Rough Aid? An econometric analysis of Chinese development aid`s effect on good governance in Sub-Saharan Africa
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This thesis attempts to estimate the effect of Chinese development aid on good governance in Sub-Saharan Africa over time. The motivation of this thesis is the growing importance of China as a donor, and the many assumptions about China`s negative effect on Governance. China follows the principles of non-interference and South-South cooperation their development aid allocations, and as a consequence, they are criticized for being motivated by their own economic and diplomatic interest, rather than the needs of recipients. Chinese aid is therefore characterized as “rough aid”. However, China discloses very little information of their aid allocations. As such, few quantitative empirical studies confront the various claims about Chinese rough aid. The research lab AidData has recently introduced a new open-source methodology for collecting data on Chinese aid, and created a database on Chinese development finance to Africa between 2000 and 2013. Now that data is available, it is both possible and needed to fill the gap in the literature. The analysis compares the effect of Chinese aid on good governance to the effect of Western aid. The thesis analyzes the effect within 29 Sub-Saharan African countries between 2000 and 2013, using panel data regression models. I find that China does not have a positive effect on good governance, but it is not possible to say with certainty that the general effect is negative either. I do not find any effect of Western aid on good governance over time. Additionally, I find no evidence that China harms the effectiveness of Western aid. The results are robust to several changes in the model specifications. The sharpest critique of Chinese aid is that is that it will diminish the effectiveness of Western aid, which in turn will lead to worse governance in recipient countries. The finding that China does not harm the effectiveness of Western aid can therefore have important implication on policy and the debate on Chinese “rough aid”. The findings suggest that the intensions of donors may not have any general impact on good governance, and that it might be other factors that determine the success of development aid.
PublisherThe University of Bergen
Subjectdevelopment aidpanel dataDACSub-Saharan AfricabistandChinaregressionstyresettKinesisk bistandgood governanceChinese aidutvikling
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