Determinants of China's and Japan's Foreign Aid Allocations in Africa

Furuoka, Fumitaka

doi:10.1111/1467-8268.12275

Cited by 23 publications

(13 citation statements)

References 53 publications

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“…In fact, only 12 out of 21 agricultural projects are unfunded compared to infrastructures (see Table 2). Third, this outcome may support Furuoka (2017) that Chinaʼs provision of foreign aid is mostly driven by its self-interest.…”

Section: Causality Test Resultsmentioning

confidence: 75%

Is there a nexus between China outward foreign direct investment and welfare in Côte dʼIvoire? Empirical evidence from the Toda–Yamamoto procedure

Allou

Adeleye

Cheng

et al. 2020

African Development Review

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Foreign direct investment (FDI) plays an important role in the socioeconomic advancement of developing countries. In the last decade, FDI inflows from China into Côte dʼIvoire have grown rapidly. Using quarterly time series data from 2003Q1 to 2017Q4, this study probes if China FDI has any significant welfare impact on the citizens of Côte dʼIvoire vis-à-vis if a causal relationship exists. The policy outcome is to stimulate further discourse that will reduce poverty and enhance the living standard of the population. The study uses vector autoregressive (VAR) and the Toda and Yamamoto (1995) modification of the non-Granger causality test to determine if a causal relationship exists and the direction of causality. The empirical analysis provides evidence of a unidirectional causality from China FDI to social welfare (proxied by the human development index [HDI]) but no indication of causality between China FDI to economic welfare (proxied by real gross domestic product per capita [GDPPC]). This study, which is borne out of empirical curiosity, fills a lacuna in the FDI literature. To the best of our knowledge, this paper is a novel contribution that examines the FDI-welfare nexus between China and a developing economy like Côte dʼIvoire. Thus, policies that will further stimulate FDI inflows from China must be carefully crafted to attract funding to the most productive sectors of the economy in order to improve both social and economic welfare. By extension, the policies may be adapted by developing economies with similar characteristics to Côte dʼIvoire. 1 | INTRODUCTION The "One Belt and One Road" initiative of the Chinese government allows Chinese firms to invest in Africa with a view to promoting a "win-win and multi-win cooperation" in host countries in the form of foreign direct investment (FDI). This ingenuity made Africa one of the main economic and commercial partners of China in the Sino-Afro cooperation (Yanxia & Meibo, 2015). For a successful implementation, the Chinese governmentthrough the Forum on China-Africa Cooperation (FOCAC)-implemented strategies to help African countries

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Section: Causality Test Resultsmentioning

confidence: 75%

Is there a nexus between China outward foreign direct investment and welfare in Côte dʼIvoire? Empirical evidence from the Toda–Yamamoto procedure

Allou

Adeleye

Cheng

et al. 2020

African Development Review

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show abstract

“…Despite this need, there is almost no empirical analysis. While several studies have attempted to analyze China, Japan, and Korea individually for each country's motives behind foreign aid allocations (Cooray and Shahiduzzaman 2004;Fuchs and Rudyak 2019;Park & Lee 2015), only a few studies have conducted comparative analyses of Japan and China (Furuoka 2017) or Japan and Korea (Kang et al 2011). Yet, it is challenging to find a comprehensive comparative analysis of these three countries of their behaviors related to foreign aid.…”

Section: An East Asian Model Of Foreign Aidmentioning

confidence: 99%

Assessing Motives in Northeast Asian Aid Allocations: China, Japan, and Korea as a Collective Group and as Individual Donors

Sohn¹,

Kim²,

Changbin³

2020

kjis

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The landscape of global foreign aid is changing with the growing number of new donors, especially in Asia. While Japan is no longer overwhelmingly dominant, complexity grows as China is becoming increasingly influential as an emerging donor, and Korea is rising to be a considerable donor by joining the OECD's Development Assistance Committee. In this context, there have been numerous controversies concerning East Asian donors, and even debates about the East Asian model of aid apart from the more traditional Western models. However, only a handful of studies have examined donor behavior empirically. This study aims to assess the motives in the foreign aid allocations of China, Japan, and Korea as a group and as individual donors by methodically and empirically examining aid patterns and the East Asian model of aid. This research shows that the most important drivers of aid allocations of East Asian donor are economic, as opposed to political-strategic or humanitarian, which is viewed as typical for China, Japan, and Korea. Furthermore, this characteristic of valuing economic factors can be seen more clearly in Asia and other regions compared to in Africa. However, on an individual country level, economic motives are the primary determinants of aid allocations only for China. Japan prioritizes humanitarian factors over economic ones, and Korea does not reveal a clear pattern either way.

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“…The analysis of the relationship between foreign aid on economic development is complicated by potential endogeneity of aid as donors tend to allocate foreign aid to countries and areas within countries that have a track record of demonstrated capacity to manage and absorb it efficiently (Furuoka, 2017; Wilson, 2011). To account for the endogeneity problem, previous studies have used lagged aid as an instrument for current aid and yet found mixed results regarding the effect of aggregate aid or sector‐specific aid on infant or child mortality (Boone, 1996; Masud & Yontcheva, 2005; Mary & Gomez y Paloma, 2015; Pickbourn & Ndikumana, 2019).…”

Section: Introductionmentioning

confidence: 99%

Impact of development aid on infant mortality: Micro‐level evidence from Côte d'Ivoire

Wayoro

Ndikumana

2020

African Development Review

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The empirical literature has failed to reach consensus on the impact of aid on development outcomes based on aggregate crosscountry analysis. This study follows the current trend in the literature on the effectiveness of aid to examine the impact of local-level aid on health outcomes. We combine data on World Bank's geo-located aid projects with three rounds of Demographic Health Surveys from Côte d'Ivoire and use difference-indifference estimation techniques to explore the effects of aid on infant mortality. We find that proximity to development aid projects is associated with reduced infant mortality. The results hold whether we consider proximity to any aid project or specifically to water and sanitation projects. They are also robust to inclusion of mother fixed-effects in the model. The evidence suggests that access to prenatal and postnatal health care are possible mechanisms through which aid may affect infant mortality.

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Determinants of China's and Japan's Foreign Aid Allocations in Africa

Cited by 23 publications

References 53 publications

Is there a nexus between China outward foreign direct investment and welfare in Côte dʼIvoire? Empirical evidence from the Toda–Yamamoto procedure

Is there a nexus between China outward foreign direct investment and welfare in Côte dʼIvoire? Empirical evidence from the Toda–Yamamoto procedure

Assessing Motives in Northeast Asian Aid Allocations: China, Japan, and Korea as a Collective Group and as Individual Donors

Impact of development aid on infant mortality: Micro‐level evidence from Côte d'Ivoire

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