Aid and conflict: Evidence from Chinese aid

Jianan Li · Xiaoning Long · Qi Jiang

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International Development and Aid Political Conflict and Governance Natural Resources and Economic Development

Abstract

Using data from AidData and the conflict report from Uppsala Conflict Data Program (UCDP) from 2000 to 2014, we find that China's other official flows (OOF) aid can significantly reduce the frequency of conflicts. To deal with the endogeneity, we use China's competitive capacity as the instrumental variable. Our results are robust when considering the possible sample selection bias and different types of international aid. We find that increasing the local infrastructure investment and employment is the main mechanism, which increases the opportunity cost of engaging in conflicts. Our results provide evidence on the effectiveness of China's aid mode and the importance of infrastructure investment in developing countries.

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References

2000Who Gives Foreign Aid to Whom and Why?2014US Food Aid and Civil Conflict 2004On the Empirics of Foreign Aid and Growth 2009Aid, Dutch disease, and manufacturing growth 2018Chinese aid and local corruption 2017Aid, China, and Growth: Evidence from a New Global Development Finance Dataset 2004Public Infrastructure Investment, Interstate Spatial Spillovers, and Manufacturing Costs 2015Rogue aid? An empirical analysis of China's aid allocation

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