Does health aid reduce infant mortality? Cross-country evidence

Does health aid help reduce infant mortality? Despite a growing literature, existing findings have no consensus. To investigate the relationship between health aid and infant mortality, this paper applies polynomial inverse lag (PIL) framework to panel data from 131 countries over the period 2002-2019, and focuses on the instant and long-term impacts of health aid on infant mortality. The results indicate that health aid can effectively reduce infant mortality and it has a greatest effect in the current year. More specifically, a 1% rise in health aid causes a 1.53% drop in infant mortality instantly, though the impact tails off over time. The results maintain robustness across specifications. Heterogeneity test shows that health aid's benign impact is more pronounced in deep poverty countries. Finally, it is found that aid raises public health expenditure of recipient countries, leading to a better health care system and a lower infant mortality.