Does Chinese Foreign Aid Work in Sub-Saharan Africa? An Empirical Analysis

This article focuses on the effectiveness of Chinese developmental aid in Sub-Saharan Africa. The two main research questions are (1) whether Chinese development aid has a positive effect on economic growth in Sub-Saharan Africa; and (2) whether this impact is conditional on other factors. To examine these theoretical propositions, I analyze panel data covering 51 countries from the SSA over the 2000-2014 (15 years) period using FGLS estimations and 2SLS-IV estimations with two exogenous instrumental variables. The results show that Chinese Official Development Assistance (ODA) boosts economic growth. More specifically, Chinese ODA and grants work effectively in countries with anocratic regimes and in a scenario in which there is no US aid presence. Our findings shed light on the competition between China and the US for regional influence via developmental aid.