Attaining Improvement Health Care Indicators in Southern Africa

The aid debate continues to remain largely unsolved and many vehemently hold that it is a destructive, as opposed to effective, method for promoting development. Given this debate, and the increased trend towards a more focused approach of disbursing aid funds, a country-specific investigation into the effectiveness of health care aid could shed some light on whether sector-specific aid is effective, and whether its effects, if any, differ from country to country. This study will do exactly that, by assessing whether health care aid disbursed to Botswana and Mozambique is effective in improving health conditions. The main theories used to explain aid are Utilitarianism, Diminishing Marginal Utility of Wealth and Rosenstein-Rodan‟s „Big-push‟ theory. Utilitarianism is a normative philosophy that supports the redistribution of goods/wealth, so long as such a re-allocation promotes the social benefit. Diminishing Marginal Utility of Wealth is used to show that the marginal utility of money in the developed world is much lower –due to its relative abundance- than that in the developing world, and so wealth should be transferred to the poor, as they will benefit comparatively more from it. Finally, the „Big-push‟ theory states that in order for industrialization, development and growth to occur, there must be some initial financial impetus that can spur on investment and allow for positive spillover effects to disperse from industry to industry. These three theories have led to the hypotheses that higher health aid improves health indicators and that health aid is more effective in countries with higher levels of safety and rule of law. Using Two-Stage-Least Squares and controlling for reverse causality, GDP growth and population density, the result is that health sector aid can have very slight positive effects on life expectancy, infant mortality and the levels of DPT and Measles immunization. However, often the effect of health care aid is insignificant and subject to country idiosyncrasies. In addition to this, health care aid is often shown to be significantly more effective in safe and lawful countries; nonetheless its impact even in these societies is relatively low.