Is Health Aid Different? The Relationship of Foreign Aid to Population Health Improvements

Eran Bendavid, Stanford University
Jay Bhattacharya, Stanford University

We provide evidence for a provocative hypothesis: that foreign aid to the health sector of developing countries may have been driving improvements in life expectancy and under-5 mortality. We assembled a panel data on health aid, life expectancy, and under-5 mortality among 140 health aid recipient countries between 1974 and 2010. We test our hypothesis using first difference models. Life expectancy increased by 0.24 months faster (p=0.03) and under-5 mortality declined by 0.14 per 1,000 births faster (p=0.02) with each 1% higher aid. The association has been strengthening over time. At current rates, an additional $1bn in aid (about a 4% increase) would be associated with 364,800 fewer under-five deaths (95% CI 98,400-630,000). We conclude that foreign aid to the health sector is related to improving life expectancy and under-5 mortality, especially between 2000 and 2010, possibly because of improving health technologies or effective targeting of aid.