IDEAS home Printed from https://ideas.repec.org/a/eee/wdevel/v156y2022ics0305750x22000985.html
   My bibliography  Save this article

Is Chinese aid different?

Author

Listed:
  • Hoeffler, Anke
  • Sterck, Olivier

Abstract

China’s involvement in African countries has been criticized for being guided by self-interest rather than recipient need or merit. For the period 2000–2012, we compare China’s aid allocation behaviour to that of the five largest donor countries globally: France, Germany, Japan, the UK, and the USA. We use regression analysis and a rigorous variance decomposition method to measure the importance of various factors in predicting aid commitments. We find that donors differ markedly in how they allocate aid. While Germany, Japan, the USA, and the UK assign high importance to recipient need, France’s and China’s allocation models are, for a large part, driven by variables that relate to self-interest: trade in the case of France, and the adherence to the “One-China policy” in the case of China. However, China is not a purely selfish donor. As most Western donors, China commits more aid to poorer countries. Furthermore, we find no evidence that commercial interests, such as trade or access to natural resources, determine Chinese aid allocation. This latter result contrasts with Western donors, which allocate more aid to their trade partners. France and the UK also commit significantly more aid to their former colonies. In conclusion, the claim that China’s aid allocation is different must be qualified.

Suggested Citation

  • Hoeffler, Anke & Sterck, Olivier, 2022. "Is Chinese aid different?," World Development, Elsevier, vol. 156(C).
  • Handle: RePEc:eee:wdevel:v:156:y:2022:i:c:s0305750x22000985
    DOI: 10.1016/j.worlddev.2022.105908
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0305750X22000985
    Download Restriction: Full text for ScienceDirect subscribers only

    File URL: https://libkey.io/10.1016/j.worlddev.2022.105908?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. 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.
    2. 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.
    3. Axel Dreher & Peter Nunnenkamp & Maya Schmaljohann, 2015. "The Allocation of German Aid: Self-interest and Government Ideology," Economics and Politics, Wiley Blackwell, vol. 27(1), pages 160-184, March.
    4. Alesina, Alberto & Dollar, David, 2000. "Who Gives Foreign Aid to Whom and Why?," Journal of Economic Growth, Springer, vol. 5(1), pages 33-63, March.
    5. Kickbusch, Ilona & Franz, Christian & Holzscheiter, Anna & Hunger, Iris & Jahn, Albrecht & Köhler, Carsten & Razum, Oliver & Schmidt, Jean-Olivier, 2017. "Germany's expanding role in global health," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 390(10097), pages 898-912.
    6. Dudley, Leonard & Montmarquette, Claude, 1976. "A Model of the Supply of Bilateral Foreign Aid," American Economic Review, American Economic Association, vol. 66(1), pages 132-142, March.
    7. 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.
    8. William Robert Reed, 2015. "On the Practice of Lagging Variables to Avoid Simultaneity," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 77(6), pages 897-905, December.
    9. Fleck, Robert K. & Kilby, Christopher, 2010. "Changing aid regimes? U.S. foreign aid from the Cold War to the War on Terror," Journal of Development Economics, Elsevier, vol. 91(2), pages 185-197, March.
    10. Mayer, Thierry & Zignago, Soledad, 2006. "Notes on CEPII’s distances measures," MPRA Paper 26469, University Library of Munich, Germany.
    11. 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.
    12. Hristos Doucouliagos & Martin Paldam, 2009. "The Aid Effectiveness Literature: The Sad Results Of 40 Years Of Research," Journal of Economic Surveys, Wiley Blackwell, vol. 23(3), pages 433-461, July.
    13. de Ree, Joppe & Nillesen, Eleonora, 2009. "Aiding violence or peace? The impact of foreign aid on the risk of civil conflict in sub-Saharan Africa," Journal of Development Economics, Elsevier, vol. 88(2), pages 301-313, March.
    14. Olivier Sterck, 2019. "Beyond The Stars," Journal of Economic Surveys, Wiley Blackwell, vol. 33(5), pages 1409-1436, December.
    15. Carl-Johan Dalgaard & Henrik Hansen & Finn Tarp, 2004. "On The Empirics of Foreign Aid and Growth," Economic Journal, Royal Economic Society, vol. 114(496), pages 191-216, June.
    16. Ndikumana, Léonce & Pickbourn, Lynda, 2017. "The Impact of Foreign Aid Allocation on Access to Social Services in sub-Saharan Africa: The Case of Water and Sanitation," World Development, Elsevier, vol. 90(C), pages 104-114.
    17. Isaksson, Ann-Sofie & Kotsadam, Andreas, 2018. "Chinese aid and local corruption," Journal of Public Economics, Elsevier, vol. 159(C), pages 146-159.
    18. Eric Neumayer, 2003. "Do Human Rights Matter in Bilateral Aid Allocation? A Quantitative Analysis of 21 Donor Countries," Social Science Quarterly, Southwestern Social Science Association, vol. 84(3), pages 650-666, September.
    19. Raghuram G. Rajan & Arvind Subramanian, 2008. "Aid and Growth: What Does the Cross-Country Evidence Really Show?," The Review of Economics and Statistics, MIT Press, vol. 90(4), pages 643-665, November.
    20. Shorrocks, A F, 1982. "Inequality Decomposition by Factor Components," Econometrica, Econometric Society, vol. 50(1), pages 193-211, January.
    21. 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.
    22. Daniel Kaufmann & Aart Kraay & Massimo Mastruzzi, 2004. "Governance Matters III: Governance Indicators for 1996, 1998, 2000, and 2002," The World Bank Economic Review, World Bank, vol. 18(2), pages 253-287.
    23. Brautigam, Deborah, 2011. "The Dragon's Gift: The Real Story of China in Africa," OUP Catalogue, Oxford University Press, number 9780199606290.
    24. Glenn-Marie Lange & Quentin Wodon & Kevin Carey, 2018. "The Changing Wealth of Nations 2018," World Bank Publications - Books, The World Bank Group, number 29001.
    25. D. Thomas & Edward Hughes & Bruno Zumbo, 1998. "On Variable Importance in Linear Regression," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 45(1), pages 253-275, November.
    26. Collier, Paul & Dollar, David, 2002. "Aid allocation and poverty reduction," European Economic Review, Elsevier, vol. 46(8), pages 1475-1500, September.
    27. Peter Nunnenkamp & Rainer Thiele, 2006. "Targeting Aid to the Needy and Deserving: Nothing But Promises?," The World Economy, Wiley Blackwell, vol. 29(9), pages 1177-1201, September.
    28. Axel Dreher & Peter Nunnenkamp & Hannes Öhler & Johannes Weisser, 2012. "Financial Dependence and Aid Allocation by Swiss NGOs: A Panel Tobit Analysis," Economic Development and Cultural Change, University of Chicago Press, vol. 60(4), pages 829-867.
    29. MARK McGILLIVRAY & EDWARD OCZKOWSKI, 1991. "Modelling the Allocation of Australian Bilaterial Aid: A Two‐Part Sample Selection Approach," The Economic Record, The Economic Society of Australia, vol. 67(2), pages 147-152, June.
    30. World Bank, 2020. "International Debt Statistics 2021," World Bank Publications - Books, The World Bank Group, number 34588.
    31. Dreher, Axel & Fuchs, Andreas & Hodler, Roland & Parks, Bradley C. & Raschky, Paul A. & Tierney, Michael J., 2021. "Is Favoritism a Threat to Chinese Aid Effectiveness? A Subnational Analysis of Chinese Development Projects," World Development, Elsevier, vol. 139(C).
    32. Iacoella, Francesco & Martorano, Bruno & Metzger, Laura & Sanfilippo, Marco, 2021. "Chinese official finance and political participation in Africa," European Economic Review, Elsevier, vol. 136(C).
    33. Nathan Nunn & Nancy Qian, 2014. "US Food Aid and Civil Conflict," American Economic Review, American Economic Association, vol. 104(6), pages 1630-1666, June.
    34. Michael A. Clemens & Steven Radelet & Rikhil R. Bhavnani & Samuel Bazzi, 2012. "Counting Chickens when they Hatch: Timing and the Effects of Aid on Growth," Economic Journal, Royal Economic Society, vol. 122(561), pages 590-617, June.
    35. Brett Leeds & Jeffrey Ritter & Sara Mitchell & Andrew Long, 2002. "Alliance Treaty Obligations and Provisions, 1815-1944," International Interactions, Taylor & Francis Journals, vol. 28(3), pages 237-260, July.
    36. J. Svensson, 1999. "Aid, Growth and Democracy," Economics and Politics, Wiley Blackwell, vol. 11(3), pages 275-297, November.
    37. Anaxagorou, Christiana & Efthyvoulou, Georgios & Sarantides, Vassilis, 2020. "Electoral motives and the subnational allocation of foreign aid in sub-Saharan Africa," European Economic Review, Elsevier, vol. 127(C).
    38. repec:bla:ecorec:v:67:y:1991:i:197:p:147-52 is not listed on IDEAS
    39. Francis Vella, 1998. "Estimating Models with Sample Selection Bias: A Survey," Journal of Human Resources, University of Wisconsin Press, vol. 33(1), pages 127-169.
    40. Knutsen, Tora & Kotsadam, Andreas, 2020. "The political economy of aid allocation: Aid and incumbency at the local level in Sub Saharan Africa," World Development, Elsevier, vol. 127(C).
    41. World Bank, 2020. "International Debt Statistics 2020," World Bank Publications - Books, The World Bank Group, number 32382.
    42. White, Howard, 2004. "Trends in the volume and allocation of official flows from donor countries," International Review of Economics & Finance, Elsevier, vol. 13(3), pages 233-244.
    43. Kilby, Christopher, 2009. "The political economy of conditionality: An empirical analysis of World Bank loan disbursements," Journal of Development Economics, Elsevier, vol. 89(1), pages 51-61, May.
    44. Simon Feeny & Mark McGillivray, 2008. "What Determines Bilateral Aid Allocations? Evidence From Time Series Data," Review of Development Economics, Wiley Blackwell, vol. 12(3), pages 515-529, August.
    45. Kristen Hopewell, 2021. "Power transitions and global trade governance: The impact of a rising China on the export credit regime," Regulation & Governance, John Wiley & Sons, vol. 15(3), pages 634-652, July.
    46. Austin M. Strange & Axel Dreher & Andreas Fuchs & Bradley Parks & Michael J. Tierney, 2017. "Tracking Underreported Financial Flows: China’s Development Finance and the Aid–Conflict Nexus Revisited," Journal of Conflict Resolution, Peace Science Society (International), vol. 61(5), pages 935-963, May.
    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. Koppenberg, Maximilian & Mishra, Ashok K. & Hirsch, Stefan, 2023. "Food aid and violent conflict: A review and Empiricist’s companion," Food Policy, Elsevier, vol. 121(C).
    2. Anke Hoeffler & Patricia Justino, 2024. "Aid and fragile states," Chapters, in: Raj M. Desai & Shantayanan Devarajan & Jennifer L. Tobin (ed.), Handbook of Aid and Development, chapter 14, pages 225-246, Edward Elgar Publishing.
    3. 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.
    4. Mogge, Lukas & McDonald, Morag & Knoth, Christian & Teickner, Henning & Purevtseren, Myagmartseren & Pebesma, Edzer & Kraehnert, Kati, 2023. "Allocation of humanitarian aid after a weather disaster," World Development, Elsevier, vol. 166(C).
    5. Dreher, Axel & Lang, Valentin & Reinsberg, Bernhard, 2024. "Aid effectiveness and donor motives," World Development, Elsevier, vol. 176(C).
    6. Liu, Feng & Liu, Fengrui & Huang, Jiqiang & Dong, Haoran, 2024. "Aid and national tax capacity: Empirical evidence from Chinese aid," China Economic Review, Elsevier, vol. 85(C).
    7. Bode, Eckhardt, 2024. "The motives for Chinese and Western countries' sovereign lending to Africa," Kiel Working Papers 2269, Kiel Institute for the World Economy (IfW Kiel).
    8. Betts, Alexander & Flinder Stierna, Maria & Omata, Naohiko & Sterck, Olivier, 2023. "Refugees welcome? Inter-group interaction and host community attitude formation," World Development, Elsevier, vol. 161(C).
    9. Koppenberg, Maximilian & Mishra, Ashok K. & Hirsch, Stefan, 2023. "Food Aid and Violent Conflict: A Review of Literature," IZA Discussion Papers 16574, Institute of Labor Economics (IZA).
    10. Tritto, Angela & Haini, Hazwan & Wu, Hongsen, 2024. "Help with strings attached? China’s medical assistance and political allegiances during the Covid-19 pandemic," World Development, Elsevier, vol. 178(C).

    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. Dreher, Axel & Lang, Valentin & Reinsberg, Bernhard, 2024. "Aid effectiveness and donor motives," World Development, Elsevier, vol. 176(C).
    2. 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.
    3. Dreher, Axel & Fuchs, Andreas & Hodler, Roland & Parks, Bradley C. & Raschky, Paul A. & Tierney, Michael J., 2021. "Is Favoritism a Threat to Chinese Aid Effectiveness? A Subnational Analysis of Chinese Development Projects," World Development, Elsevier, vol. 139(C).
    4. Gehring, Kai & Kaplan, Lennart C. & Wong, Melvin H.L., 2022. "China and the World Bank—How contrasting development approaches affect the stability of African states," Journal of Development Economics, Elsevier, vol. 158(C).
    5. 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.
    6. Simon Feeny & Paul Hansen & Stephen Knowles & Mark McGillivray & Franz Ombler, 2019. "Donor motives, public preferences and the allocation of UK foreign aid: a discrete choice experiment approach," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 155(3), pages 511-537, August.
    7. Tierney, Michael J. & Nielson, Daniel L. & Hawkins, Darren G. & Roberts, J. Timmons & Findley, Michael G. & Powers, Ryan M. & Parks, Bradley & Wilson, Sven E. & Hicks, Robert L., 2011. "More Dollars than Sense: Refining Our Knowledge of Development Finance Using AidData," World Development, Elsevier, vol. 39(11), pages 1891-1906.
    8. 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.
    9. 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.
    10. Dreher, Axel & Fuchs, Andreas & Hodler, Roland & Parks, Bradley C. & Raschky, Paul A. & Tierney, Michael J., 2019. "African leaders and the geography of China's foreign assistance," Journal of Development Economics, Elsevier, vol. 140(C), pages 44-71.
    11. Juergen Bitzer & Erkan Goeren, 2018. "Foreign Aid and Subnational Development: A Grid Cell Analysis," Working Papers V-407-18, University of Oldenburg, Department of Economics, revised Mar 2018.
    12. 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.
    13. Nagae, Akira & Katayama, Hajime & Takase, Koichi, 2022. "Donor aid allocation and accounting standards of recipients," Economic Modelling, Elsevier, vol. 106(C).
    14. Dreher, Axel & Fuchs, Andreas & Parks, Bradley & Strange, Austin M. & Tierney, Michael J., 2016. "Apples and Dragon Fruits: The Determinants of Aid and Other Forms of State Financing from China to Africa," Working Papers 0620, University of Heidelberg, Department of Economics.
    15. Aurore Gary & Mathilde Maurel, 2013. "The effect of donors' policy coherence on growth," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00825816, HAL.
    16. Eichenauer, Vera Z. & Fuchs, Andreas & Brückner, Lutz, 2021. "The effects of trade, aid, and investment on China's image in Latin America," Journal of Comparative Economics, Elsevier, vol. 49(2), pages 483-498.
    17. 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).
    18. Ziyoda Asatullaeva & Reza Fathollah Zadeh Aghdam & Nisar Ahmad & Laylo Tashpulatova, 2021. "The impact of foreign aid on economic development: A systematic literature review and content analysis of the top 50 most influential papers," Journal of International Development, John Wiley & Sons, Ltd., vol. 33(4), pages 717-751, May.
    19. BenYishay, Ariel & DiLorenzo, Matthew & Dolan, Carrie, 2022. "The economic efficiency of aid targeting," World Development, Elsevier, vol. 160(C).
    20. Nordtveit, Ingvild, 2014. "Does better governance and commitment to development attract general budget support?," Working Papers in Economics 02/14, University of Bergen, Department of Economics.

    More about this item

    Keywords

    ODA; China; Allocation; Commitments;
    All these keywords.

    JEL classification:

    • F35 - International Economics - - International Finance - - - Foreign Aid
    • H84 - Public Economics - - Miscellaneous Issues - - - Disaster Aid
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

    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:wdevel:v:156:y:2022:i:c:s0305750x22000985. 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/worlddev .

    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.