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Tracking Under-Reported Financial Flows: China’s Development Finance and the Aid-Conflict Nexus Revisited

Author

Listed:
  • Austin M. Strange

    (Harvard University)

  • Bradley Parks

    (College of William and Mary)

  • Michael J. Tierney

    (College of William and Mary)

  • Andreas Fuchs

    (University of Heidelberg)

  • Axel Dreher

    (University of Heidelberg)

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 to Africa from 2000-2011. We find that China’s commitments amounted to approximately US$ 73 billion, of which US$ 15 billion are comparable to Official Development Assistance following OECD definitions. We provide details on 1,511 projects to 50 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 “non-traditional donors” to better understand the link between aid and conflict.

Suggested Citation

  • Austin M. Strange & Bradley Parks & Michael J. Tierney & Andreas Fuchs & Axel Dreher, 2015. "Tracking Under-Reported Financial Flows: China’s Development Finance and the Aid-Conflict Nexus Revisited," Courant Research Centre: Poverty, Equity and Growth - Discussion Papers 175, Courant Research Centre PEG.
    • Handle: RePEc:got:gotcrc:175
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    References listed on IDEAS

    as
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    Cited by:

    1. Zhiming Cheng & Russell Smyth, 2016. "Why Give it Away When You Need it Yourself? Understanding Public Support for Foreign Aid in China," Journal of Development Studies, Taylor & Francis Journals, vol. 52(1), pages 53-71, January.
    2. Richard Bluhm & Martin Gassebner & Sarah Langlotz & Paul Schaudt, 2021. "Fueling conflict? (De)escalation and bilateral aid," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 36(2), pages 244-261, March.
    3. Daniele Pianeselli, 2016. "Does The one who pays the piper really call the tune? OECD and Chinese aid to infrastructure in Sub-Saharan Africa," Departmental Working Papers of Economics - University 'Roma Tre' 0204, Department of Economics - University Roma Tre.
    4. Martorano, Bruno & Metzger, Laura & Sanfilippo, Marco, 2020. "Chinese development assistance and household welfare in Sub-Saharan Africa," World Development, Elsevier, vol. 129(C).
    5. Kitano, Naohiro & Harada, Yukinori, 2014. "Estimating China’s Foreign Aid 2001-2013," Working Papers 78, JICA Research Institute.

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    More about this item

    Keywords

    Development Finance; Foreign Aid; Non-DAC Donors; South-South Cooperation; China; Africa; Aid Shocks; Violent Armed Conflict; Civil War; Intrastate War;
    All these keywords.

    JEL classification:

    • F35 - International Economics - - International Finance - - - Foreign Aid
    • F51 - International Economics - - International Relations, National Security, and International Political Economy - - - International Conflicts; Negotiations; Sanctions
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions

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