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The driving factors of Chinese aid allocation to African countries

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  • Jiang Yushi
  • Dinkneh Gebre Borojo
  • Miao Miao
  • Xiaoyun Zhang

Abstract

We investigate the driving factors of Chinese aid allocation to 44 African countries for the periods 2003–2017. The Poisson pseudo-maximum likelihood (PPML) procedure is applied to estimate the gravity model of aid and loan allocation as it can solve zero-valued observations and heterogeneity problems prevalent in the panel data set. An aggregate indicator is derived for the quality of governance using principal component analysis. We controlled for aggregate Chinese aid and loans separately because a significant share of aid allocation China commits to African countries is repayable long-term loans. Controlling for source and destination countries’ motives of aid and loan allocation, our findings provide evidence that Chinese aid and loan flow to African countries is significantly determined by African countries’ and China’s strategic, economic and commercial factors. The results further examine the importance of China-Africa trade and Chinese FDI, China’s international support and foreign policy considerations in China’s aid and loan allocation policy to African countries. Additionally, it gives a detailed analysis of the aid-institution paradox.

Suggested Citation

  • Jiang Yushi & Dinkneh Gebre Borojo & Miao Miao & Xiaoyun Zhang, 2020. "The driving factors of Chinese aid allocation to African countries," Cogent Business & Management, Taylor & Francis Journals, vol. 7(1), pages 1812219-181, January.
    • Handle: RePEc:taf:oabmxx:v:7:y:2020:i:1:p:1812219
    DOI: 10.1080/23311975.2020.1812219
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    Cited by:

    1. Bode, Eckhardt, 2024. "The motives for Chinese and Western countries' sovereign lending to Africa," Kiel Working Papers 2269, Kiel Institute for the World Economy (IfW Kiel).

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