Chinese Aid and Health at the Country and Local Level

49 Pages Posted: 10 Jun 2020

See all articles by John Cruzatti C.

John Cruzatti C.

Heidelberg University - Alfred Weber Institute for Economics

Axel Dreher

Heidelberg University

Johannes Matzat

University of Goettingen (Gottingen) - Faculty of Economics and Business Administration

Multiple version iconThere are 2 versions of this paper

Date Written: 2020

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.

JEL Classification: I150, F350

Suggested Citation

Cruzatti C., John and Dreher, Axel and Matzat, Johannes, Chinese Aid and Health at the Country and Local Level ( 2020). CESifo Working Paper No. 8352, Available at SSRN: https://ssrn.com/abstract=3623687

John Cruzatti C. (Contact Author)

Heidelberg University - Alfred Weber Institute for Economics ( email )

Grabengasse 14
Heidelberg, D-69117
Germany

Axel Dreher

Heidelberg University ( email )

Grabengasse 1
Heidelberg, 69117
Germany

HOME PAGE: http://www.axel-dreher.de

Johannes Matzat

University of Goettingen (Gottingen) - Faculty of Economics and Business Administration ( email )

Platz der Goettinger Sieben 3
Goettingen, 37073
Germany

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