The impact of development aid on education and health: Survey and new evidence from dynamic models
Thomas Ziesemer
#2012-057
We investigate the impact of aggregate aid, earmarked aid, committed or
disbursed, on social indicators in health and education. A literature
review shows that for earmarked aid use of commitment data mostly leads
to insignificant results; use of disbursement data mostly leads to
significantly favourable results; panel data models including lagged
dependent variables lead to significantly favourable results for at
least one form of aid unless only commitment data are used. In our own
analysis of effects of aggregate aid per capita on life expectancy and
literacy we find from detailed analysis of lag structures that the data
for literacy and life expectancy in dynamic panel data models should be
taken in the form of growth rates. Growth rates of aid per capita are
shown to have significantly favourable effects on the growth rates life
expectancy. Growth rates or levels of aid per capita may reduce growth
rates of illiteracy in system GMM estimates.
JEL codes: F35, I15, I25