Considerations in Assessing the Evidence and Implications of Aid Displacement from the Health Sector

Questions about whether, and how, giving health aid to governments leads to a reduction in health financing from domestic sources are essential to decisions about which countries receive aid, and whether aid is directed to governments. A 2010 analysis by Lu et al. made the case that for every additional US dollar of development assistance for health (DAH) from 1995 to 2006, government health expenditures from domestic sources fell by at least US$0.43 [1]. Similarly, Farag and colleagues found that each US dollar in DAH to low-income countries was associated with a US$0.14 decrease in those low-income countries’ government health spending [2]. The methods used by Lu et al. have been scrutinized carefully, but their findings have led to concerns that recipient governments may waste donor resources [3]. Our previous essay in PLOS Medicine also questioned the analysis by Lu et al., but we have retracted it due to errors in our statistical model and reporting [4]. However, here we reaffirm the importance of understanding aid displacement and in particular, an exploration of where the money goes.