Rogue Aid? The Determinants of China’s Aid Allocation

Courant Research Centre Discussion Paper No. 93

49 Pages Posted: 13 Sep 2011 Last revised: 1 Mar 2012

See all articles by Axel Dreher

Axel Dreher

Heidelberg University

Andreas Fuchs

Helmut Schmidt University Hamburg; Kiel Institute for the World Economy

Multiple version iconThere are 3 versions of this paper

Date Written: September 6, 2011

Abstract

Foreign aid from China is often characterized as ‘rogue aid’ that is not guided by recipient need but by China’s national interests alone. However, no econometric study so far confronts this claim with data. We make use of various datasets, covering the 1956-2006 period, to empirically test to which extent political and commercial interests shape China’s aid allocation decisions. We estimate the determinants of China’s allocation of project aid, food aid, medical teams and total aid money to developing countries, comparing its allocation decisions with traditional and other so-called emerging donors. We find that political considerations are an important determinant of China’s allocation of aid. However, in comparison to other donors, China does not pay substantially more attention to politics. In contrast to widespread perceptions, we find no evidence that China’s aid allocation is dominated by natural resource endowments. Moreover, China’s allocation of aid seems to be widely independent of democracy and governance in recipient countries. Overall, denominating aid from China as ‘rogue aid’ seems unjustified.

Keywords: Aid allocation, China’s foreign aid, new donors, donor motives

JEL Classification: F35

Suggested Citation

Dreher, Axel and Fuchs, Andreas, Rogue Aid? The Determinants of China’s Aid Allocation (September 6, 2011). Courant Research Centre Discussion Paper No. 93. Available at SSRN: https://ssrn.com/abstract=1926471 or http://dx.doi.org/10.2139/ssrn.1926471

Axel Dreher

Heidelberg University ( email )

Grabengasse 1
Heidelberg, 69117
Germany

HOME PAGE: http://www.axel-dreher.de

Andreas Fuchs (Contact Author)

Helmut Schmidt University Hamburg ( email )

Holstenhofweg 85
Hamburg, 22043
Germany

Kiel Institute for the World Economy ( email )

Kiellinie 66
Kiel, Schleswig-Hosltein 24105
Germany

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