The West's aid dilemma and the Chinese solution?

Xiaobing Wang and Adam Ozanne

Global Development Institute Working Paper Series from GDI, The University of Manchester

Abstract: Abstract There are currently two contrasting approaches towards aid policy in Africa: that followed by the West is well known for its conditionality, selectivity and focus on direct financial support, while the approach adopted by China eschews conditionality and concentrates on infrastructure building. The Chinese approach has been criticised for its failure to create direct employment and because, it is argued, its unconditionality hampers good governance in Africa. However, this paper argues that the West faces a dilemma, in that governance and its improvements are endogenous to the economic development of a country. Making aid conditional upon governance therefore unduly penalises countries at the bottom. The Chinese approach, in contrast, avoids this dilemma by directly targeting constraints to development; it may therefore be more effective in generating long-run growth, which may in turn foster good governance.

Date: 2012
New Economics Papers: this item is included in nep-afr and nep-dev
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