The Impact of Chinese Aid on the African Continental Free Trade Area (AfCFTA)'s Exports

Ismael Abdou
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Ismael Abdou: University of International Business and Economics (UIBE), Beijing, China.

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Abstract: This study examines the impact of Chinese official development assistance (ODA) on the export performance of African Continental Free Trade Area (AfCFTA) member countries using a structural gravity model. The study uses a balanced panel dataset covering 54 African countries from 2000 to 2023 (a unified sample window that resolves inconsistencies across cross-sectional data periods). It applies the Poisson pseudo-maximum likelihood (PPML) method and a stringent instrumental variable (IV) strategy to address zero trade flows, heteroskedasticity, and endogeneity. The model includes exporter-time, importer-time, and country-pair fixed effects to account fully for the outward and inward multilateral resistance terms (MRTs). The empirical results indicate that Chinese aid significantly promotes AfCFTA's total exports; specifically, a 1% increase in Chinese aid is associated with a 0.30% increase in total regional exports. The effect is heterogeneous, with a stronger association for intra-AfCFTA trade (coefficient = 0.35) than for extra-regional trade (coefficient = 0.28). Furthermore, the mechanism analysis indicates that Chinese aid promotes export expansion through a dual-channel mechanism that reduces both outward multilateral resistance (OMR) and inward multilateral resistance (IMR), with the indirect effect through IMR accounting for 40% of the total effect. Moreover, Chinese aid and AfCFTA regional integration exhibit a synergistic relationship: the trade-creation effect of AfCFTA strengthens the export-enhancing role of foreign aid. Unlike previous studies, this study develops a comprehensive analytical framework that combines dual-MRT and regional-integration perspectives, thereby addressing limitations in the existing literature. It contributes to the application of gravity models in aid-trade research and provides empirical evidence and policy implications for strengthening China–Africa aid cooperation and promoting regional trade integration among African countries.

Date: 2026-08-18
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Published in Journal of Economics, Management and Trade, 2026, 32 (8), pp.93-103

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05720520

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