Development Assistance for Health, Resource Allocation and Public Sector Behaviour

This thesis comprises three research papers on the allocation of health care resources in resource-poor settings. I first examine the effects of aid conditionality in a theoretical framework where the donor has imperfect information about the local health needs while the central and local governments do not engage in self-interested efforts upon receiving aid. The novelty of the model is to introduce foreign aid in a decentralised health system in order to explore the implications of conditionality of aid on local health expenditures, intergovernmental transfers and social welfare. I analyse the conditions under which aid conditionality increases local health expenditures but reduces at the same time the welfare of the high-need populations; the outcomes of this setting are then compared to the situation where aid is unconditional. I finally discuss these consequences in a health system with two levels of care when the donor restricts aid on Primary Health Care. The findings highlight the potentially detrimental effects of aid conditionality on local health outcomes and underscore the need for establishing close collaboration between donors and all levels of federal governments in the recipient country. To empirically assess the predictions of the model, I examine the effectiveness of donors in targeting the highest burden of malaria in the Democratic Republic of Congo when the health information structure is fragmented. I exploit local variations in the burden of malaria induced by mining activities as well as financial and epidemiological data from health facilities to estimate how local aid is matching local health needs. Using a regression discontinuity design, I find significant but quantitatively small variations in aid to health facilities located within mining areas. Comparing local aid with the additional cost of treatment and prevention associated with the increased risk of malaria transmission, I find suggestive evidence that local populations with the highest burden of the disease receive a proportionately lower share of aid compared to neighbouring areas with reduced exposure to malaria infection. Finally, the last chapter explores to what extent colonial medical missions explain contemporaneous disparities in hospital performance in sub-Saharan Africa. Using archival data from colonial Belgian Congo between 1929 and 1956, this study investigates the effects of colonial health investments on modern health facility performances. I document a strong persistent effect on physical and human capital. Government allocation to colonial hospitals is also substantially higher even when controlling for the medical staff and bed capacity. The ability of the colonial regime to mobilise large health investments and skilled resources appears to be a strong channel of persistence of the colonial effects