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Rogue Aid? The Determinants of China’s Aid Allocation

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  • Axel Dreher

    (Heidelberg University)

  • Andreas Fuchs

    (Georg-August-University Göttingen)

Abstract

Foreign aid from China is often characterized as ‘rogue aid’ that is not guided by recipient need but by China’s national interests alone. However, no econometric study so far confronts this claim with data. We make use of various datasets, covering the 1956-2006 period, to empirically test to which extent political and commercial interests shape China’s aid allocation decisions. We estimate the determinants of China’s allocation of project aid, food aid, medical staff and total aid money to developing countries, comparing its allocation decisions with traditional and other so-called emerging donors. We find that political considerations are an important determinant of China’s allocation of aid. However, in comparison to other donors, China does not pay substantially more attention to politics. In contrast to widespread perceptions, we find no evidence that China’s aid allocation is dominated by natural resource endowments. Moreover, China’s allocation of aid seems to be widely independent of democracy and governance in recipient countries. Overall, denominating aid from China as ‘rogue aid’ seems unjustified.

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Bibliographic Info

Paper provided by Courant Research Centre PEG in its series Courant Research Centre: Poverty, Equity and Growth - Discussion Papers with number 93.

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Date of creation: 06 Sep 2011
Date of revision: 29 Feb 2012
Handle: RePEc:got:gotcrc:093

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Keywords: Aid allocation; China’s foreign aid; new donors; donor motives;

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References

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  1. Christopher Kilby, 2011. "Informal influence in the Asian Development Bank," The Review of International Organizations, Springer, vol. 6(3), pages 223-257, September.
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Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. China and the aid market
    by Straub in Stephane Straub on 2012-01-30 07:05:12
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Cited by:
  1. Axel Dreher & Andreas Fuchs, 2011. "Does terror increase aid?," Courant Research Centre: Poverty, Equity and Growth - Discussion Papers 86, Courant Research Centre PEG.
  2. Strange, Austin M. & Parks , Bradley & Tierney, Michael J. & Fuchs, Andreas & Dreher , Axel, 2014. "Tracking Under-Reported Financial Flows: China’s Development Finance and the Aid-Conflict Nexus Revisited," Working Papers 0553, University of Heidelberg, Department of Economics.
  3. Erasmus Kersting & Christopher Kilby, 2013. "Aid and Democracy Redux," Villanova School of Business Department of Economics and Statistics Working Paper Series 23, Villanova School of Business Department of Economics and Statistics.
  4. Fuchs, Andreas & Vadlamannati, Krishna Chaitanya, 2013. "The Needy Donor: An Empirical Analysis of India’s Aid Motives," World Development, Elsevier, vol. 44(C), pages 110-128.
  5. Axel Dreher & Nathan Jensen, 2009. "Country or Leader? Political Change and UN General Assembly Voting," KOF Working papers 09-217, KOF Swiss Economic Institute, ETH Zurich.
  6. Fuchs, Andreas & Klann, Nils-Hendrik, 2013. "Emergency Aid 2.0," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79898, Verein für Socialpolitik / German Economic Association.

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