Chinese public investment in Ecuador– an analysis of the motivational framework for Chinese state financing in the Latin American context

Abstract

The paper examines the underlying determinants of Chinese foreign finance allocation in Latin America and outlines the implications of these dynamics for receiver countries in the region. A case study on Ecuador is used in order to enrich the analysis with detail on country-level. Underlying drivers for aid allocation cannot be identified from the statistical analysis. However, the results do not lend support to the popular hypotheses of resource-driven or power-driven Chinese aid allocation either. In terms of less concessional financing, natural resource endowment results as the driving factor for Chinese fund allocation while the findings suggest that the country's risk profile and investment environment play a minor role in Chinese public financing.