Working Paper: CEPR ID: DP14862
Authors: John Cruzatti; C. Axel Dreher; Johannes Matzat
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
JEL Codes: I15; F35
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Chinese aid (F35) | infant mortality at subnational scales (I14) |
| Chinese aid (F35) | infant mortality at the country level (I15) |
| aid-financed facilities (F35) | infant mortality (J13) |
| aid (F35) | number of deliveries in health clinics (J13) |
| aid (F35) | turnover of health staff at existing clinics (J63) |
| aid (F35) | average educational quality (I21) |
| domestic public expenditures to health prior to receiving aid (H51) | negative effect of aid on mortality (F35) |
| Chinese support (Y10) | World Bank aid for health (F35) |
| Chinese health aid (I19) | probability that women take antimalaria pills during pregnancy (C83) |