The worrying link between aid and growth in Africa
Africa's robust economic growth over the past decade has raised hopes the poorest continent can reduce reliance on aid. The problem with this scenario is its failure to consider the role aid may be playing in the 'Africa Rising' narrative. Looking for a link between aid and growth, an unmistakable pattern emerges from the numbers.
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.