Aid on Demand: African Leaders and the Geography of China’s Foreign Assistance

Wednesday 25 February 2015, 1.00PM to 2:00pm

Speaker(s): Roland Hodler, St Gallen University

Abstract: We investigate whether the political leaders of aid-receiving countries use foreign aid inflows to further their own political or personal interests. Aid allocation biased by leaders’ selfish interests arguably reduces the effectiveness of aid, negatively affecting development outcomes. We examine whether more Chinese aid is allocated to the political leaders’ birth regions and regions populated by the ethnic group to which the leader belongs, controlling for objective indicators of need. We have collected data on 117 African leaders’ birthplaces and ethnic groups and geocoded 1,955 Chinese development finance projects across 3,553 physical locations over the 2000-2012 period. The results from various fixed-effects regressions show that regions receive substantially larger financial flows when being the birth region of the current political leader. We do not find evidence that leaders shift aid to regions populated by their ethnicity. e investigate whether the political leaders of aid-receiving countries use foreign aid inflows to further their own political or personal interests. Aid allocation biased by leaders’ selfish interests arguably reduces the effectiveness of aid, negatively affecting development outcomes. We examine whether more Chinese aid is allocated to the political leaders’ birth regions and regions populated by the ethnic group to which the leader belongs, controlling for objective indicators of need. We have collected data on 117 African leaders’ birthplaces and ethnic groups and geocoded 1,955 Chinese development finance projects across 3,553 physical locations over the 2000-2012 period. The results from various fixed-effects regressions show that regions receive substantially larger financial flows when being the birth region of the current political leader. We do not find evidence that leaders shift aid to regions populated by their ethnicity.

Location: ARRC Auditorium (A/RC014)

Admission: All welcome.