Donor Choice in Multilateral Health Aid

Abstract

Donors of development aid for health face increasingly complex decisions when distributing their contributions. A significant portion of aid is still given bilaterally, but donors also have the choice of an expanding number of multilateral institutions involved in global public health. How do donors distribute their multilateral budget between available institutions? I argue that donor states prefer to delegate and contribute to institutions with aid distribution preferences similar to their own. To account for past and present preference similarity, donors will evaluate the overlap between their bilateral aid portfolio and the institution’s multilateral aid portfolio. But to gauge future preference similarity, donor states will also take into account their general political alignment with other member states of the institution. The paper presents a set of empirical tests based on an analysis of cross-country data on multilateral health aid given between 2000 and 2009. The analysis shows that greater alignment with member states does indeed lead to significantly increased contributions from donors, but that the similarity of aid portfolios has no such effect. In delegating multilaterally, donors seem to care more about who they share an institution with, rather than how the institution spends its money.

Keywords: multilateral institutions, global public health, development aid, principal-agent, institutional choice