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Tracking Under-Reported Financial Flows: China’s Development Finance and the Aid-Conflict Nexus Revisited

Author

Listed:
  • Austin M. Strange

    (Harvard University)

  • Bradley Parks

    (College of William and Mary)

  • Michael J. Tierney

    (College of William and Mary)

  • Andreas Fuchs

    (University of Heidelberg)

  • Axel Dreher

    (University of Heidelberg)

Abstract

China’s provision of development finance to other countries is sizable but reliable information is scarce. We introduce a new open source methodology for collecting project-level development finance information and create a database of Chinese official finance to Africa from 2000-2011. We find that China’s commitments amounted to approximately US$ 73 billion, of which US$ 15 billion are comparable to Official Development Assistance following OECD definitions. We provide details on 1,511 projects to 50 African countries. We use this database to extend previous research on aid and conflict, which suffers from omitted variable bias due to the exclusion of Chinese development finance. Our results show that sudden withdrawals of “traditional” aid no longer induce conflict in the presence of sufficient alternative funding from China. Our findings highlight the importance of gathering more complete data on the development activities of “non-traditional donors” to better understand the link between aid and conflict.

Suggested Citation

  • Austin M. Strange & Bradley Parks & Michael J. Tierney & Andreas Fuchs & Axel Dreher, 2015. "Tracking Under-Reported Financial Flows: China’s Development Finance and the Aid-Conflict Nexus Revisited," Courant Research Centre: Poverty, Equity and Growth - Discussion Papers 175, Courant Research Centre PEG.
  • Handle: RePEc:got:gotcrc:175
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    References listed on IDEAS

    as
    1. Fuchs, Andreas & Vadlamannati, Krishna Chaitanya, 2013. "The Needy Donor: An Empirical Analysis of India’s Aid Motives," World Development, Elsevier, vol. 44(C), pages 110-128.
    2. 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.
    3. Paul Collier & Anke Hoeffler, 2002. "AID, Policy and Peace: Reducing the risks of civil conflict," Defence and Peace Economics, Taylor & Francis Journals, vol. 13(6), pages 435-450.
    4. Konstantinos Drakos, 2007. "The size of under‐reporting bias in recorded transnational terrorist activity," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 170(4), pages 909-921, October.
    5. Ai, Chunrong & Norton, Edward C., 2003. "Interaction terms in logit and probit models," Economics Letters, Elsevier, vol. 80(1), pages 123-129, July.
    6. King, Gary & Lowe, Will, 2003. "An Automated Information Extraction Tool for International Conflict Data with Performance as Good as Human Coders: A Rare Events Evaluation Design," International Organization, Cambridge University Press, vol. 57(3), pages 617-642, July.
    7. Mona Lyne & Daniel Nielson & Michael Tierney, 2009. "Controlling coalitions: Social lending at the multilateral development banks," The Review of International Organizations, Springer, vol. 4(4), pages 407-433, December.
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    Cited by:

    1. Zhiming Cheng & Russell Smyth, 2016. "Why Give it Away When You Need it Yourself? Understanding Public Support for Foreign Aid in China," Journal of Development Studies, Taylor & Francis Journals, vol. 52(1), pages 53-71, January.
    2. Richard Bluhm & Martin Gassebner & Sarah Langlotz & Paul Schaudt, 2021. "Fueling conflict? (De)escalation and bilateral aid," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 36(2), pages 244-261, March.
    3. Martorano, Bruno & Metzger, Laura & Sanfilippo, Marco, 2020. "Chinese development assistance and household welfare in Sub-Saharan Africa," World Development, Elsevier, vol. 129(C).
    4. 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.

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    More about this item

    Keywords

    Development Finance; Foreign Aid; Non-DAC Donors; South-South Cooperation; China; Africa; Aid Shocks; Violent Armed Conflict; Civil War; Intrastate War;
    All these keywords.

    JEL classification:

    • F35 - International Economics - - International Finance - - - Foreign Aid
    • F51 - International Economics - - International Relations, National Security, and International Political Economy - - - International Conflicts; Negotiations; Sanctions
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions

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