More Data and Appropriate Statistical Methods Needed to Fully Measure the Displacement Effects of Development Assistance for Health

The question of whether foreign aid results in recipient governments spending less on health is an enduring concern in global health. In separate analyses, Farag et al. and Lu et al., which included members of our group (CL, CM), found compelling evidence of ‘‘aid displacement,’’ meaning a substitution between development assistance for health from foreign donors and health expenditure financed by domestic sources [1,2] We reported that for every dollar a government received in development assistance for health, the government’s domestic expenditure on health decreased by $0.46 (95% confidence interval: 0.24, 0.67) [2]. Subsequent research questioned those findings [3–6], including Batniji and Bendavid in PLOS Medicine who have since admitted mistakes in their statistical model [4]. We argue that these subsequent studies fail to account for the complex, dynamic connection between domestic and foreign funding sources. Estimating this relationship requires detailed data on both flows of resources and how national resources are allocated along with the appropriate statistical method. Given the analytical challenges, it is imperative that more data be available and appropriate methods be used, so that the impact of development assistance can be better understood.