Does India use development finance to compete with China? A subnational analysis

Gerda Asmus, Vera Eichenauer, Andreas Fuchs and Bradley Parks

No 2189, Kiel Working Papers from Kiel Institute for the World Economy (IfW Kiel)

Abstract: China and India increasingly provide aid and credit to developing countries. This paper explores whether India uses these financial instruments to compete for geopolitical and commercial influence with China (and vice versa). To do so, we build a new geocoded dataset of Indian government-financed projects abroad between 2007 and 2014 and combine it with data on Chinese government-financed projects. Our regression results for 2,333 provinces within 123 countries demonstrate that India's Exim Bank is significantly more likely to locate a project in a given jurisdiction if China provided government financing there in the previous year. Since this effect is more pronounced in countries where China has made public opinion gains relative to India and where both lenders have a similar export structure, we interpret this as evidence of India competing with China. By contrast, we do not find evidence that China uses official aid or credit to compete with India through co-located projects.

Keywords: development finance; foreign aid; social development assistance; official credits; new donors; China; India; geospatial analysis (search for similar items in EconPapers)
JEL-codes: F34 F35 F59 H77 H81 O19 O22 P33 R58 (search for similar items in EconPapers)
Date: 2021
New Economics Papers: this item is included in nep-cna, nep-cwa, nep-dev, nep-fdg and nep-isf
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
https://www.econstor.eu/bitstream/10419/234955/1/1760699349.pdf (application/pdf)

Related works:
Working Paper: Does India Use Development Finance to Compete With China? A Subnational Analysis (2022)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwkwp:2189

Access Statistics for this paper

More papers in Kiel Working Papers from Kiel Institute for the World Economy (IfW Kiel) Contact information at EDIRC.
Bibliographic data for series maintained by ZBW - Leibniz Information Centre for Economics ().