On February 24, Axel Dreher, professor of International and Development Politics at Heidelberg University, presented a departmental talk titled The Political Economy of Chinese Aid to the UBC Political Science department.
Abstract:
We investigate the political economy of Chinese foreign aid allocation and effectiveness. To this end, we introduce a new dataset of official financing from China to 138 countries over the 2000-2014 period. We use these data to investigate whether China’s foreign aid is prone to capture by political leaders of aid-receiving countries’ examining whether more Chinese aid is allocated to the birth regions of political leaders and regions populated by the ethnic groups to which leaders belong. Our results show that when leaders hold power their birth regions receive substantially more funding from China than other subnational regions. We also find–less robust–evidence that African leaders direct more Chinese aid to areas populated by individuals who share their ethnicity. We use the new data to investigate whether and to what extent Chinese aid affects economic growth, health outcomes, and spatial inequality in recipient countries, at the national and sub-national level. Our results show that Chinese aid improves some development outcomes but not others. What is more, we find no evidence that the political motives that guide the allocation of aid reduce its effectiveness.
Bio:
Axel Dreher is professor of International and Development Politics at Heidelberg University. He is Affiliated Professor at the University of Goettingen and the KOF Swiss Economic Institute, Research Fellow at CEPR and CESifo, a member of the European Development Network (EUDN), the Academia Europaea, and a Faculty Associate of AidData. He Editor of the Review of International Organizations and a former President of the European Public Choice Society. Most of his work is in the fields of development economics and political economy.
