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Development Assistance for Health: Time for a Brutal Re-assessment

September 13, 2011

“The Super Committee” of twelve Senate and House members is now in session. It has to find at least $1.2 trillion in spending reductions by Thanksgiving.  In early discussions, however, members are proposing more serious reductions, to the tune of $3 trillion.

In the FY 2012 foreign operations budget, the House Foreign Affairs Committee has already proposed a 9% cut in global health and 18% in overall foreign aid. On September 7, the Center for Strategic International Studies (CSIS) published a blog, stating that “investments in development and global health are fundamental to U. S. leadership in the world”.  Most certainly, this can be seen in PEPFAR, where the U. S. led the world in a response to HIV/AIDS, and in the President’s Malaria Initiative.

The “Super Committee” would do well to review the world as it existed when the Foreign Assistance Act of 1961 was passed.  At that time, almost all of Africa and most of the sub-continent of Asia were emerging from a colonial era. It was entirely appropriate to target all aid to the public sector of developing countries. Today, most of those countries—and indeed the largest of them, e.g., India, Indonesia, Nigeria, etc., have more than 70-75% of their health service delivery capacity in their private sectors.  Still, aid flows go mainly to the public sectors of these same countries.

All OECD DAC donor countries continue to allocate development assistance for health into a country’s public sector.  With so many countries contributing to health projects, and almost none of them using control groups from which empirical measurements can be made, how is it possible to state that any one country’s contributions can have a specific effect on such national indicators as infant mortality rates.  In 2010, the University of Washington found that, from all sources, the resource flows to global health increased from $8 billion in 1995 to $27 billion, excluding private giving, religious organizations, and most NGOs.

In 2007, the International Monetary Fund published a report on the relationship between foreign aid and health outcomes. It said:”despite the vast empirical literature considering the effect of foreign aid on growth, there is little systematic empirical evidence on how overall aid affects health, and none at all (to our knowledge) on how health aid affects health. This is surprising given the recent attention devoted to promoting health in developing countries.

The World Bank’s Development Group published an earlier study, finding in 1997 that “the major drivers on reductions in infant mortality are economic and educational; public health investments account for 5% of the decline.”

In that same year, WHO reported that “a 1997 examination of cross-national variations in child survival and infant mortality found that 95% of the differences could be explained by differences in income, income distribution, women’s education, ethnicity, and religion.”  (See M. Brockerhoff, Bulletin of the World Health Organization, 78:1, 2000, 30-41.)

A litmus test to determine the effects of development assistance for health can be found by its uses within developing countries. The University of Washington study reported that “health aid to government had a negative and significant effect on domestic spending on health, such that for every US$1 of health aid to government, government health expenditures from domestic sources were reduced by $0.43 cents.  However, health aid to the non-governmental sector had a positive and significant effect on domestic government spending.”

The Center for Global Prosperity at Hudson Institute publishes annual reports on the U. S. total net economic engagement with the developing world.  This includes ODA as well as resource flows from foundations, corporations, religious organizations, etc. In 2009, the last year for which OECD data were available, the total net economic engagement was $226.2 billion, of which only $28.8 billion, or 13%, was US ODA. In 2004, US ODA was 20% of the total US net economic engagement. (See  The Index of Global Philanthropy & Remittances, Hudson Institute, April 2011.)

American’s haven’t given up on helping those less advantaged abroad. And the intensity of their private giving strongly indicates that they prefer to give through institutions that show greater promise of using their funds wisely.

The “Super Committee” needs to take note of the fact that ODA is no longer the 800 pound gorilla of development assistance; the world has changed and we need to change with it.  The Committee should continue to support America’s leadership role. But given the studies by the IMF, World Bank, and WHO—rather than more money for health, perhaps its mantra should be: more health for the money.

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