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Long Live friendship? The long-term impact of Soviet aid on Sino-Russian trade

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  • Hu, Zhi-An
  • Li, Jinghong
  • Nie, Zhuo

Abstract

This study examines the long-term effect of aid on bilateral trade and provides a new mechanism that aid fosters intergroup affinity. Our empirical setting is the Soviet aid to China during the 1950s under the 156 Program, which allowed numerous large industrial plants to be constructed. Using a difference-in-differences framework, we find that Chinese cities which received more aid through the program, trade more with Russia than with other countries in the 2000s, despite the Sino-Russian split. We then provide a rich set of evidence suggesting that the relationship between aid and trade can be explained by the affinity mechanism.

Suggested Citation

  • Hu, Zhi-An & Li, Jinghong & Nie, Zhuo, 2023. "Long Live friendship? The long-term impact of Soviet aid on Sino-Russian trade," Journal of Development Economics, Elsevier, vol. 164(C).
    • Handle: RePEc:eee:deveco:v:164:y:2023:i:c:s030438782300072x
    DOI: 10.1016/j.jdeveco.2023.103117
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    More about this item

    Keywords

    Aid; Bilateral trade; Intergroup affinity;
    All these keywords.

    JEL classification:

    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F35 - International Economics - - International Finance - - - Foreign Aid
    • N45 - Economic History - - Government, War, Law, International Relations, and Regulation - - - Asia including Middle East
    • Z10 - Other Special Topics - - Cultural Economics - - - General

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