Remittances, Public Health Spending and Foreign Aid in the Access to Health Care Services in Developing Countries

The aim of this paper is to analyze the respective impacts of remittances, health aid and public spending on the access to health care services in developing countries. The specific objectives are threefold. Firstly, we quantify the differential impacts of remittances on the access to public and private health care services. Secondly, we determine whether remittances and foreign health aid are complements or substitutes in the access to health care services. Lastly, we evaluate the heterogeneity of the impact of remittances in the access to public and private health care services by quintile of income. We provide a rigorous econometric analysis by controlling for the endogeneity of remittances, public spending and foreign aid. We find that remittances, health aid and public spending are important determinants of access to health services in recipients’ countries. Another interesting result comes from the fact that, remittances lead to a sectorial glide in the uses of health care services from the public to the private sector for the intermediate income class. This result holds also for the richer quintiles that are the major recipients of remittances in developing countries. Moreover, remittances and foreign health aid are complements for the access to health care services in “low” income countries. Finally, these results suggest that policies aiming at increasing remittances are appropriate for developing countries but also that, the “optimal” therapy for the “low” income countries is the combination of remittances and foreign aid.