Taking the health aid debate to the subnational level: the impact and allocation of foreign health aid in Malawi.

OBJECTIVE: Cross-national studies provide inconclusive results as to the effectiveness of foreign health aid. We highlight a novel application of using subnational data to evaluate aid impacts, using Malawi as a case study.

DESIGN: We employ two rounds of nationally representative household surveys (2004/2005 and 2010/2011) and geo-referenced foreign aid data. We examine the determinants of Malawi's traditional authorities receiving aid according to health, environmental risk, socioeconomic and political factors. We use two approaches to estimate the impact of aid on reducing malaria prevalence and increasing healthcare quality: difference-in-difference models, which include traditional authority and month-of-interview fixed effects and control for individual and household level time-varying factors, and entropy balancing, where models balance on health-related and socioeconomic baseline characteristics. General health aid and four specific health aid sectors are examined.

RESULTS: Traditional authorities with greater proportions of individuals living in urban areas, more health facilities and greater proportions of those in major ethnic groups were more likely to receive aid. Difference-in-difference models show health infrastructure and parasitic disease control aid reduced malaria prevalence by 1.20 (95% CI -0.36 to 2.76) and 2.20 (95% CI 0.43 to 3.96) percentage points, respectively, and increased the likelihood of individuals reporting healthcare as more than adequate by 12.1 (95% CI 1.51 to 22.68) and 14.0 (95% CI 0.11 to 28.11) percentage points. Entropy balancing shows similar results.

CONCLUSIONS: Aid was targeted to areas with greater existing health infrastructure rather than areas most in need, but still effectively reduced malaria prevalence and enhanced self-reported healthcare quality.