The Short Run Effects of Health Aid in Low Income Countries:Evidence from Panel Data Analysis
Abstract Background The effect of health targeted aid in developing countries is debatable. This paper examines the short run effect of health aid on health status in low income countries of the world. Method The study estimates the short run effect of health aid on health status in low income countries. Infant mortality rate was used as a proxy for health status and a panel data was constructed from 34 countries for the period between 2000 and 2017. For the estimation, first difference GMM and System GMM were employed. Results The estimation results confirm the argument that health aid has a beneficial and statistically significant short run effect on the health status of low income countries: doubling health aid saves the lives of 20 infants per 10,000 live births. Conclusion From the findings of this paper it can be concluded that health aid could be one of the best tools with which the broader health status gap currently observed between high income and low income groups, could be eliminated and hence the target of Universal Health Coverage is met. However, recipient countries need to find ways of promoting domestic factors that have favorable impact on health sector as they cannot persistently relay up on external resources.