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Aid on Demand: African Leaders and the Geography of China's Foreign Assistance

Author

Listed:
  • Axel Dreher
  • Andreas Fuchs
  • Roland Hodler
  • Bradley C. Parks
  • Paul A. Raschky
  • Michael J. Tierney

Abstract

This article investigates whether China’s foreign aid is particularly prone to political capture by political leaders of aid-receiving countries. Specifically, we examine whether more Chinese aid is allocated to the political leaders’ birth regions and regions populated by the ethnic group to which the leader belongs, controlling for indicators of need and various fixed effects. We have collected data on 117 African leaders’ birthplaces and ethnic groups and geocoded 1,650 Chinese development finance projects across 3,097 physical locations committed to Africa over the 2000-2012 period. Our econometric results show that current political leaders’ birth regions receive substantially larger financial ows from China than other regions. On the contrary, when we replicate the analysis for the World Bank, our regressions with region-fixed effects show no evidence of such favoritism. For Chinese and World Bank aid alike, we also find no evidence that African leaders direct more aid to areas populated by groups who share their ethnicity, when controlling for region-fixed effects.

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  • Axel Dreher & Andreas Fuchs & Roland Hodler & Bradley C. Parks & Paul A. Raschky & Michael J. Tierney, 2015. "Aid on Demand: African Leaders and the Geography of China's Foreign Assistance," CESifo Working Paper Series 5439, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_5439
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    Cited by:

    1. Quoc-Anh Do & Kieu-Trang Nguyen & Anh N. Tran, 2017. "One Mandarin Benefits the Whole Clan: Hometown Favoritism in an Authoritarian Regime," American Economic Journal: Applied Economics, American Economic Association, vol. 9(4), pages 1-29, October.
    2. Andrew Dickens, 2017. "Ethnolinguistic Favoritism in African Politics," Working Papers 1702, Brock University, Department of Economics.
    3. Bluhm, Richard & Gassebner, Martin & Langlotz, Sarah & Schaudt, Paul, 2016. "Fueling conflict? : (De)escalation and bilateral aid," MERIT Working Papers 053, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    4. 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.
    5. 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.
    6. Daniele Pianeselli, 2016. "Does The one who pays the piper really call the tune? OECD and Chinese aid to infrastructure in Sub-Saharan Africa," Departmental Working Papers of Economics - University 'Roma Tre' 0204, Department of Economics - University Roma Tre.
    7. Kersting, Erasmus K. & Kilby, Christopher, 2016. "With a little help from my friends: Global electioneering and World Bank lending," Journal of Development Economics, Elsevier, vol. 121(C), pages 153-165.
    8. Strange, Austin M. & Parks , Bradley & Tierney, Michael J. & Fuchs, Andreas & Dreher , Axel, 2014. "Tracking Under-Reported Financial Flows: China’s Development Finance and the Aid-Conflict Nexus Revisited," Working Papers 0553, University of Heidelberg, Department of Economics.
    9. repec:eee:pubeco:v:159:y:2018:i:c:p:146-159 is not listed on IDEAS
    10. Quoc-Anh Do & Kieu-Trang Nguyen & Anh N. Tran, 2017. "One Mandarin Benefits the Whole Clan: Hometown Favoritism in an Authoritarian Regime," American Economic Journal: Applied Economics, American Economic Association, vol. 9(4), pages 1-29, October.
    11. repec:eee:wdevel:v:105:y:2018:i:c:p:59-69 is not listed on IDEAS
    12. repec:eee:wdevel:v:103:y:2018:i:c:p:133-148 is not listed on IDEAS
    13. Axel Dreher & Steffen Lohmann, 2015. "Aid and growth at the regional level," Oxford Review of Economic Policy, Oxford University Press, vol. 31(3-4), pages 420-446.
    14. repec:spr:revint:v:12:y:2017:i:2:d:10.1007_s11558-017-9270-7 is not listed on IDEAS
    15. Quoc-Anh Do & Kieu-Trang Nguyen & Anh N. Tran, 2017. "One Mandarin Benefits the Whole Clan: Hometown Favoritism in an Authoritarian Regime," American Economic Journal: Applied Economics, American Economic Association, vol. 9(4), pages 1-29, October.
    16. repec:eee:wdevel:v:102:y:2018:i:c:p:243-261 is not listed on IDEAS
    17. repec:aea:aejapp:v:10:y:2018:i:3:p:370-402 is not listed on IDEAS
    18. repec:spr:revint:v:12:y:2017:i:2:d:10.1007_s11558-017-9275-2 is not listed on IDEAS
    19. Isaksson, Ann-Sofie & Kotsadam, Andreas, 2018. "Chinese aid and local corruption," Journal of Public Economics, Elsevier, vol. 159(C), pages 146-159.
    20. Levoshko, Tamila, 2017. ""Pork-Barrel"-Politik und das regionale Wirtschaftswachstum. Empirische Evidenz für die Ukraine und Polen," Working Papers 0642, University of Heidelberg, Department of Economics.
    21. Christian Bommer & Axel Dreher & Marcello Perez-Alvarez, 2018. "Regional and Ethnic Favoritism in the Allocation of Humanitarian Aid," CESifo Working Paper Series 7038, CESifo Group Munich.
    22. Eichenauer, Vera Z. & Fuchs, Andreas & Brueckner, Lutz, 2018. "The Effects of Trade, Aid, and Investment on China's Image in Developing Countries," Working Papers 0646, University of Heidelberg, Department of Economics.

    More about this item

    Keywords

    foreign aid; favoritism; aid allocation; Africa; China; official development assistance; georeferenced data; spatial analysis;

    JEL classification:

    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • F35 - International Economics - - International Finance - - - Foreign Aid
    • P33 - Economic Systems - - Socialist Institutions and Their Transitions - - - International Trade, Finance, Investment, Relations, and Aid
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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