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The Political and Economic Dynamics of Foreign Aid: A Case Study of United States and Chinese Aid to Sub-Sahara Africa

Author

Listed:
  • Kafayat Amusa

    (Department of Economics, University of Pretoria)

  • Nara Monkam

    (African Tax Administration Forum (ATAF))

  • Nicola Viegi

    () (Department of Economics, University of Pretoria)

Abstract

The foreign aid arena as it pertains to the African continent has traditionally been dominated by the Organization of Economic Co-operation and Development (OECD) countries, however over the last three decades non-traditional donors such as the China, South Africa and Brazil have emerged in the donor field. The increasing importance of non-traditional donors has meant that the economic and political stronghold of Western and OECD countries in sub-Sahara African (SSA) has gradually ebbed, due to increased competition amongst donors on the continent. Specifically, as the economic and political reach of the United States (USA), the second largest bilateral donor to SSA has diminished, amongst the group of emerging donors, China has become the largest contributor of aid to SSA countries. There appears to be a political - economic dynamic that points to the existence of two competing reasons underpinning the foreign aid trend in SSA. Using a comparative approach, this study examines the determinants of aid allocation by China and the United States to SSA countries. The study finds that both donor motives and recipient need are factors in US and Chinese aid allocation to SSA. Additionally, the study finds di¤erences in US aid allocation determinants pre and post China’s entry into SSA’s aid …eld. Furthermore, evidence of income and population bias is observed for both donor countries.

Suggested Citation

  • Kafayat Amusa & Nara Monkam & Nicola Viegi, 2016. "The Political and Economic Dynamics of Foreign Aid: A Case Study of United States and Chinese Aid to Sub-Sahara Africa," Working Papers 201628, University of Pretoria, Department of Economics.
  • Handle: RePEc:pre:wpaper:201628
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    References listed on IDEAS

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    Cited by:

    1. Pedrosa-Garcia, Jose Antonio, 2017. "Trends and Features of Research on Foreign Aid: A Literature Review," MPRA Paper 82134, University Library of Munich, Germany.
    2. Liu, Ailan & Tang, Bo, 2018. "US and China aid to Africa: Impact on the donor-recipient trade relations," China Economic Review, Elsevier, vol. 48(C), pages 46-65.

    More about this item

    Keywords

    foreign aid allocation; donor motives; recipient need; Sub-Saharan Africa;

    JEL classification:

    • F35 - International Economics - - International Finance - - - Foreign Aid

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