The Effectiveness of Development Aid: Measured as the variation in height among Malawian children

Abstract: We examine the effectiveness of development aid on the country of Malawi in Africa. The idea stems from a strong empirical correlation between economic development and body height. To measure this, we use the body height variation of children as dependent variable. As development aid data, we apply a dataset containing the number of aid- financed projects implemented in each of the 27 districts of Malawi over the past 20 years. For data on body height, we use the latest available DHS survey. To analyze the correlation, we use an OLS regression and control for different health and environmental factors. We find a positive correlation between financial aid and body height that becomes insignificant when controlling for social factors. Analyzing the potential reasons for this leads us to the problem of endogeneity, which we try to solve by using district population size as an instrument for number of aid projects. This regression shows the aid variable as insignificant. However, the result is inconclusive and points towards a slightly effective development aid. When questioning why this is, we reason regarding the difficulty of measuring the effectiveness of aid. On a more general level, we also analyze aid dependency, as well as incentive problems that allow this to occur.