Altruism or Trade Benefits: What Motive Determines China’s Foreign Aid to African Oil Exporting Countries
Journal of Business Economics Management, 2019
14 Pages Posted: 9 Jul 2020
Date Written: May 16, 2019
This paper examines the determinants of China’s financial aid to oil/minerals exporting African countries. By using China’s loan data obtained from the China Africa Research Initiative, Johns Hopkins University and UN-COMTRADE product data classified into oil/minerals, agriculture and manufacturing, this study employ fixed effects, generalised least squares and Pesaran dynamic fixed effects to analyse the motives. The results indicate that oil/minerals are not the motives behind China’s aid to Africa. However, China’s aid is driven by its manufacturing exports, suggesting that aid may be tied to trade. Also, the institutional structure enhances more financial aid to Africa. The findings of this study serve as recommendations for policymakers to improve trade policies that will enhance the sustainability of Africa’s engagement with China.
Keywords: China, Africa, oil, manufacturing, agriculture, aid, institutional structures
JEL Classification: O53, O55, L72, L60, Q17, F35, E02
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