IDEAS home Printed from https://ideas.repec.org/a/eee/streco/v79y2026icp181-197.html

China's Aid, Governmental Governance Capacity, and Recipient Countries' Social Trust

Author

Listed:
  • Sun, Churen
  • Xu, Jinqiang

Abstract

With the development of China’s aid, the issue of the effectiveness of China’s aid has received more and more attention. This paper explores the effectiveness of China’s aid from the perspective of social capital by studying the impact of China’s aid on social trust in recipient countries. The results show that China’s aid can enhance social trust in recipient countries. The mechanism test finds that the effect of China’s aid on social trust in recipient countries is mainly achieved by improving the governmental governance capacity of recipient countries. In addition, the study also finds that China’s aid has a greater boosting effect on social trust in recipient countries with poorer governmental governance capacity, and a greater increase in social trust in the non-employed group within recipient countries that are more dependent on government governance. This paper extends the scope of research on the effectiveness of foreign aid, making the study on the effectiveness of foreign aid more complete.

Suggested Citation

  • Sun, Churen & Xu, Jinqiang, 2026. "China's Aid, Governmental Governance Capacity, and Recipient Countries' Social Trust," Structural Change and Economic Dynamics, Elsevier, vol. 79(C), pages 181-197.
    • Handle: RePEc:eee:streco:v:79:y:2026:i:c:p:181-197
    DOI: 10.1016/j.strueco.2026.05.005
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0954349X26000858
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.strueco.2026.05.005?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

    for a different version of it.

    References listed on IDEAS

    as
    1. Jörg Schimmel, 2009. "Development as Happiness: The Subjective Perception of Happiness and UNDP’s Analysis of Poverty, Wealth and Development," Journal of Happiness Studies, Springer, vol. 10(1), pages 93-111, March.
    2. Djankov, Simeon & Montalvo, Jose G. & Reynal-Querol, Marta, 2009. "Aid with multiple personalities," Journal of Comparative Economics, Elsevier, vol. 37(2), pages 217-229, June.
    3. Tavares, Jose, 2003. "Does foreign aid corrupt?," Economics Letters, Elsevier, vol. 79(1), pages 99-106, April.
    4. Jones, Sam & Tarp, Finn, 2016. "Does foreign aid harm political institutions?," Journal of Development Economics, Elsevier, vol. 118(C), pages 266-281.
    5. Dong, Yan & Fan, Cijun, 2020. "The role of China's aid and ODI in the economic growth of African countries," Emerging Markets Review, Elsevier, vol. 44(C).
    6. Todd Moss & Gunilla Pettersson & Nicolas van de Walle, 2006. "An Aid-Institutions Paradox? A Review Essay on Aid Dependency and State Building in Sub-Saharan Africa," Working Papers 74, Center for Global Development.
    7. 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.
    8. Douglas Staiger & James H. Stock, 1997. "Instrumental Variables Regression with Weak Instruments," Econometrica, Econometric Society, vol. 65(3), pages 557-586, May.
    9. Bergh, Andreas & Bjørnskov, Christian, 2013. "Trust, Welfare States and Income Equality: What Causes What?," Working Paper Series 994, Research Institute of Industrial Economics.
    10. Brautigam, Deborah A & Knack, Stephen, 2004. "Foreign Aid, Institutions, and Governance in Sub-Saharan Africa," Economic Development and Cultural Change, University of Chicago Press, vol. 52(2), pages 255-285, January.
    11. Deng, Wen-Shuenn & Lin, Yi-Chen & Gong, Jinguo, 2012. "A smooth coefficient quantile regression approach to the social capital–economic growth nexus," Economic Modelling, Elsevier, vol. 29(2), pages 185-197.
    12. Isaksson, Ann-Sofie & Kotsadam, Andreas, 2018. "Chinese aid and local corruption," Journal of Public Economics, Elsevier, vol. 159(C), pages 146-159.
    13. Goldsmith, Arthur A., 2001. "Foreign Aid and Statehood in Africa," International Organization, Cambridge University Press, vol. 55(1), pages 123-148, January.
    14. Raghuram Rajan & Arvind Subramanian, 2007. "Does Aid Affect Governance?," American Economic Review, American Economic Association, vol. 97(2), pages 322-327, May.
    15. Stephen Knack, 2001. "Aid Dependence and the Quality of Governance: Cross‐Country Empirical Tests," Southern Economic Journal, John Wiley & Sons, vol. 68(2), pages 310-329, October.
    16. Joseph G. Altonji & Todd E. Elder & Christopher R. Taber, 2005. "Selection on Observed and Unobserved Variables: Assessing the Effectiveness of Catholic Schools," Journal of Political Economy, University of Chicago Press, vol. 113(1), pages 151-184, February.
    17. Axel Dreher & Andreas Fuchs & Bradley Parks & Austin Strange & Michael J. Tierney, 2021. "Aid, China, and Growth: Evidence from a New Global Development Finance Dataset," American Economic Journal: Economic Policy, American Economic Association, vol. 13(2), pages 135-174, May.
    18. Liu, Ailan & Tang, Bo, 2018. "US and China aid to Africa: Impact on the donor-recipient trade relations," China Economic Review, Elsevier, vol. 48(C), pages 46-65.
    19. Alberto Alesina & Beatrice Weder, 2002. "Do Corrupt Governments Receive Less Foreign Aid?," American Economic Review, American Economic Association, vol. 92(4), pages 1126-1137, September.
    20. Chauvet, Lisa & Ehrhart, Hélène, 2018. "Aid and growth: evidence from firm-level data," Journal of Development Economics, Elsevier, vol. 135(C), pages 461-477.
    21. D. B. Kalashnikov, 2021. "Chinese Aid to the Industrial Development of the South: Input into Post-Industrialization of China," Outlines of global transformations: politics, economics, law, Center for Crisis Society Studies, vol. 14(2).
    22. Zohid Askarov & Hristos Doucouliagos, 2013. "Does aid improve democracy and governance? A meta-regression analysis," Public Choice, Springer, vol. 157(3), pages 601-628, December.
    23. Johnson, Noel D. & Mislin, Alexandra, 2012. "How much should we trust the World Values Survey trust question?," Economics Letters, Elsevier, vol. 116(2), pages 210-212.
    24. Sjoerd Beugelsdijk & Henri L.F. de Groot & Anton B.T.M. van Schaik, 2004. "Trust and economic growth: a robustness analysis," Oxford Economic Papers, Oxford University Press, vol. 56(1), pages 118-134, January.
    25. Busse, Matthias & Gröning, Steffen, 2009. "Does foreign aid improve governance?," Economics Letters, Elsevier, vol. 104(2), pages 76-78, August.
    Full references (including those not matched with items on IDEAS)

    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. Dijkstra, Geske, 2018. "Aid and good governance: Examining aggregate unintended effects of aid," Evaluation and Program Planning, Elsevier, vol. 68(C), pages 225-232.
    2. Sujin Cha, 2024. "Chinese aid and corruption in African local governments," Journal of International Development, John Wiley & Sons, Ltd., vol. 36(1), pages 587-605, January.
    3. repec:elg:eechap:15325_15 is not listed on IDEAS
    4. Hagen, Rune Jansen, 2014. "Rents and the Political Economy of Development Aid," Working Papers in Economics 07/14, University of Bergen, Department of Economics.
    5. Marson, Marta & Savin, Ivan, 2022. "Complementary or adverse? Comparing development results of official funding from China and traditional donors in Africa," Structural Change and Economic Dynamics, Elsevier, vol. 62(C), pages 189-206.
    6. Ann-Sofie Isaksson & Dick Durevall, 2023. "Aid and institutions: Local effects of World Bank aid on perceived institutional quality in Africa," The Review of International Organizations, Springer, vol. 18(3), pages 523-551, July.
    7. Temple, Jonathan R.W., 2010. "Aid and Conditionality," Handbook of Development Economics, in: Dani Rodrik & Mark Rosenzweig (ed.), Handbook of Development Economics, edition 1, volume 5, chapter 0, pages 4415-4523, Elsevier.
    8. Isaksson, Ann-Sofie & Kotsadam, Andreas, 2018. "Racing to the bottom? Chinese development projects and trade union involvement in Africa," World Development, Elsevier, vol. 106(C), pages 284-298.
    9. Chauvet, Lisa & Ehrhart, Hélène, 2018. "Aid and growth: evidence from firm-level data," Journal of Development Economics, Elsevier, vol. 135(C), pages 461-477.
    10. Iannantuoni, Alice, 2025. "Foreign aid volatility and institutional development," World Development, Elsevier, vol. 189(C).
    11. Jones, Sam & Tarp, Finn, 2016. "Does foreign aid harm political institutions?," Journal of Development Economics, Elsevier, vol. 118(C), pages 266-281.
    12. Askarov, Zohid & Doucouliagos, Hristos, 2015. "Aid and institutions in transition economies," European Journal of Political Economy, Elsevier, vol. 38(C), pages 55-70.
    13. Zohid Askarov & Hristos Doucouliagos, 2013. "Does aid improve democracy and governance? A meta-regression analysis," Public Choice, Springer, vol. 157(3), pages 601-628, December.
    14. Mandon, Pierre & Woldemichael, Martha Tesfaye, 2023. "Has Chinese aid benefited recipient countries? Evidence from a meta-regression analysis," World Development, Elsevier, vol. 166(C).
    15. Jones, Sam & Tarp, Finn, 2016. "Does foreign aid harm political institutions?," Journal of Development Economics, Elsevier, vol. 118(C), pages 266-281.
    16. Jinqiang Xu & Churen Sun, 2024. "Does China’s aid increase individual happiness of recipient countries?," Empirical Economics, Springer, vol. 66(6), pages 2761-2793, June.
    17. Brice Kamguia & Sosson Tadadjeu & Clovis Miamo & Henri Njangang, 2022. "Does foreign aid impede economic complexity in developing countries?," International Economics, CEPII research center, issue 169, pages 71-88.
    18. Broich, Tobias & Szirmai, Adam & Thomsson, Kaj, 2015. "Precolonial centralisation, foreign aid and modern state capacity in Africa," MERIT Working Papers 2015-025, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    19. Churen Sun & Jinqiang Xu & Hui Jiang, 2025. "Can China's aid promote the position upgrading of recipient countries in the global value chains," Journal of International Development, John Wiley & Sons, Ltd., vol. 37(1), pages 230-250, January.
    20. Maria Rosaria Carillo & Valentina Chiariello & Rita De Siano & Luca Pennacchio, 2025. "Foreign Aid and Corruption: Do Women Make the Difference?," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 11(1), pages 103-151, March.
    21. Dzhumashev, Ratbek & Hailemariam, Abebe, 2021. "Foreign aid and the quality of economic institutions," European Journal of Political Economy, Elsevier, vol. 68(C).

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    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:streco:v:79:y:2026:i:c:p:181-197. 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/inca/525148 .

    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.