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Aid diversion and the impact of Development Assistance for Health in a decentralized health system

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  • Samuel Lordemus

    (Department of Economics, University of Sheffield, UK)

Abstract

The effects of foreign aid on a decentralised health system are analysed in a theoretical framework where the donor has imperfect information about the local health needs while the central and local governments do not engage in self-interested efforts upon receiving aid. I discuss the implications of conditionality of aid on local health expenditures, intergovernmental transfers and social welfare. I then examine these consequences in a health system with two levels of care when the donor restricts aid on Primary Health Care.

Suggested Citation

  • Samuel Lordemus, 2018. "Aid diversion and the impact of Development Assistance for Health in a decentralized health system," Working Papers 2018016, The University of Sheffield, Department of Economics.
    • Handle: RePEc:shf:wpaper:2018016
    as

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    File URL: http://www.sheffield.ac.uk/economics/research/serps/articles/2018_016
    File Function: First version, October 2018
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    References listed on IDEAS

    as
    1. Martens,Bertin & Mummert,Uwe & Murrell,Peter & Seabright,Paul, 2008. "The Institutional Economics of Foreign Aid," Cambridge Books, Cambridge University Press, number 9780521055390, January.
    2. van de Walle, Dominique & Mu, Ren, 2007. "Fungibility and the flypaper effect of project aid: Micro-evidence for Vietnam," Journal of Development Economics, Elsevier, vol. 84(2), pages 667-685, November.
    3. Nicolas Van de Sijpe, 2013. "Is Foreign Aid Fungible? Evidence from the Education and Health Sectors," The World Bank Economic Review, World Bank, vol. 27(2), pages 320-356.
    4. Dolan, Paul & Tsuchiya, Aki, 2009. "The social welfare function and individual responsibility: Some theoretical issues and empirical evidence," Journal of Health Economics, Elsevier, vol. 28(1), pages 210-220, January.
    5. Mishra, Prachi & Newhouse, David, 2009. "Does health aid matter?," Journal of Health Economics, Elsevier, vol. 28(4), pages 855-872, July.
    6. Swaroop, Vinaya & Jha, Shikha & Sunil Rajkumar, Andrew, 2000. "Fiscal effects of foreign aid in a federal system of governance: The case of India," Journal of Public Economics, Elsevier, vol. 77(3), pages 307-330, September.
    7. Basurto, Maria Pia & Dupas, Pascaline & Robinson, Jonathan, 2020. "Decentralization and efficiency of subsidy targeting: Evidence from chiefs in rural Malawi," Journal of Public Economics, Elsevier, vol. 185(C).
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Conditionality; Decentralisation; Fiscal transfer; Foreign aid; Fungibility;
    All these keywords.

    JEL classification:

    • F35 - International Economics - - International Finance - - - Foreign Aid
    • H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods
    • H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Government: Health, Education, and Welfare
    • I10 - Health, Education, and Welfare - - Health - - - General
    • I15 - Health, Education, and Welfare - - Health - - - Health and Economic Development
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations

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