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Tracking Underreported Financial Flows: China’s Development Finance and the Aid–Conflict Nexus Revisited

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  • Austin M. Strange
  • Axel Dreher
  • Andreas Fuchs
  • Bradley Parks
  • Michael J. Tierney

Abstract

China’s provision of development finance to other countries is sizable but reliable information is scarce. We introduce a new open-source methodology for collecting project-level development finance information and create a database of Chinese official finance (OF) to Africa from 2000 to 2011. We find that China’s commitments amounted to approximately US$73 billion, of which US$15 billion are comparable to Official Development Assistance following Organization for Economic Cooperation and Development definitions. We provide details on 1,511 projects to fifty African countries. We use this database to extend previous research on aid and conflict, which suffers from omitted-variable bias due to the exclusion of Chinese development finance. Our results show that sudden withdrawals of “traditional†aid no longer induce conflict in the presence of sufficient alternative funding from China. Our findings highlight the importance of gathering more complete data on the development activities of “nontraditional donors†to better understand the link between aid and conflict.

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  • Austin M. Strange & Axel Dreher & Andreas Fuchs & Bradley Parks & Michael J. Tierney, 2017. "Tracking Underreported Financial Flows: China’s Development Finance and the Aid–Conflict Nexus Revisited," Journal of Conflict Resolution, Peace Science Society (International), vol. 61(5), pages 935-963, May.
    • Handle: RePEc:sae:jocore:v:61:y:2017:i:5:p:935-963
    DOI: 10.1177/0022002715604363
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    References listed on IDEAS

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    Cited by:

    1. Broich, Tobias, 2017. "Do authoritarian regimes receive more Chinese development finance than democratic ones? Empirical evidence for Africa," China Economic Review, Elsevier, vol. 46(C), pages 180-207.
    2. Iacoella, Francesco & Martorano, Bruno & Metzger, Laura & Sanfilippo, Marco, 2021. "Chinese official finance and political participation in Africa," European Economic Review, Elsevier, vol. 136(C).
    3. Akhtaruzzaman, Muhammad & Berg, Nathan & Lien, Donald, 2017. "Confucius Institutes and FDI flows from China to Africa," China Economic Review, Elsevier, vol. 44(C), pages 241-252.
    4. Dimant, Eugen & Krieger, Tim & Meierrieks, Daniel, 2023. "Paying them to hate US: The effect of U.S. military aid on anti-American terrorism, 1968-2018," Discussion Paper Series 2023-02, University of Freiburg, Wilfried Guth Endowed Chair for Constitutional Political Economy and Competition Policy.
    5. Coletta Frenzel Baudisch, 2019. "Chinese Capital Flows to African Economies and Real Bilateral Exchange Rates," MAGKS Papers on Economics 201910, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    6. Dreher, Axel & Fuchs, Andreas & Langlotz, Sarah, 2019. "The effects of foreign aid on refugee flows," European Economic Review, Elsevier, vol. 112(C), pages 127-147.
    7. Krishna Chaitanya Vadlamannati & Yuanxin Li & Samuel Brazys & Alexander Dukalskis, 2019. "Building Bridges or Breaking Bonds? The Belt and Road Initiative and Foreign Aid Competition," Working Papers 201906, Geary Institute, University College Dublin.
    8. Angelika J. Budjan & Andreas Fuchs, 2021. "Democracy and Aid Donorship," American Economic Journal: Economic Policy, American Economic Association, vol. 13(4), pages 217-238, November.
    9. Anaxagorou, Christiana & Efthyvoulou, Georgios & Sarantides, Vassilis, 2020. "Electoral motives and the subnational allocation of foreign aid in sub-Saharan Africa," European Economic Review, Elsevier, vol. 127(C).
    10. Yi Che & Xiaoyu He & Yan Zhang, 2021. "Natural resource exports and African countries' voting behaviour in the United Nations: Evidence from the economic rise of China," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 54(2), pages 712-759, May.
    11. Knutsen, Tora & Kotsadam, Andreas, 2020. "The political economy of aid allocation: Aid and incumbency at the local level in Sub Saharan Africa," World Development, Elsevier, vol. 127(C).
    12. Eichenauer, Vera Z. & Fuchs, Andreas & Brückner, Lutz, 2021. "The effects of trade, aid, and investment on China's image in Latin America," Journal of Comparative Economics, Elsevier, vol. 49(2), pages 483-498.
    13. Hoeffler, Anke & Sterck, Olivier, 2022. "Is Chinese aid different?," World Development, Elsevier, vol. 156(C).
    14. Eichenauer, Vera Z. & Fuchs, Andreas & Brueckner, Lutz, 2018. "The Effects of Trade, Aid, and Investment on China's Image in Developing Countries," Working Papers 0646, University of Heidelberg, Department of Economics.
    15. Dreher, Axel & Fuchs, Andreas & Hodler, Roland & Parks, Bradley C. & Raschky, Paul A. & Tierney, Michael J., 2019. "African leaders and the geography of China's foreign assistance," Journal of Development Economics, Elsevier, vol. 140(C), pages 44-71.
    16. Dimant, Eugen & Krieger, Tim & Meierrieks, Daniel, 2022. "The risks of nation-building through military aid and intervention," Discussion Paper Series 2022-04, University of Freiburg, Wilfried Guth Endowed Chair for Constitutional Political Economy and Competition Policy.
    17. Adam, Antonis & Tsarsitalidou, Sofia, 2022. "The effect of international development association's (IDA) aid on conflict. A fuzzy regression discontinuity approach," European Journal of Political Economy, Elsevier, vol. 74(C).
    18. Gong, Xue, 2021. "Logics of appropriateness: Explaining Chinese Financial Institutions’ weak supervision of overseas financing," World Development, Elsevier, vol. 142(C).
    19. Bai, Yu & Li, Yanjun & Wang, Yunuo, 2022. "Chinese aid and local political attitudes," Economic Modelling, Elsevier, vol. 113(C).
    20. Daniel L. Nielson & Bradley Parks & Michael J. Tierney, 2017. "International organizations and development finance: Introduction to the special issue," The Review of International Organizations, Springer, vol. 12(2), pages 157-169, June.
    21. Becker, Malte & Krüger, Finja & Heidland, Tobias, 2022. "Country, culture or competition: What drives attitudes towards immigrants in Sub-Saharan Africa?," Kiel Working Papers 2224, Kiel Institute for the World Economy (IfW Kiel).
    22. Loujaina Abdelwahed & Georgios Karras, 2021. "Did 272 billion dollars from China help stabilize business cycle fluctuations in recipient countries?," Review of International Economics, Wiley Blackwell, vol. 29(2), pages 314-358, May.
    23. Mandon, Pierre & Woldemichael, Martha Tesfaye, 2023. "Has Chinese aid benefited recipient countries? Evidence from a meta-regression analysis," World Development, Elsevier, vol. 166(C).
    24. Dreher, Axel & Fuchs, Andreas & Hodler, Roland & Parks, Bradley C. & Raschky, Paul A. & Tierney, Michael J., 2021. "Is Favoritism a Threat to Chinese Aid Effectiveness? A Subnational Analysis of Chinese Development Projects," World Development, Elsevier, vol. 139(C).
    25. Michael Appiah‐Kubi & Jeneshia Jarrett, 2023. "Chinese aid and crime: Evidence from Africa," Journal of International Development, John Wiley & Sons, Ltd., vol. 35(7), pages 1619-1647, October.

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