Does health sector aid matter? Evidence from time-series data analysis in Ethiopia

Abstract

Aims: Development assistance for health is an important part of financing health care in developing countries. In spite of the increasing volumes in absolute terms in development assistance for health, there are controversies on their effect on health outcomes. Therefore, this study aims to analyze the effect of development assistance for health on health status in Ethiopia. Methods: Using dynamic time series analytic approach for the period 1978-2013, this paper examines whether development assistance for health has contributed for health status change in Ethiopia. While life expectancy at birth was used as a measure of health status, vector error correction model was used for the analysis. Results: Development assistance for health expenditure (lagged one and two years) had a significant positive effect on life expectancy at birth in Ethiopia. Other things being equal, a 1% increase in per capita development assistance for health leads to 0.026 years improvement in life expectancy at birth (P<0.001) in the immediate year following the period of assistance, and 0.008 years (P=0.025) in the immediate two years following the provision of assistance. Conclusion: This study indicates that, seemingly, development assistance for health has significant favourable effect in improving health status in Ethiopia. The policy implication of this finding is development assistance for the health should continue as an interim means to an end.