Can Aid Buy Foreign Public Support? Evidence from Chinese Development Finance

Lukas Wellner, Axel Dreher, Andreas Fuchs, Bradley C. Parks and Austin M. Strange

No 9646, CESifo Working Paper Series from CESifo

Abstract: Bilateral donors use foreign aid to pursue soft power. We test the effectiveness of aid in reaching this goal by leveraging a new dataset on the precise commitment, implementation, and completion dates of Chinese development projects. We use data from the Gallup World Poll for 126 countries over the 2006–2017 period and identify causal effects with (i) an event-study model that includes high-dimensional fixed effects, and (ii) instrumental-variables regressions that rely on exogenous variation in the supply of Chinese government financing over time. Our results are nuanced and depend on whether we focus on subnational jurisdictions, countries, or groupings of countries. On average, we estimate that the completion of one additional development project in a recipient country increases public support for the Chinese government by more than 3 percentage points in the short run and 0.2 percentage points in the longer run.

Keywords: development finance; foreign aid; aid events; public opinion; government approval; soft power; China; Gallup World Poll (search for similar items in EconPapers)
JEL-codes: F35 F59 H73 H77 O19 P33 (search for similar items in EconPapers)
Date: 2022
New Economics Papers: this item is included in nep-cna and nep-ore
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Working Paper: Can Aid Buy Foreign Public Support? Evidence from Chinese Development Finance (2022)
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