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China & India as Africa's New Donors: The Impact of Aid on Development

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  • Dorothy McCormick

Abstract

Using a two-analytical framework and drawing on a wide range of secondary data, this article attempts to assess the likely impact of aid from China and India on the development of Africa. The framework treats aid as one of four main channels through which China and India influence the shape and performance of particular sectors and, through them, development outcomes. The first stage of analysis examines the varying patterns of Chinese and Indian aid and the multiple impacts such aid has on one key sector: manufacturing. The main findings from this level of analysis have to do with the differing patterns of Indian and Chinese aid, differences between Chinese and Indian aid, and aid from western countries, and the interconnections between the impact channels. India and China have different patterns of aid. India concentrates on non-monetary aid mainly in the form of technical assistance and scholarships, while China offers a wider range of monetary and non-monetary aid packages, which include grants and loans for infrastructure, plant and equipment, as well as scholarships, training opportunities, and technical assistance. Chinese monetary aid is tied to the use of Chinese goods and services, and requires adherence to the 'One China' policy, but does not carry the 'good governance' conditionalities that currently characterise western donors. The impact channels of trade, FDI, aid, and migration overlap to some degree, especially in the case of China. The line between FDI and aid is often blurred, as is the line between aid and trade. The second stage of the analysis looks at the implications of Chinese and Indian aid to manufacturing for development outcomes such as growth, distribution, governance, and environment. The analysis shows clearly that the potential impact of Chinese and Indian aid on Africa is significant, but that the actual effects of these emerging donors on particular countries depends to a large extent on the institutional and structural conditions of the recipients.

Suggested Citation

  • Dorothy McCormick, 2008. "China & India as Africa's New Donors: The Impact of Aid on Development," Review of African Political Economy, Taylor & Francis Journals, vol. 35(115), pages 73-92, March.
    • Handle: RePEc:taf:revape:v:35:y:2008:i:115:p:73-92
    DOI: 10.1080/03056240802011501
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    References listed on IDEAS

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    Cited by:

    1. Joanna Gravier-Rymaszewska, 2012. "How Aid Supply Responds to Economic Crises: A Panel VAR Approach," WIDER Working Paper Series wp-2012-025, World Institute for Development Economic Research (UNU-WIDER).
    2. Simplice A. Asongu & Paul N. Acha-Anyi, 2020. "A survey on the Washington Consensus and the Beijing Model: reconciling development perspectives," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 67(2), pages 111-129, June.
    3. Asongu, Simplice A, 2014. "Sino-African relations: a review and reconciliation of dominant schools of thought," MPRA Paper 66597, University Library of Munich, Germany.
    4. Miao Miao & Jiang Yushi & Dinkneh Gebre Borojo, 2020. "The Impacts of China–Africa Economic Relation on Factor Productivity of African Countries," Economies, MDPI, vol. 8(2), pages 1-30, June.
    5. Wim Naudé, 2009. "The Financial Crisis of 2008 and the Developing Countries," WIDER Working Paper Series DP2009-01, World Institute for Development Economic Research (UNU-WIDER).
    6. Xing, Yijun & Liu, Yipeng & Tarba, Shlomo Yedidia & Cooper, Cary L., 2016. "Intercultural influences on managing African employees of Chinese firms in Africa: Chinese managers’ HRM practices," International Business Review, Elsevier, vol. 25(1), pages 28-41.
    7. Shriya Rai, 2024. "Unpacking Aid in Africa- The Decolonization Turn," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 8(1), pages 1790-1796, January.
    8. Simplice Anutechia Asongu, 2014. "A Development Consensus reconciling the Beijing Model and Washington Consensus: Views and Agenda," AAYE Policy Research Working Paper Series 14_025, Association of African Young Economists, revised Dec 2014.
    9. Simplice Asongu & John Ssozi, 2016. "Sino-African Relations: Some Solutions and Strategies to the Policy Syndromes," Journal of African Business, Taylor & Francis Journals, vol. 17(1), pages 33-51, January.
    10. Amsalu K. Addis & Simplice Asongu & Zhu Zuping & Hailu Kendie Addis & Eshetu Shifaw, 2020. "Chinese and Indian investment in Ethiopia: infrastructure for ‘debt-trap diplomacy’ exchange and the land grabbing approach," International Journal of Emerging Markets, Emerald Group Publishing Limited, vol. 16(6), pages 998-1025, June.
    11. World Bank, 2020. "Violence without Borders," World Bank Publications - Books, The World Bank Group, number 33330, December.
    12. Hassen Abda Wako, 2018. "Aid, institutions and economic growth in sub†Saharan Africa: Heterogeneous donors and heterogeneous responses," Review of Development Economics, Wiley Blackwell, vol. 22(1), pages 23-44, February.
    13. James Reilly, 2012. "A Northeast Asian Model of ODA? Comparing Chinese, Japanese and Korean Official Development Assistance," Chapters, in: Christopher M. Dent & Jörn Dosch (ed.), The Asia-Pacific, Regionalism and the Global System, chapter 14, Edward Elgar Publishing.
    14. Danielle Resnick, 2012. "Foreign Aid in Africa: Tracing Channels of Influence on Democratic Transitions and Consolidation," WIDER Working Paper Series wp-2012-015, World Institute for Development Economic Research (UNU-WIDER).
    15. Winnie Rugutt & Maria Nzomo & Pontian Godfrey Okoth, 2023. "Industrialization in Africa and the Role of Foreign Aid: Lessons from Kenya and Mauritius," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 7(9), pages 930-944, September.
    16. Molintas, Dominique Trual, 2013. "Impact of Globalisation on Rare Earth: China's co-optive conquest of Colongese coltan," MPRA Paper 96264, University Library of Munich, Germany.
    17. Anna Kobierecka, 2023. "Post-covid China: ‘vaccine diplomacy’ and the new developments of Chinese foreign policy," Place Branding and Public Diplomacy, Palgrave Macmillan, vol. 19(3), pages 280-293, September.
    18. Boureima Sawadogo & T gawend Juliette Nana & Maimouna Hama Natama & Fid le Bama & Emma Tapsoba & Kassoum Zerbo, 2020. "Impact of Economic and Trade Expansion of China on Employment and Household Welfare in Burkina Faso: A Computable General Equilibrium Analysis," International Journal of Economics and Financial Issues, Econjournals, vol. 10(6), pages 139-153.
    19. Yeshi Choedon, 2015. "India and Democracy Promotion," India Quarterly: A Journal of International Affairs, , vol. 71(2), pages 160-173, June.
    20. Gravier-Rymaszewska, Joanna, 2012. "How Aid Supply Responds to Economic Crises: A Panel VAR Approach," WIDER Working Paper Series 025, World Institute for Development Economic Research (UNU-WIDER).
    21. Miao Miao & Qiaoqi Lang & Dinkneh Gebre Borojo & Jiang Yushi & Xiaoyun Zhang, 2020. "The Impacts of Chinese FDI and China–Africa Trade on Economic Growth of African Countries: The Role of Institutional Quality," Economies, MDPI, vol. 8(3), pages 1-20, June.
    22. Matthias Busse & Ceren Erdogan & Henning Mühlen, 2016. "China's Impact on Africa – The Role of Trade, FDI and Aid," Kyklos, Wiley Blackwell, vol. 69(2), pages 228-262, May.
    23. Resnick, Danielle, 2012. "Foreign Aid in Africa: Tracing Channels of Influence on Democratic Transitions and Consolidation," WIDER Working Paper Series 015, World Institute for Development Economic Research (UNU-WIDER).
    24. Boureima Sawadogo & Tegawende Juliette Nana & Maimouna Hama Natama & Fidèle Bama & Emma Tapsoba & Kassoum Zerbo, 2015. "Impact de l'expansion économique et commerciale de la Chine sur la croissance et l'emploi au Burkina Faso: une analyse en équilibre général calculable," Working Papers MPIA 2015-03, PEP-MPIA.
    25. Tiwari, Rajnish & Herstatt, Cornelius, 2012. "India - a lead market for frugal innovations? Extending the lead market theory to emerging economies," Working Papers 67, Hamburg University of Technology (TUHH), Institute for Technology and Innovation Management.

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