Does Funding From Donors Displace Government Spending For Health In Developing Countries?

• DOI: 10.1377/hlthaff.28.4.1045
• Publication Date: 2009-07-14T02:01:04Z
• Authors: Marwa Farag; A.K. Nandakumar; Stanley S. Wallack; Gary Gaumer; Dominic Hodgkin
• Keywords: Health spending

The notable increases in funding from various donors for health over the past several years have made examining effectiveness of aid all more important. We examine extent to which donor substitutes for—rather than complements—health financing by recipient governments. find evidence a strong substitution effect. proportionate decrease government spending associated with an increase is largest low-income countries. results suggest that needs be structured way better aligns donors' and governments' incentives, using innovative approaches such as performance-based financing.