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Rogue Aid? The Determinants of China’s Aid Allocation

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  • Axel Dreher
  • Andreas Fuchs

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 teams 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 ULB -- Universite Libre de Bruxelles in its series Working Papers CEB with number 11-035.

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Length: 48 p.
Date of creation: Sep 2011
Date of revision:
Publication status: Published by:
Handle: RePEc:sol:wpaper:2013/96986

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

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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. 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.
  2. Fuchs, Andreas & Vadlamannati, Krishna Chaitanya, 2012. "The Needy Donor: An Empirical Analysis of India’s Aid Motives," Working Papers 0532, University of Heidelberg, Department of Economics.
  3. Dreher, Axel & Jensen, Nathan M., 2013. "Country or leader? Political change and UN General Assembly voting," European Journal of Political Economy, Elsevier, vol. 29(C), pages 183-196.
  4. Axel Dreher & Andreas Fuchs, 2011. "Does terror increase aid?," Courant Research Centre: Poverty, Equity and Growth - Discussion Papers 86, Courant Research Centre PEG.

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