Impact of health ODA on developing countries and its implications for Korea's health ODA

Abstract

Health sector development of a country requires efforts from various aspects including health service financing, establishment of health guarantee system, health infrastructure, health delivery system and strengthening health workforce. However, developing countries lack the capabilities and resources to improve their population health or to achieve health sector development. In that matter, the international society has been playing an important role in developing countries through Official Development Aid for health. As one of the donor countries, Korea also allocates high share of her total ODA to the health sector. Funding for health ODA has been constantly increasing especially after the inclusion of three health issues in the Millennium Development Goals. Along with the significant rise in health ODA, there has been rise of disputes about the effectiveness of the money invested in health The purpose of this study is to evaluate the impact of health ODA on the promotion of health in developing countries through an empirical analysis and compare the outcome with Korea’s health ODA strategies. In doing so, this study contributes to the existing body of discussion on health aid effectiveness and provides implications for Korea’s future health ODA directions and strategies. Infant mortality rate, under-five mortality rate, and life expectancy were used as outcome variables of health, and health ODA was used as the key explanatory variable. Health ODA is dissected into smaller subsectors to analyze if a specific type of health ODA is more effective than others. Fixed effects methodology is applied to estimate whether health ODA has positive effects on the three health outcomes in the sample of 131 countries over the period of 2002-2013. The study found that health ODA has a statistically significant and positive effect on target health outcomes and basic health ODA such as basic health care and infectious disease control are more effective than other types of health assistance. This supports the validity of the current strategy of health ODA in the international development cooperation where much stress is on increasing assistance to basic health. On the other hand, Korea’s health ODA may need to revise the priority settings, as a large share of Korea’s health ODA investment is directed to health infrastructure than the sectors that were found effective in this study.