This post examines the latest—and simultaneously age-old—furor gripping the international development blogosphere: is foreign aid advancing global health?
The Lancet recently published the Institute for Health Metrics and Evaluation’s controversial study demonstrating that for every dollar donated to advance global health, recipient governments reduced their own health expenditures by anywhere from 43 cents to $1.14. Taxpayers in donor countries—donors’ donors, if you will—generally insist that development assistance complement and enhance, not subtract from, the aid recipient country’s public health agenda.
Funding for global health has skyrocketed by over one hundred percent over the last decade (see figure 1). Therefore, the Institute for Health Metrics and Evaluation’s conclusion was deemed newsworthy: the Associated Press, New York Times, Washington Post, Guardian and Reuters all reported on the research, fanning the subject into a heated public debate.
The New York Times‘ headline reads “Study: Health Aid Made Some Countries Cut Budgets”; the Washington Post’s article begins with “after getting millions of dollars to fight AIDS, some African countries responded by slashing their health budgets”; the Guardian, whose headline reads “Nations slash health funding if sent aid, report says,” ventures further away from unbiased reporting and approaches sensationalism.
Owen Barder, the international development pundit most critical of the Lancet article, recognizes that the original report’s language is measured and evenhanded compared to the Guardian, but he points out that its first sentence—“Government spending on health from domestic sources is an important indicator of a government’s commitment to the health of its people, and is essential for the sustainability of health programs”—clearly signals that the authors were disquieted by the report’s findings.
Barder censures the authors for leading impressionable international development tyros to believe that billions in health aid was squandered and that an alternative aid modality that circumvents government should be pursued.
In response to their counterintuitive discovery, the authors recommend fixing a target share of governmental health expenditures, evaluating the risks and benefits of channeling aid through NGOs, and experimenting with price subsidies and product transfers.
Of Ignorance & Indifference
Barder continues his invective, expressing shock at the authors’ “ignorance of, or indifference to, decades of experience about what works in development.” (Although, what does not work in development is more like it.) He then lists three commandments of international development:
- Thou shalt not set input targets
- Thou shalt not bypass the government by using NGOs
- Thou shalt not donate shoes and other in kind gifts as aid—cash only!
The commandments proscribe the authors’ policy recommendations. Additionally, the inclination to coerce ostensibly beneficial reform flouts international treaties such as the 2005 Paris Declaration and the 2008 Accra Agenda for Action. Perhaps a fourth commandment is in order: Thou shalt not spurn history and its lessons.
Of Banks & Brothels
During his tenure as deputy director of the World Bank in 1947, Paul Rosenstein-Rodin quipped, “when the World Bank thinks it is financing an electric power station, it is really financing a brothel.” Laura Freschi recycles the pithy quote as support for the partial validity of the media’s hasty mastication and regurgitation of the Lancet study—sometimes health aid is, in fact, usurped by kleptocrats who use those funds towards financing luxury goods, military equipment and political patronage. Barder, however, does not touch upon corruption and completely disregards it as a possible drain on government health spending.
If Hamlet Were a Development Economist…
Is aid fungible* or not fungible—that is the question. Barder’s impassioned blog post cum diatribe argues that it is indeed fungible, and evidence thereof augurs that the views of development pundits are antipodal to those of laymen due to the disconnect in how they perceive aid fungibility. According to a 2007 paper in the Journal of Development Economics, “most economists assume that aid is fungible, [but] most aid donors behave as if it is not.”
*For a detailed explanation of fungibility, read this post by Owen Barder.