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Tracking Underreported Financial Flows: China’s Development Finance and the Aid–Conflict Nexus Revisited

Austin M. Strange, Axel Dreher (), Andreas Fuchs (), Bradley Parks and Michael J. Tierney

Journal of Conflict Resolution, 2017, vol. 61, issue 5, 935-963

Abstract: China’s provision of development finance to other countries is sizable but reliable information is scarce. We introduce a new open-source methodology for collecting project-level development finance information and create a database of Chinese official finance (OF) to Africa from 2000 to 2011. We find that China’s commitments amounted to approximately US$73 billion, of which US$15 billion are comparable to Official Development Assistance following Organization for Economic Cooperation and Development definitions. We provide details on 1,511 projects to fifty African countries. We use this database to extend previous research on aid and conflict, which suffers from omitted-variable bias due to the exclusion of Chinese development finance. Our results show that sudden withdrawals of “traditional†aid no longer induce conflict in the presence of sufficient alternative funding from China. Our findings highlight the importance of gathering more complete data on the development activities of “nontraditional donors†to better understand the link between aid and conflict.

Keywords: development finance; foreign aid; non-DAC donors; South-South cooperation; China; Africa; aid shocks; violent armed conflict; civil war; intrastate war (search for similar items in EconPapers)
Date: 2017
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Handle: RePEc:sae:jocore:v:61:y:2017:i:5:p:935-963