Chinese Aid and Health at the Country and Local Level

50 Pages Posted: 16 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: June 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.

Keywords: Fungibility, Health Aid, infant mortality

JEL Classification: F35, I15

Suggested Citation

Cruzatti C., John and Dreher, Axel and Matzat, Johannes, Chinese Aid and Health at the Country and Local Level (June 2020). CEPR Discussion Paper No. DP14862, Available at SSRN: https://ssrn.com/abstract=3628182

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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