Health Aid and Governance in Developing Countries

Fielding, David

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Health Aid and Governance in Developing Countries

Fielding, David

Cite this item: Fielding, D. (2008). Health Aid and Governance in Developing Countries (Economics Discussion Papers Series No. 809). Department of Economics, University of Otago. Retrieved from http://hdl.handle.net/10523/1558

Permanent link to OUR Archive version: http://hdl.handle.net/10523/1558

Date: 2008-11-01

Publisher: Department of Economics, University of Otago

Pages: 24

Series: Economics Discussion Papers Series

Series number: 809

Keywords: aid; governance; Health

Research Type: Discussion Paper

Abstract:

Despite anecdotal evidence that the quality of governance in recipient countries affects the allocation of international health aid, there is no quantitative evidence on the magnitude of this effect, or on which dimensions of governance influence donor decisions. We measure health

aid flows over 2001-2005 for 87 aid recipients, matching aid data with measures of different dimensions of governance and a range of country-specific economic and health characteristics. Both corruption and political rights, but not civil rights, have a significant impact on aid. The sensitivity of aid to corruption might be explained by a perception that poor institutions make health aid inefficient. However, even when we allow for variations in the level of corruption, political rights still have a significant impact on aid allocation. This suggests that health aid is sometimes used as an incentive to reward political reforms, even though (as we find) such aid is not fungibile.

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