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Contesting Influence: U.S. Aid Responses to Chinese Financing

Author

Listed:
  • Emmanuel Caiazzo

    (Parthenope University of Naples and MoFiR.)

  • Pietro Panizza

    (University of Calabria)

  • Alberto Zazzaro

    (University of Naples Federico II, CSEF and MoFiR.)

Abstract

Competition between the United States and China is likely to shape the course of history in the coming years. Does foreign aid constitute an arena of confrontation? Using the OECD Creditor Reporting System and the Global Chinese Development Finance Dataset, we study the relationship between the aid-commitment strategies of Beijing and Washington. Employing an instrumental variables approach, we find that the United States increases its aid commitments in recipient countries where China commits more funds. The effect is stronger when the United States has close political or commercial ties with the recipient country and is larger in years of heightened US–China political disagreement. These findings are consistent with a framework in which the two countries compete to acquire influence over the recipient countries.

Suggested Citation

  • Emmanuel Caiazzo & Pietro Panizza & Alberto Zazzaro, 2026. "Contesting Influence: U.S. Aid Responses to Chinese Financing," CSEF Working Papers 788, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    • Handle: RePEc:sef:csefwp:788
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    Keywords

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    JEL classification:

    • F35 - International Economics - - International Finance - - - Foreign Aid
    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations

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