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

By Axel Dreher, Andreas Fuchs, Roland Hodler, Bradley C. Parks, Paul A. Raschky, Michael J. Tierney. Social Science Research Network, 2015

382 citations recorded by the source corpus.

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 flows 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.

Subfields: Anthropology, Development, Safety Research

View Paper: https://www.semanticscholar.org/paper/acfe1de983832c4bb4cd8882fdb447377e31e87e

How researchers see this paper

The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.

In Anthropology

In Development

In Safety Research

Citations in the corpus

Development aid and infant mortality. Micro-level evidence from Nigeria (2018, background): “…political capture of aid in Kenya; Öhler and Nunnenkamp (2014) on factors determining the allocation of World Bank and African Development Bank aid; Dreher et al. (2016), on allocation of Chinese aid to the birth regions of African leaders; Isaksson and Kotsadam (2016), on the effects of Chinese…”
Aid, China, and Growth: Evidence from a New Global Development Finance Dataset (2023, positive): “53 These results are consistent with evidence on the growth impacts of Chinese, IDA, and IBRD projects at the subnational level (Dreher and Lohmann 2015; Dreher et al. 2016).”
Aid and Growth at the Regional Level (2015, positive): “We add an additional three-year period lag, given that commitments are on average disbursed with a delay, broadly in line with the timing suggested in Dreher et al. (2014). Note that ten countries passed the threshold in the last or second-to last period in our sample.”
NIGHT LIGHTS IN ECONOMICS: SOURCES AND USES1 (2020, methodology): “We do not table a summary of these studies, because in some cases (a subset of, or a variant of) the data used as the LHS variables in the studies in Table 3 are used as RHS variables in other studies by the same authors (e.g. Hodler and Raschky, 2014a; Dreher et al, 2019a).”
Apples and Dragon Fruits: The Determinants of Aid and Other Forms of State Financing from China to Africa (2018, positive): “This paper and various efforts to 40 Analyzing aid targeting at the subnational level, Dreher et al. (2015) find that Chinese aid flows disproportionately to the hometowns of African leaders and not necessarily to areas of greatest need within countries.”
Racing to the bottom? Chinese development projects and trade union involvement in Africa (2018, methodology): “…China claims to follow a policy of non-interference in the domestic affairs of recipients (see e.g. Tull, 2006; Bräutigam, 2009; Tan-Mullins et al., 2010; Dreher et al., 2016) arguably implies that they are unlikely to use their funds to promote civil society development and citizen participation.”
Tracking Underreported Financial Flows: China’s Development Finance and the Aid–Conflict Nexus Revisited (2017, positive): “And, while we do not take it up in this paper, if Chinese aid comes with fewer strings attached, then recipient governments will have even more flexibility in allocating for “tenure extension activities,” so that one dollar of Chinese aid goes further in reducing conflict than one dollar of Western ”
Elite Capture of Foreign Aid: Evidence from Offshore Bank Accounts (2020, neutral): “Most importantly, we underestimate the total leakage rate by not including funds invested in real estate, spent on luxury goods, allocated to pet government projects (Dreher et al. 2019), or diverted through offshore intermediaries (to be analyzed below).”