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US and China Aid to Africa: Impact on the Donor-Recipient Trade Relations

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  • Liu, Ailan
  • Tang, Bo

Abstract

This paper investigates the impact of the US and China’s foreign aids to Africa on trade flows between donor and recipient countries. Evidence from the gravity model estimates reveals that the two donors’ exports are strengthened by their aids to African partners. Interestingly, China’s aid shows a positive effect on its total volume of trade and imports from Africa, while the aid from the US exhibits little impact on the US-Africa total trade and its imports from Africa. A possible explanation for such a difference could be due to the dissimilar national interests of donors in Africa. This study finally suggests that African countries should accelerate the pace of advancing domestic economies and rely less on foreign assistance, in order to establish a fairer and more equal international economic order.

Suggested Citation

  • Liu, Ailan & Tang, Bo, 2017. "US and China Aid to Africa: Impact on the Donor-Recipient Trade Relations," MPRA Paper 82276, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:82276
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    3. Bernard Hoekman & Anirudh Shingal, 2020. "Aid for trade and international transactions in goods and services," Review of International Economics, Wiley Blackwell, vol. 28(2), pages 320-340, May.
    4. Wang, Mingchu & Wei, Yingqi & Azumah, Gideon & Wang, Catherine L., 2024. "African returnees in international knowledge transfer: A social capital perspective," Journal of International Management, Elsevier, vol. 30(1).
    5. Savin, Ivan & Marson, Marta & Sutormina, Marina, 2020. "How different aid flows affect different trade flows: Evidence from Africa and its largest donors," Structural Change and Economic Dynamics, Elsevier, vol. 55(C), pages 119-136.
    6. 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.
    7. Yifang Wan & Yunxian Chen, 2022. "China’s Foreign Aid and Sustainable Growth of Recipient Countries: Mechanism and Evaluation," Sustainability, MDPI, vol. 14(17), pages 1-17, August.
    8. Dung Ly‐My & Hyun‐Hoon Lee & Donghyun Park, 2021. "Does aid for trade promote import diversification?," The World Economy, Wiley Blackwell, vol. 44(6), pages 1740-1769, June.
    9. Camélia TURCU & Yunzhi ZHANG, 2020. "How Does Development Aid Impact Trade Performance and Margins? Evidence from China," LEO Working Papers / DR LEO 2847, Orleans Economics Laboratory / Laboratoire d'Economie d'Orleans (LEO), University of Orleans.
    10. Tan Li & Qing Liu & Lihe Xu, 2024. "Whose Aid is Beneficial to Firms' Exports? Evidence from a Post‐disaster Aid Experiment in China," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 32(2), pages 73-96, March.
    11. Shekhar Hari Kumar & Vimal Balasubramaniam & Ila Patnaik & Ajay Shah, 2020. "Who cares about the Renminbi?," 2020 Papers pha1373, Job Market Papers.

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    More about this item

    Keywords

    Foreign aid; Aid-trade relations; Gravity model;
    All these keywords.

    JEL classification:

    • F35 - International Economics - - International Finance - - - Foreign Aid
    • P33 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - International Trade, Finance, Investment, Relations, and Aid

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