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Does foreign aid crowd out government investments? Evidence from rural health centres in Rwanda
  1. Chunling Lu1,2,
  2. Benjamin Cook3,
  3. Chris Desmond4
  1. 1 Division of Global Health Equity, Brigham and Women's Hospital, Harvard Medical School, Boston, Massachusetts, USA
  2. 2 Department of Science and Technology-National Research Foundation (DST-NRF) Center of Excellence in Human Development, University of Witwatersrand, Johannesburg, South Africa
  3. 3 Department of Psychiatry, Harvard Medical School, Cambridge Health Alliance, Cambridge, Massachusetts, USA
  4. 4 Human and Social Development Research Programme, Human Sciences Research Council, Durban, South Africa
  1. Correspondence to Dr Chunling Lu; chunling_lu{at}hms.harvard.edu

Abstract

Background Rural healthcare facilities in low-income countries play a major role in providing primary care to rural populations. We examined the link of foreign aid with government investments and medical service provision in rural health centres in Rwanda.

Methods Using the District Health System Strengthening Tool, a web-based database built by the Ministry of Health in Rwanda, we constructed two composite indices representing provision of (1) child and maternal care and (2) HIV, tuberculosis (TB) and malaria services in 330 rural health centres between 2009 and 2011. Financing variables in a healthcare centre included received funds from various sources, including foreign donors and government. We used multilevel random-effects model in regression analyses and examined the robustness of results to a range of alternative specification, including scale of dependent variables, estimation methods and timing of aid effects.

Findings Both government and foreign donors increased their direct investments in the 330 rural healthcare centres during the period. Foreign aid was positively associated with government investments (0.13, 95% CI 0.06 to 0.19) in rural health centres. Aid in the previous year was positively associated with service provision for child and maternal health (0.008, 95% CI 0.002 to 0.014) and service provision for HIV, TB and malaria (0.014, 95% CI 0.004 to 0.022) in the current year. The results are robust when using fixed-effects models.

Conclusions These findings suggest that foreign aid did not crowd out government investments in the rural healthcare centres. Foreign aid programmes, conducted in addition to government investments, could benefit rural residents in low-income countries through increased service provision in rural healthcare facilities.

  • Health economics
  • financing health care
  • rural health care
  • health aid
  • aid additionality
  • international/global health studies

This is an Open Access article distributed in accordance with the Creative Commons Attribution Non Commercial (CC BY-NC 4.0) license, which permits others to distribute, remix, adapt, build upon this work non-commercially, and license their derivative works on different terms, provided the original work is properly cited and the use is non-commercial. See: http://creativecommons.org/licenses/by-nc/4.0/

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Footnotes

  • Contributors CL conceived and designed the study, led statistical analysis and wrote the first draft. BC and CD contributed to study design. All the authors participated in results interpretation and manuscript writing.

  • Funding This study was funded by NIH 1K0HD07 1929-01.

  • Competing interests None declared.

  • Provenance and peer review Not commissioned; externally peer reviewed.

  • Data sharing statement Data can be obtained through application to the Ministry of Health in Rwanda.

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