Chinese aid and local corruption
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Isaksson, Ann-Sofie & Andreas Kotsadam
Considering the mounting criticisms concerning Chinese aid practices, the present paper investigates whetherChinese aid projects fuel local-level corruption in Africa. To this end, we geographically match a new geo-referenced dataset on the subnational allocation of Chinese developmentfinance projects to Africa over the2000–2012 period with 98,449 respondents from four Afrobarometer survey waves across 29 African countries.By comparing the corruption experiences of individuals who live near a site where a Chinese project is beingimplemented at the time of the interview to those of individuals living close to a site where a Chinese project willbe initiated but where implementation had not yet started at the time of the interview, we control for un-observable time-invariant characteristics that may influence the selection of project sites. The empirical resultsconsistently indicate more widespread local corruption around active Chinese project sites. The effect is see-mingly not driven by an increase in economic activity, but rather seems to signify that the Chinese presenceimpacts norms. Moreover, Chinese aid stands out from World Bank aid in this respect. In particular, whereas theresults indicate that Chinese aid projects fuel local corruption but have no observable impact on short term localeconomic activity, they suggest that World Bank aid projects stimulate local economic activity without anyconsistent evidence of it fuelling local corruption.
D73, F35, O1, O55
Chinese aid, Local corruption, Africa