Recent Publications: African Leaders and the Geography of China’s Foreign Assistance

in: Journal of Development Economics 140:44-71, September 2019

Authors: Axel Dreher, Andreas Fuchs, Roland Hodler, Bradley Parks, Paul A. Raschky and Michael J. Tierney

Abstract
We investigate whether foreign aid from China is prone to political capture in aid-receiving countries. Specifically, we examine whether more Chinese aid is allocated to the birth regions of political leaders, controlling for indicators of need and various fixed effects. We collect data on 117 African leaders’ birthplaces and geocode 1650 Chinese development projects across 2969 physical locations in Africa from 2000 to 2012. Our econometric results show that political leaders’ birth regions receive substantially larger financial flows from China in the years when they hold power compared to what the same region receives at other times. We find evidence that these biases are a consequence of electoral competition: Chinese aid disproportionately benefits politically privileged regions in country-years when incumbents face upcoming elections and when electoral competitiveness is high. We observe no such pattern of favoritism in the spatial distribution of World Bank development projects.

Image: Book, Santi DeFerrol. CC BY-NC-ND 2.0. https://flic.kr/p/HsjYN