This paper draws on data from Uganda's 2013 World Bank Enterprise Survey (WBES), which comprises data on 762 firms across Uganda to assess the effects of the business environment, with particular interest on the impact of finance on firm growth by focusing on differences across firm size. Unlike past studies, we use firm level data that allows us to interrogate whether the impact of the business environment is unbiased across firm size. Most importantly, this paper mitigates the risk of the potential measurement error, omitted variable bias, and endogeneity. The results suggest that micro, small, and medium enterprises (MSMEs) in Uganda benefit more from financial access than large firms. These effects are stronger and more sustained among medium firms. The paper interprets these results as evidence that MSMEs are more credit constrained relative to large firms. The paper also discerns that while informality and poor regulatory environment may help divert economic activity from large firms to MSMEs, informality increases the vulnerability of MSMEs to corruption to sustain their informal and invisible status. The policy implication on size, efficiency, and dynamism of the business sector in Uganda is that there is a need to increase not only financial inclusion of MSMEs but also improve the general business environment, particularly the formalization of micro firms.

ObjectiveCross-national studies provide inconclusive results as to the effectiveness of foreign health aid. We highlight a novel application of using subnational data to evaluate aid impacts, using Malawi as a case study.DesignWe employ two rounds of nationally representative household surveys (2004/2005 and 2010/2011) and geo-referenced foreign aid data. We examine the determinants of Malawi's traditional authorities receiving aid according to health, environmental risk, socioeconomic and political factors. We use two approaches to estimate the impact of aid on reducing malaria prevalence and increasing healthcare quality: difference-in-difference models, which include traditional authority and month-of-interview fixed effects and control for individual and household level time-varying factors, and entropy balancing, where models balance on health-related and socioeconomic baseline characteristics. General health aid and four specific health aid sectors are examined.ResultsTraditional authorities with greater proportions of individuals living in urban areas, more health facilities and greater proportions of those in major ethnic groups were more likely to receive aid. Difference-in-difference models show health infrastructure and parasitic disease control aid reduced malaria prevalence by 1.20 (95% CI −0.36 to 2.76) and 2.20 (95% CI 0.43 to 3.96) percentage points, respectively, and increased the likelihood of individuals reporting healthcare as more than adequate by 12.1 (95% CI 1.51 to 22.68) and 14.0 (95% CI 0.11 to 28.11) percentage points. Entropy balancing shows similar results.ConclusionsAid was targeted to areas with greater existing health infrastructure rather than areas most in need, but still effectively reduced malaria prevalence and enhanced self-reported healthcare quality.

Is foreign aid an effective instrument of soft power? Does it generate affinity for donor countries and the values they espouse? This article answers these questions in the context of Chinese aid to Africa and the competing aid regime of the United States. The study combines data on thirty-eight African countries from Afrobarometer, AidData, and the Aid Information Management Systems of African finance and planning ministries. The authors use spatial difference-in-differences to isolate the causal effects of Chinese and US aid. The study finds that Chinese aid to Africa does not increase (and may in fact reduce) beneficiaries’ support for China. By contrast, US aid appears to increase support for the United States and to strengthen recipients’ commitment to liberal democratic values, such as the belief in the importance of elections. Chinese aid does not appear to weaken this commitment, and may strengthen it. The study also finds that Chinese aid increases support for the UK, France and other former colonial powers. These findings advance our understanding of the conditions under which competing aid regimes generate soft power and facilitate the transmission of political principles and ideals.

The health sector has attracted significant foreign aid; however, evidence on the effectiveness of this support is mixed. This paper combines household panel data with geographically referenced subnational foreign aid data to investigate the contribution of health aid to health outcomes in Uganda. Using a difference-in-differences approach, we find that aid had a strong effect on reducing the productivity burden of disease indicated by days of productivity lost due to illness but was less effective in reducing disease prevalence. Consequently, health aid appeared to primarily quicken recovery times rather than prevent disease. In addition, we find that health aid was most beneficial to individuals who lived closest to aid projects. Apart from the impact of aid, we find that aid tended to not be targeted to localities with the worse socioeconomic conditions. Overall, the results highlight the importance of allocating aid close to subnational areas with greater need to enhance aid effectiveness.