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Economic benefits of foreign aid: An analysis of China’s aid to Africa

By Nguyen Quynh Anh (VNP 22)

Supervisor: Dr. Howard Nicholas / Dr.Nguyen Trong Hoai

Abstract

This study considered the motives of Chinese aid to Africa with an emphasis being on the economic motives of aid. The analysis undertaken concluded that Chinese aid, like OECD aid in general, serves the interests of the donor, specifically economic benefits. Using data on aid flows from 2010 to 2012, with a particular focus on the trade- aid linkages, the study found a strong correlation between Chinese aid flowing to infrastructure sectors and its imports of strategic materials from the aid recipient countries, with the former leading the latter. Simultaneously, Chinese aid, in general was found strongly correlated with exports of it manufacturing goods to the aid recipient countries, with the relationship being largely a contemporaneous one.

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