IDEAS home Printed from https://ideas.repec.org/a/eee/chieco/v60y2020ics1043951x19300045.html
   My bibliography  Save this article

What can we learn on Chinese aid allocation motivations from available data? A sectorial analysis of Chinese aid to African countries

Author

Listed:
  • Guillon, Marlène
  • Mathonnat, Jacky

Abstract

Since the creation of the Forum on China-Africa Cooperation (FOCAC) in 2000, Chinese official development assistance (ODA) to Africa has increased drastically. Only few analyses on the determinants of Chinese ODA allocation to African countries are available. Moreover, existing literature mainly focused on total aid flows while Chinese motivations for aid allocation might differ depending on the ODA sector considered. Our objective is to study the factors associated with Chinese aid allocation to African countries by sector between 2000 and 2014. We consider three ODA broad sectors as defined by the Organisation for Economic Cooperation and Development (OECD): the social infrastructure and services sector, the economic infrastructure and services sector and the production sector. Chinese ODA is measured using AidData's Global Chinese Official Finance Dataset, 2000–2014, Version 1.0. Over the 2000–2014 period, China allocated 971, 218 and 138 ODA projects to African countries in the social infrastructure and services sector, the economic infrastructure and services sector and the production sector respectively. Between 2000 and 2014, the economic infrastructure and services sector was the first sector in terms of ODA amount with a total of US$18.9 billion ahead from the social infrastructure and services sector with US$7 billion or the production sector with US$3.1 billion. Results of our analysis suggest that the motivations of Chinese aid allocation to African countries differ by sector. Chinese ODA in the social infrastructure and services sector appears more responsive to the economic needs of recipient countries but is also more driven by foreign policy considerations. Chinese economic interest, in particular for natural resources acquisition, is associated with China's ODA allocation in the economic infrastructure and services sector. Finally, while governance quality in recipient countries is not related to Chinese ODA in the social infrastructure and services sector, we find that China allocates more ODA in the economic infrastructure and services sector and the production sector to African countries with weaker institutions. One of the strong conclusions of this study is to show that considering only China's overall aid to Africa can be misleading as to its underlying determinants, and therefore to point out the need to disaggregate the analysis by ODA sectors.

Suggested Citation

  • Guillon, Marlène & Mathonnat, Jacky, 2020. "What can we learn on Chinese aid allocation motivations from available data? A sectorial analysis of Chinese aid to African countries," China Economic Review, Elsevier, vol. 60(C).
    • Handle: RePEc:eee:chieco:v:60:y:2020:i:c:s1043951x19300045
    DOI: 10.1016/j.chieco.2019.01.004
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1043951X19300045
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.chieco.2019.01.004?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    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. Anderson, James E. & Yotov, Yoto V., 2016. "Terms of trade and global efficiency effects of free trade agreements, 1990–2002," Journal of International Economics, Elsevier, vol. 99(C), pages 279-298.
    3. Axel Dreher & Andreas Fuchs, 2015. "Rogue aid? An empirical analysis of China's aid allocation," Canadian Journal of Economics, Canadian Economics Association, vol. 48(3), pages 988-1023, August.
    4. Fink, Günther & Redaelli, Silvia, 2011. "Determinants of International Emergency Aid--Humanitarian Need Only?," World Development, Elsevier, vol. 39(5), pages 741-757, May.
    5. Eric Neumayer, 2003. "What Factors Determine the Allocation of Aid by Arab Countries and Multilateral Agencies?," Journal of Development Studies, Taylor & Francis Journals, vol. 39(4), pages 134-147.
    6. Fuchs, Andreas & Dreher, Axel & Hodler, Roland & Parks, Bradley C. & Raschky, Paul, 2015. "Aid on Demand: African Leaders and the Geography of China s Foreign Assistance," VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 112838, Verein für Socialpolitik / German Economic Association.
    7. 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.
    8. shepherd, Ben, 2010. "Geographical Diversification of Developing Country Exports," World Development, Elsevier, vol. 38(9), pages 1217-1228, September.
    9. Dreher, Axel & Nunnenkamp, Peter & Thiele, Rainer, 2011. "Are ‘New’ Donors Different? Comparing the Allocation of Bilateral Aid Between nonDAC and DAC Donor Countries," World Development, Elsevier, vol. 39(11), pages 1950-1968.
    10. Younas, Javed, 2008. "Motivation for bilateral aid allocation: Altruism or trade benefits," European Journal of Political Economy, Elsevier, vol. 24(3), pages 661-674, September.
    11. Santos Silva, J.M.C. & Tenreyro, Silvana, 2011. "Further simulation evidence on the performance of the Poisson pseudo-maximum likelihood estimator," Economics Letters, Elsevier, vol. 112(2), pages 220-222, August.
    12. Marlène Guillon & Jacky Mathonnat, 2017. "Is there a strategy in China’s health official development assistance to African countries?," Working Papers halshs-01519715, HAL.
    13. Luo, Limin & Qi, Zhen & Hubbard, Paul, 2017. "Not looking for trouble: Understanding large-scale Chinese overseas investment by sector and ownership," China Economic Review, Elsevier, vol. 46(C), pages 142-164.
    14. Didier, Laurent, 2018. "Economic diplomacy: The “one–China policy” effect on trade," China Economic Review, Elsevier, vol. 48(C), pages 223-243.
    15. Nunnenkamp, Peter & Öhler, Hannes, 2011. "Aid Allocation through Various Official and Private Channels: Need, Merit, and Self-Interest as Motives of German Donors," World Development, Elsevier, vol. 39(3), pages 308-323, March.
    16. Jean‐Claude Berthélemy, 2006. "Bilateral Donors’ Interest vs. Recipients’ Development Motives in Aid Allocation: Do All Donors Behave the Same?," Review of Development Economics, Wiley Blackwell, vol. 10(2), pages 179-194, May.
    17. Anke Hoeffler & Verity Outram, 2011. "Need, Merit, or Self‐Interest—What Determines the Allocation of Aid?," Review of Development Economics, Wiley Blackwell, vol. 15(2), pages 237-250, May.
    18. Cashel-Cordo, Peter & Craig, Steven G, 1997. "Donor Preferences and Recipient Fiscal Behavior: A Simultaneous Analysis of Foreign Aid," Economic Inquiry, Western Economic Association International, vol. 35(3), pages 653-671, July.
    19. David Fielding, 2011. "Health aid and governance in developing countries," Health Economics, John Wiley & Sons, Ltd., vol. 20(7), pages 757-769, July.
    20. Dollar, David & Levin, Victoria, 2006. "The Increasing Selectivity of Foreign Aid, 1984-2003," World Development, Elsevier, vol. 34(12), pages 2034-2046, December.
    21. Mourao, Paulo Reis, 2018. "What is China seeking from Africa? An analysis of the economic and political determinants of Chinese Outward Foreign Direct Investment based on Stochastic Frontier Models," China Economic Review, Elsevier, vol. 48(C), pages 258-268.
    22. Peter J Buckley & L Jeremy Clegg & Adam R Cross & Xin Liu & Hinrich Voss & Ping Zheng, 2007. "The determinants of Chinese outward foreign direct investment," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 38(4), pages 499-518, July.
    23. Marlène GUILLON & Jacky MATHONNAT, 2017. "Is there a strategy in China’s health official development assistance to African countries?," Working Papers 201710, CERDI.
    24. Mark McGillivray, 2003. "Modelling Aid Allocation: Issues, Approaches And Results," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 28(1), pages 171-188, June.
    25. Marlène GUILLON & Jacky MATHONNAT, 2017. "Is there a strategy in China’s health official development assistance to African countries?," Working Papers 201720, CERDI.
    26. Broich, Tobias, 2017. "Do authoritarian regimes receive more Chinese development finance than democratic ones? Empirical evidence for Africa," MERIT Working Papers 2017-011, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    27. Berthelemy, Jean-Claude & Tichit, Ariane, 2004. "Bilateral donors' aid allocation decisions--a three-dimensional panel analysis," International Review of Economics & Finance, Elsevier, vol. 13(3), pages 253-274.
    28. Fernandes, Ana M. & Freund, Caroline & Pierola, Martha Denisse, 2016. "Exporter behavior, country size and stage of development: Evidence from the exporter dynamics database," Journal of Development Economics, Elsevier, vol. 119(C), pages 121-137.
    29. Lan Xue, 2014. "China's Foreign Aid Policy and Architecture," IDS Bulletin, Blackwell Publishing, vol. 45(4), pages 36-45, July.
    30. Marco Sanfilippo, 2010. "Chinese FDI to Africa: What Is the Nexus with Foreign Economic Cooperation?," African Development Review, African Development Bank, vol. 22(S1), pages 599-614.
    31. Papke, Leslie E & Wooldridge, Jeffrey M, 1996. "Econometric Methods for Fractional Response Variables with an Application to 401(K) Plan Participation Rates," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 11(6), pages 619-632, Nov.-Dec..
    32. Acht, Martin & Mahmoud, Toman Omar & Thiele, Rainer, 2015. "Corrupt governments do not receive more state-to-state aid: Governance and the delivery of foreign aid through non-state actors," Journal of Development Economics, Elsevier, vol. 114(C), pages 20-33.
    33. Esser, Daniel E. & Keating Bench, Kara, 2011. "Does Global Health Funding Respond to Recipients' Needs? Comparing Public and Private Donors' Allocations in 2005-2007," World Development, Elsevier, vol. 39(8), pages 1271-1280, August.
    34. You, Kefei & Solomon, Offiong Helen, 2015. "China's outward foreign direct investment and domestic investment: An industrial level analysis," China Economic Review, Elsevier, vol. 34(C), pages 249-260.
    35. Stubbs, Thomas H. & Kentikelenis, Alexander E. & King, Lawrence P., 2016. "Catalyzing Aid? The IMF and Donor Behavior in Aid Allocation," World Development, Elsevier, vol. 78(C), pages 511-528.
    36. Kimura, Hidemi & Todo, Yasuyuki, 2010. "Is Foreign Aid a Vanguard of Foreign Direct Investment? A Gravity-Equation Approach," World Development, Elsevier, vol. 38(4), pages 482-497, April.
    37. Clist, Paul, 2011. "25Years of Aid Allocation Practice: Whither Selectivity?," World Development, Elsevier, vol. 39(10), pages 1724-1734.
    38. Amighini, Alessia A. & Rabellotti, Roberta & Sanfilippo, Marco, 2013. "Do Chinese state-owned and private enterprises differ in their internationalization strategies?," China Economic Review, Elsevier, vol. 27(C), pages 312-325.
    39. Peter Kragelund, 2008. "The Return of Non-DAC Donors to Africa: New Prospects for African Development?," Development Policy Review, Overseas Development Institute, vol. 26(5), pages 555-584, September.
    40. Denghua Zhang & Graeme Smith, 2017. "China’s foreign aid system: structure, agencies, and identities," Third World Quarterly, Taylor & Francis Journals, vol. 38(10), pages 2330-2346, October.
    41. Richard Manning, 2006. "Will 'Emerging Donors' Change the Face of International Co-operation?," Development Policy Review, Overseas Development Institute, vol. 24(4), pages 371-385, July.
    42. Lee, Suejin A. & Lim, Jae-Young, 2014. "Does International Health Aid Follow Recipients’ Needs? Extensive and Intensive Margins of Health Aid Allocation," World Development, Elsevier, vol. 64(C), pages 104-120.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Richard Bluhm & Axel Dreher & Andreas Fuchs & Bradley C. Parks & Austin M. Strange & Michael J. Tierney, 2020. "Connective Financing - Chinese Infrastructure Projects and the Diffusion of Economic Activity in Developing Countries," CESifo Working Paper Series 8344, CESifo.
    2. Mohamed Boly, 2021. "On the allocation of environmental aid : strategy beyond environmental considerations?," Working Papers hal-03174770, HAL.
    3. Ahsan Kibria & Reza Oladi & Ryan Bosworth, 2021. "Political economy of aid allocation: The case of Arab donors," The World Economy, Wiley Blackwell, vol. 44(8), pages 2460-2495, August.
    4. Fon, Roger & Alon, Ilan, 2022. "Governance, foreign aid, and Chinese foreign direct investment," LSE Research Online Documents on Economics 113678, London School of Economics and Political Science, LSE Library.
    5. Bernhard Reinsberg & Sebastian Dellepiane, 2022. "Development co‐operation by European regions: Introducing the subnational donor governance dataset," Development Policy Review, Overseas Development Institute, vol. 40(6), November.
    6. 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.
    7. Huong, Tran Thi Lan & Ha, Le Thanh, 2023. "A comprehensive analysis of the correlation between foreign aid and energy security in emerging countries: Does institutional quality matter?," Economic Analysis and Policy, Elsevier, vol. 77(C), pages 952-968.
    8. Philip Akrofi Atitianti, 2023. "The impact of Chinese aid on political trust," Journal of International Development, John Wiley & Sons, Ltd., vol. 35(2), pages 233-259, March.
    9. Pedro Antonio Martín Cervantes & Nuria Rueda López & Salvador Cruz Rambaud, 2020. "The Relative Importance of Globalization and Public Expenditure on Life Expectancy in Europe: An Approach Based on MARS Methodology," IJERPH, MDPI, vol. 17(22), pages 1-20, November.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Marlène Guillon & Jacky Mathonnat, 2019. "What can we learn on Chinese aid allocation motivations from available data ? A sectorial analysis of Chinese aid to African countries," Post-Print hal-02005784, HAL.
    2. Marlène GUILLON & Jacky MATHONNAT, 2018. "What can we learn on Chinese aid allocation motivations from new available data? A sectorial analysis of Chinese aid to African countries," Working Papers P225, FERDI.
    3. Marlène Guillon & Jacky Mathonnat, 2018. "What can we learn on Chinese aid allocation motivations from new available data? A sectorial analysis of Chinese aid to African countries," Working Papers hal-01777484, HAL.
    4. Marlène GUILLON & Jacky MATHONNAT, 2018. "What can we learn on Chinese aid allocation motivations from new available data? A sectorial analysis of Chinese aid to African countries," Working Papers P225, FERDI.
    5. Marlène Guillon & Jacky Mathonnat, 2018. "What can we learn on Chinese aid allocation motivations from new available data? A sectorial analysis of Chinese aid to African countries," Post-Print hal-01777484, HAL.
    6. Marlène GUILLON & Jacky MATHONNAT, 2017. "Is there a strategy in China’s health official development assistance to African countries?," Working Papers 201710, CERDI.
    7. Marlène Guillon & Jacky Mathonnat, 2017. "Is there a strategy in China’s health official development assistance to African countries?," Working Papers halshs-01519715, HAL.
    8. Marlène Guillon & Jacky Mathonnat, 2017. "Is there a strategy in China’s health official development assistance to African countries?," CERDI Working papers halshs-01519715, HAL.
    9. Marlène Guillon & Jacky Mathonnat, 2019. "Is there a Strategy in China’s Health Official Development Assistance to African Countries ?," Post-Print hal-03157281, HAL.
    10. Stubbs, Thomas H. & Kentikelenis, Alexander E. & King, Lawrence P., 2016. "Catalyzing Aid? The IMF and Donor Behavior in Aid Allocation," World Development, Elsevier, vol. 78(C), pages 511-528.
    11. Barthel, Fabian & Neumayer, Eric & Nunnenkamp, Peter & Selaya, Pablo, 2014. "Competition for Export Markets and the Allocation of Foreign Aid: The Role of Spatial Dependence among Donor Countries," World Development, Elsevier, vol. 64(C), pages 350-365.
    12. Raschky, Paul A. & Schwindt, Manijeh, 2012. "On the channel and type of aid: The case of international disaster assistance," European Journal of Political Economy, Elsevier, vol. 28(1), pages 119-131.
    13. Ahsan Kibria & Reza Oladi & Ryan Bosworth, 2021. "Political economy of aid allocation: The case of Arab donors," The World Economy, Wiley Blackwell, vol. 44(8), pages 2460-2495, August.
    14. Savin, Ivan & Marson, Marta & Sutormina, Marina, 2020. "How different aid flows affect different trade flows: Evidence from Africa and its largest donors," Structural Change and Economic Dynamics, Elsevier, vol. 55(C), pages 119-136.
    15. Abrams M E Tagem, 2017. "Analysing the determinants of health aid allocation in sub-Saharan Africa," Discussion Papers 2017-09, University of Nottingham, CREDIT.
    16. Mohamed Boly, 2021. "On the allocation of environmental aid : strategy beyond environmental considerations?," CERDI Working papers hal-03174770, HAL.
    17. Donaubauer, Julian & Meyer, Birgit & Nunnenkamp, Peter, 2016. "Aid, Infrastructure, and FDI: Assessing the Transmission Channel with a New Index of Infrastructure," World Development, Elsevier, vol. 78(C), pages 230-245.
    18. 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.
    19. Suzuki, Mao, 2020. "Profits before patients? Analyzing donors’ economic motives for foreign aid in the health sector," World Development, Elsevier, vol. 132(C).
    20. Nagae, Akira & Katayama, Hajime & Takase, Koichi, 2022. "Donor aid allocation and accounting standards of recipients," Economic Modelling, Elsevier, vol. 106(C).

    More about this item

    Keywords

    Official development assistance; China; Africa; Sectorial analysis;
    All these keywords.

    JEL classification:

    • F35 - International Economics - - International Finance - - - Foreign Aid

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:chieco:v:60:y:2020:i:c:s1043951x19300045. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/chieco .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.