The Dragon’s Gift or Poison? The Localized Impact of Chinese Aid on African Conflicts
This paper examines the impact of Chinese aid on African conflicts at local level. Chinese aid is often described as “rogue aid” because of its distinct features of “no-strings-attached” and its ignorance of democracy and governance. However, little is known about through which channels this form of foreign aid constitutes an important driver behind a potential aid-conflict nexus. Given the competing mechanisms that aid can both incentivize rebellions and strengthen state military power, I hypothesize that Chinese aid does not exert an amplification effect on conflicts in African countries. To address the potential endogeneity, I use the interaction of the amount of China’s steel production and the probability of receiving Chinese aid to instrument for Chinese aid. Relying on fine-grained grid cell data, overall, I do not detect any effect of Chinese aid on conflicts in African countries. However, when disaggregating conflict events by political agents involved, I find a positive effect of Chinese aid on the occurrence of riots and protests in Africa. I estimate that on average the cells with Chinese aid have 0.351 higher probability of having riots and protests. Chinese aid in two specific categories, i.e. social infrastructure and economic infrastructure, is likely to contribute most to this effect. Qualitative evidence shows that the poor labor practices, neglect of environmental impact, and little local content might be the reasons. China should carefully review its way of giving aid.
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