Granger causality between international forign aid, adult mortality and GDP: evidance from panel analysis for 96 countries

Abstract

The study examines the relationships between adult mortality, per capita income and foreign aid. We have included 37 low-income (LIC), 39 lower middle-income (LMIC), 20 upper middle income (UMIC) for the period 1990-2008. Results demonstrate that the highest bilateral causal relation between GDP, aid and mortality is for aid and mortality. Although less effective for particular groups of countries (UMIC), foreign aid generally has a negative impact on mortality, as reported by tests taking into account directional causalities (70% of valid coefficients are negative). This result moderates the pessimist view about international development aid, at least in the domain of assistance for health.