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Is Results-Based Aid More Effective than Conventional Aid?: Evidence from the Health Sector in El Salvador

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  • Pedro Bernal
  • Sebastian Martinez
  • Pablo Celhay

Abstract

Results-based aid (RBA) models link funds to outcomes, rather than paying for inputs. Despite their theoretical appeal and recent adoption by donors and multilateral development banks, there is limited empirical evidence supporting this form of aid for national governments. We estimate the effects of a RBA model using a natural experiment in El Salvador, where the same community health intervention was implemented in 98 municipalities using one of three financing models. The Salud Mesoamerica Initiative funded fourteen municipalities with a RBA model that partially conditions funds on the attainment of externally measured maternal and child health targets. Fifty-four municipalities funded inputs using conventional aid and thirty had national funds. Using a difference-in-difference approach and national health systems data we find that preventive health services increased by 19.8% in conventional aid municipalities and by 42% in RBA municipalities compared to national funds, suggesting that the results-based conditionality roughly doubled aid effectiveness. Effects are driven by increases in maternal and child preventive services incentivized by the RBA model. Rather than diverting resources from other populations, we find that the expansion of health services under RBA also benefited men and the elderly, not explicitly incentivized by the results model. While data on final health outcomes are not available, our results on proxy measures point to potential improvements in population health. The effects appear to have been driven by a more rapid expansion of health infrastructure and qualified personnel by motivated national authorities.

Suggested Citation

  • Pedro Bernal & Sebastian Martinez & Pablo Celhay, 2018. "Is Results-Based Aid More Effective than Conventional Aid?: Evidence from the Health Sector in El Salvador," IDB Publications (Working Papers) 8750, Inter-American Development Bank.
  • Handle: RePEc:idb:brikps:8750
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    References listed on IDEAS

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    Cited by:

    1. Andrei A. Levchenko, 2013. "International Trade and Institutional Change," Journal of Law, Economics, and Organization, Oxford University Press, vol. 29(5), pages 1145-1181, October.
    2. Thomas Gries & Tim Krieger & Daniel Meierrieks, 2011. "Causal Linkages Between Domestic Terrorism and Economic Growth," Defence and Peace Economics, Taylor & Francis Journals, vol. 22(5), pages 493-508, June.
    3. Baliamoune-Lutz, Mina & Addison, Tony, 2007. "Economic reform when institutional quality is weak: The case of the Maghreb," Journal of Policy Modeling, Elsevier, vol. 29(1), pages 65-79.
    4. Thanh Le, 2009. "Trade, Remittances, Institutions, and Economic Growth," International Economic Journal, Taylor & Francis Journals, vol. 23(3), pages 391-408.
    5. Dang, D Anh, 2010. "Trade Liberalization and Institutional Quality: Evidence from Vietnam," MPRA Paper 26346, University Library of Munich, Germany, revised 31 Aug 2010.
    6. Subhayu Bandyopadhyay & Suryadipta Roy, 2006. "Corruption and Trade Protection: Evidence from Panel Data," Working Papers 06-11 Classification- JEL, Department of Economics, West Virginia University.
    7. David Dollar & Aart Kraay, 2004. "Trade, Growth, and Poverty," Economic Journal, Royal Economic Society, vol. 114(493), pages 22-49, February.
    8. Belloc, Marianna, 2005. "Cross-Cultural Trade and Internal Institutional Stability," Department of Economics, Working Paper Series qt1wj7v0sn, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
    9. Fenske, James, 2010. "Institutions in African history and development: A review essay," MPRA Paper 23120, University Library of Munich, Germany.
    10. Christine Mutz & Thomas Ziesemer, 2008. "Simultaneous estimation of income and price elasticities of export demand, scale economies and total factor productivity growth for Brazil," Applied Economics, Taylor & Francis Journals, vol. 40(22), pages 2921-2937.
    11. Dollar, David & Kraay, Aart, 2003. "Institutions, trade, and growth," Journal of Monetary Economics, Elsevier, vol. 50(1), pages 133-162, January.
    12. Pierre-Guillaume Méon & Khalid Sekkat, 2008. "Institutional Quality And Trade: Which Institutions? Which Trade?," Economic Inquiry, Western Economic Association International, vol. 46(2), pages 227-240, April.
    13. Chahir Zaki & Fida Karam, 2017. "Why Don’t MENA Countries Trade More? The Curse of Bad Institutions," Working Papers 1148, Economic Research Forum, revised 10 2003.

    More about this item

    Keywords

    Results-Based Financing; Health Care Services; Foreign Aid; Results Based Aid; Performance Incentives; Health Services; El Salvador;

    JEL classification:

    • F35 - International Economics - - International Finance - - - Foreign Aid
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health

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