Aid and child health: A disaggregated analysis of the effects of aid on impaired growth

•This study explores whether aid projects help reduce child malnutrition in Malawi.•The results consistently indicate a positive impact of early-life aid exposure on healthy child growth.•The positive effect is driven primarily by multilateral aid and is stronger in rural areas.•The effect seems driven by improvements across the board rather than by interventions targeting the most vulnerable groups.•The improvements seem to be due to aid giving better economic conditions for families than aid aimed at mothers and children. Motivated by a recent setback in the fight against child malnutrition, this study explores whether aid projects help reduce stunting or impaired growth among children close to project sites. Focusing on Malawi, a country with a very high stunting prevalence for which we have access to geo-referenced data on aid projects from a broad range of donors, we geographically match spatial data on 778 aid project sites of 22 different donors with anthropometric and background data on 26,604 children under the age of five. The detailed data allows for a disaggregated analysis comparing local aid impacts by types of aid, donor- and recipient groups. To identify the effect of aid, we rely on spatial and temporal variation in aid project coverage and survey rollout, coupled with variation in the child’s age at aid exposure. The empirical results consistently indicate a positive impact of early-life aid exposure on child growth. The positive treatment effect is seemingly driven primarily by multilateral aid and is stronger in rural areas. On the other hand, we observe little heterogeneity by aid type and across socio-economic recipient groups, signaling that the treatment effect stems from improvements across the board in aid receiving areas rather than by interventions targeting the most vulnerable groups. In terms of mechanisms, the results of the mediation analysis underscore the influence of distal determinants of stunting, such as the improved economic conditions of households, which are likely to impact more proximal determinants downstream.