular with respect to food aid. The current Doha round of trade talks hinges closely on agreement in the area of agriculture, and a key issue of disagreement between the US and the EU is the question of whether the WTO should impose disciplines on food aid and agricultural export credits. The US has also challenged the EU at the WTO over trade in genetically modified organisms (GMOs). The outcome of this dispute will affect food aid, as many countries have in recent years rejected GM food aid from the US on the grounds that it would harm their export markets in Europe. Decisions on both of these battles should be forthcoming within the next year or two, and the outcomes will affect food aid policies.     

A TALE OF TWO CITIES: A CRITICAL EVALUATION OF THE GEOGRAPHICAL PROVISION OF HEALTH CARE BEFORE THE NHS

This article critically examines the state of knowledge with respect to the geographical provision of health care before the national health Service (MIS). Most accounts claim that health care was geographically unequal and/or inequitable. On closer examination, however, the claims of these studies appear roblematic. This is due to problems of the sources of data, intretation of the data, anz one writefs assertion becoming a subsequent writer's 'fact'. The xarges of inequality and inequity are critically examined. Then, for the hospital services, the situation is explored using data from a well respected but underutilized national wartime survey. Finally, an attempt is made to comare the degree of geographical inequality before the NHS with that of today. It is conclugd that the degree of inequality before the NHS is not as great as some conventional wisdom would suggest. Therefore, if the charges against the pre-NHs system are to stand, more evidence will be needed.     

全球公共产品视角下的中国国际发展合作

中国的对外援助事业随国际、国内形势而变化。近年来官方对国际发展合作的重视不仅促成中国对外援助指导思想的转变,也为对外援助向国际发展合作转型奠定了理念基础。中国为发展合作提供全球公共产品的实践不断丰富:一是基于本国成功经验而开展的减贫国际合作成为重要公共产品,二是通过创新农业技术合作方式为解决全球粮食安全问题提供更多公共产品,三是借助三方合作更好地创新公共产品供给模式,四是持续加强全球卫生公共产品供给。中国对外援助在取得积极成效的同时,也面临经济、技术实力有限、援助项目可持续性不足、受援国国家治理与互不干涉内政之间协调困难、国际发展合作的话语权有待提升等挑战。未来,中国应注重从制度建设、资金筹集、可持续性提升、受援国能动性发挥、国际话语权提升等方面做更充分准备。