By Marta Marson, Univerity of Insubria; Ivan Savin, Universitat Autònoma de Barcelona
Over the last few decades China has become an important source of aid and other official funding for African countries. Nevertheless, its coordination with other development partners into the global coordination of aid assistance to Africa remains very limited both in the countries where they operate and at the global level. Moreover, the contribution of China to Africa’s development has been severely criticised. While there have been recently studies demonstrating that funding from China and traditional donors are driven by similar determinants, little has been done to compare the impact of this funding on development.
The present work aims to close this gap, by comparing impacts on governance, infrastructure development, countries’ dependence on natural resources and external debt sustainability. Furthermore, we explore whether African countries experience some (dis)advantage from the presence of both donors.
To do so, we combine data for the period 2000-2014 from a range of sources (AidData, OECD, World Bank, UNCTAD, African Development Bank) and consider aid and other official flows together to avoid classification inconsistences. Methodologically, we employ a quantile regression that allows us to distinguish the impacts of funding on countries with different level of the development indicator under consideration.
Overall, our findings support the claim that China has similar impact on African countries when compared with traditional donors. Funding from both donors positively affects the quality of governance, the state of infrastructure, and, unfortunately, increases the dependence of African countries on natural resources. An exception is external debt, where funding from China increases normalized debt stock, while traditional donors reduce it, even after controlling for traditional donors’ debt relief. At the same time, the presence of alternative donors results in a positive effect on indebtedness sustainability, but also in negative impacts on other development dimensions (increase in dependence on natural resources, lower improvement in infrastructure and lower quality for some dimensions of governance). This confirms the intuition that presence of both donors can benefit the recipient countries strengthening ownership and alignment principles of aid effectiveness, but also challenges harmonization and accountability dimensions.
