Has Chinese Foreign Aid Contributed to Economic Growth in Africa?
Kern, Andreas T
Starting from the 1950s, non-traditional donors such as China, Brazil and India have been providing foreign aid to African and Latin American countries. China, as the largest non-traditional donor, has drawn the most attention in terms of both its incentive and impact. This paper will look into the impact of Chinese foreign aid on economic growth in Africa using a dataset constructed by AidData’s Tracking Under-reported Financial Flow Methodology. Analyzing 52 African countries in the time span between 2000 and 2013, my findings indicate that Chinese foreign aid does not have a significant influence on GDP growth in Africa. These results are robust to several robustness checks and also align with prior findings concerning foreign aid from China. From a policy perspective, my findings indicate that institutional quality has a significantly mediating impact on GDP growth. Besides institutional factors, the impact of Chinese foreign aid is conditional on the level of population, initial income and aid/GDP ratio, pointing to the importance of initial conditions for determining economic growth outcomes.
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