Aid Externalities: Evidence from PEPFAR in Africa

Melissa M. Lee, Melina Platas Izama

Research output: Contribution to journalArticlepeer-review


Do targeted aid programs have unintended consequences outside of the target issue area? We investigate this question with an examination of one of the largest targeted aid programs in the world: the President's Emergency Plan for AIDS Relief (PEPFAR). Critics of PEPFAR worry that a targeted program focusing on single diseases has a negative externality, in which the influx of massive amounts of target aid damages broader public health systems in countries that receive PEPFAR funds. Using a difference-in-differences identification strategy, we find statistical evidence that supports critics of targeted aid.

Original languageEnglish (US)
Pages (from-to)281-294
Number of pages14
JournalWorld Development
StatePublished - Mar 1 2015


  • Africa
  • Externalities
  • Foreign aid
  • Health
  • State capacity
  • Sub-Saharan Africa

ASJC Scopus subject areas

  • Geography, Planning and Development
  • Development
  • Sociology and Political Science
  • Economics and Econometrics


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