Bigger And Better? Scaling Up And Innovation In Health Aid Despite progress, much can still be done to improve the efficiency of aid to achieve better health outcomes. by Christopher Lane and Amanda Glassman ABSTRACT: As the volume of health aid to developing countries increases and allocations shift toward specific disease burdens, issues of allocation efficiency become more impor- tant to the achievement of better health outcomes. This paper examines (1) whether health aid—traditional and innovative—corresponds to recipients’ needs and priorities and (2) how the terms of aid affect its efficiency. We find that there is considerable scope for improve- ment through consolidation, improvement of terms, and increased attention to the efficient allocation of the marginal dollar of aid. [Health Affairs 26, no. 4 (2007): 935–948; 10.1377/hlthaff.26.4.935] A id disbursements for health nearly doubled between 2002 and 2005 (Exhibit 1), reflecting new players such as the Global Fund for AIDS, Tuberculosis, and Malaria (Global Fund) but also major increases in commitments by bilateral donors (Canada, the European Commission [EC], and the United States from 2003; Japan and France from 2004; and Sweden and the United Kingdom from 2005). 1 Aid priorities have changed as well. 2 In broad terms, spending has shifted to- ward prevention and treatment of communicable diseases, including HIV/AIDS, and away from other interventions. The increase in disbursements for communi- cable diseases and sexually transmitted diseases (STDs), including HIV/AIDS, be- tween 2002 and 2005 accounted for more than half of the increase in total health aid over the period. Spending on health research also rose during 2002–2005, al- beit from a low base. Low-income countries have benefited the most from these increased flows. Nonetheless, financing for global health priorities remains much lower than es- timated needs. These needs represent an additional $30–$70 billion a year in spending—approximately 9–20 percent of current health spending in developing countries and about three to eight times the current level of aid for health. 3 Al- though this amount is a small fraction of global gross domestic product (GDP) Scaling Up & Innovation HEALTH AFFAIRS ~ Volume 26, Number 4 935 DOI 10.1377/hlthaff.26.4.935 ©2007 Project HOPE–The People-to-People Health Foundation, Inc. Christopher Lane (lane.ce@gmail.com) is a consultant, Global Economy and Development, at the Brookings Institution in Washington, D.C., and a staff member of the International Monetary Fund. Amanda Glassman (aglassman@brookings.edu) is a fellow and deputy director of the Global Health Financing Initiative at Brookings.