Chinese Aid and Health at the Country and Local Level

Axel Dreher, John Cruzatti C. and Johannes Matzat

No 14862, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We investigate whether and to what extent Chinese development finance affects infant mortality, combining 92 demographic and health surveys (DHS) for a maximum of 53 countries and almost 55,000 sub-national locations over the 2002-2014 period. We address causality by instrumenting aid with a set of interacted variables. Variation over time results from indicators that measure the availability of funding in a given year. Cross-sectional variation results from a sub-national region's "probability to receive aid." Controlled for this probability in tandem with fixed effects for country-years and provinces, the interactions of these variables form powerful and excludable instruments. Our results show that Chinese aid increases infant mortality at sub-national scales, but decreases mortality at the country-level. In several tests, we show that this stark contrast likely results from aid being fungible within recipient countries.

Keywords: Health aid; Fungibility; Infant mortality (search for similar items in EconPapers)
JEL-codes: F35 I15 (search for similar items in EconPapers)
Date: 2020-06
New Economics Papers: this item is included in nep-fdg
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Citations: View citations in EconPapers (14)

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Related works:
Journal Article: Chinese aid and health at the country and local level (2023)
Working Paper: Chinese Aid and Health at the Country and Local Level (2020)
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