Does India Use Development Finance to Compete With China? A Subnational Analysis
Date Published
Feb 14, 2024
Authors
Gerda Asmus-Bluhm, Vera Z. Eichenauer, Andreas Fuchs, Bradley Parks
Publisher
Journal of Conflict Resolution
Citation
Asmus-Bluhm, G., Eichenauer, V. Z., Fuchs, A., & Parks, B. (2024). Does India Use Development Finance to Compete With China? A Subnational Analysis. Journal of Conflict Resolution, 0(0). https://doi.org/10.1177/00220027241228184
Note: A version of this article was previously published as an AidData Working Paper.
Abstract
China and India increasingly provide aid and credit to developing countries. This article explores whether India uses these financial instruments to compete for geopolitical and commercial influence with China. We build a new geocoded dataset of Indian government-financed projects in the Global South between 2007 and 2014 and combine it with data on Chinese government-financed projects. Our regression results for 2,333 provinces within 123 countries demonstrate that India’s Exim Bank is significantly more likely to locate a project in a given jurisdiction if China provided government financing there in the previous year. Since this effect is more pronounced in countries where India is more popular relative to China and where both lenders have a similar export structure, we interpret this as evidence of India competing with China. By contrast, we do not find evidence that China uses official aid or credit to compete with India through co-located projects.
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