Apples and Dragon Fruits: The Determinants of Aid and Other Forms of State Financing from China to Africa

University of Heidelberg Department of Economics Discussion Paper Series No. 620

58 Pages Posted: 21 Oct 2016

See all articles by Axel Dreher

Axel Dreher

Heidelberg University

Andreas Fuchs

University of Goettingen (Gottingen) - Faculty of Economics and Business Administration; Kiel Institute for the World Economy

Bradley Parks

College of William and Mary

Austin Strange

Harvard University, Faculty of Arts and Sciences, Department of Government

Michael J. Tierney

College of William and Mary

Multiple version iconThere are 2 versions of this paper

Date Written: October 2016

Abstract

Chinese “aid” is a lightning rod for criticism. Policymakers, journalists, and public intellectuals claim that Beijing is using its largesse to cement alliances with political leaders, secure access to natural resources, and create exclusive commercial opportunities for Chinese firms — all at the expense of citizens living in developing countries. We argue that much of the controversy about Chinese “aid” stems from a failure to distinguish between China’s Official Development Assistance (ODA) and more commercially-oriented sources and types of state financing. Using a new database on China’s official financing commitments to Africa from 2000-2013, we find the allocation of Chinese ODA to be driven primarily by foreign policy considerations, while economic interests better explain the distribution of less concessional flows. These results highlight the need for better measures of an increasingly diverse set of non-Western financial activities.

Keywords: Development Finance, Foreign Aid, Non-DAC Donors, China, Tracking Underreported Financial Flows

JEL Classification: F35, O19, O21

Suggested Citation

Dreher, Axel and Fuchs, Andreas and Parks, Bradley and Strange, Austin and Tierney, Michael J., Apples and Dragon Fruits: The Determinants of Aid and Other Forms of State Financing from China to Africa (October 2016). University of Heidelberg Department of Economics Discussion Paper Series No. 620. Available at SSRN: https://ssrn.com/abstract=2855935 or http://dx.doi.org/10.2139/ssrn.2855935

Axel Dreher

Heidelberg University ( email )

Grabengasse 1
Heidelberg, 69117
Germany

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

Andreas Fuchs (Contact Author)

University of Goettingen (Gottingen) - Faculty of Economics and Business Administration ( email )

Platz der Goettinger Sieben 3
Goettingen, 37073
Germany

Kiel Institute for the World Economy ( email )

Kiellinie 66
Kiel, Schleswig-Hosltein 24105
Germany

Bradley Parks

College of William and Mary ( email )

No Address Available

Austin Strange

Harvard University, Faculty of Arts and Sciences, Department of Government ( email )

1737 Cambridge Street
Cambridge, MA 02138
United States

Michael J. Tierney

College of William and Mary ( email )

P.O. Box 8795
Williamsburg, VA 23185
United States

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