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African leaders and the geography of China's foreign assistance

Axel Dreher (), Andreas Fuchs (), Roland Hodler, Bradley C. Parks, Paul Raschky () and Michael J. Tierney

Journal of Development Economics, 2019, vol. 140, issue C, 44-71

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.

Keywords: foreign aid; favoritism; political capture; patronage; clientelism; aid on demand; aid allocation; Africa; China; Official Development Assistance; georeferenced data; spatial analysis (search for similar items in EconPapers)
JEL-codes: D73 F35 P33 R11 (search for similar items in EconPapers)
Date: 2019
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