Project pressure: World Bank defends standards

When people reach the ripe old age of 70 they can rightfully expect to receive some presents from their nearest and dearest. Yet when the World Bank became a septuagenarian last year it could only watch on, downcast, as some of its most important member countries rushed to offer contributions to the newly-minted Asian Infrastructure Investment Bank (AIIB). By the time its founding members had signed the articles of agreement in June this year, World Bank president Jim Yong Kim graciously hailed the launch of the AIIB, which he said would deliver more infrastructure to help the poor.

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Abstract

Chinese “aid” is a lightning rod for criticism. Policy-makers, journalists, and public intellectuals claim that Beijing uses its largesse to cement alliances with political leaders, secure access to natural resources, and create exclusive commercial opportunities for Chinese firms—all at the expense of citizens living in developing countries. We argue that much of the controversy about Chinese “aid” stems from a failure to distinguish between China's Official Development Assistance (ODA) and more commercially oriented sources and types of state financing. Using a new database on China's official financing commitments to Africa from 2000 to 2013, we find that the allocation of Chinese ODA is driven primarily by foreign policy considerations, while economic interests better explain the distribution of less concessional flows. These results highlight the need for better measures of an increasingly diverse set of non-Western financial activities.

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