Does China’s Aid Promote Recipient Countries to be Embedded in Global Value Chains

Abstract

Although aid is an important tool for facilitating the integration of developing countries into global value chains (GVCs), there is lack of empirical research to support this view. This study thus examines the impact of China’s aid on the development of GVCs in recipient countries. The conclusions of this study are as follows: (1) China’s aid can significantly promote recipient countries to transform into GVCs. (2) The improvement of infrastructure in recipient countries is the main channel through which China’s aid affects the degree of integration of recipient countries’ GVCs. (3) Aid type, technology distance, and trade complementarity have a certain heterogeneity in the current study’s research results. From the perspective of GVCs, this study proves the effectiveness of foreign aid in the economic development of recipient countries and helps expand the research boundary of foreign aid.

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