Chinese aid to Latin America and the Caribbean
Chinese aid to Latin America and the Caribbean Lorenzo Maggiorelli (Italy) l. maggiorelli 10@uniandes. edu. co www. lorenzomaggiorelli. com
Woods, 2008 "Silent revolution” in the Cooperation for Development landscape Emergence of donors outside OECD-DAC system is changing the global development paradigm (Woods, 2008)
DEVELOPMENT ASSISTANCE COMMITTEE (OECD) members Australia, Austria, Belgium, Canada, Denmark, European Commission, Finland, France, Germany, Greece, Ireland, Italy, Japan, Luxemburg, New Zealand, Norway, Portugal, South Korea, Spain, Sweden, Switzerland, The Netherlands, United Kingdom, United States.
OECD ODA REPORTING SYSTEM
“Emerging”, non-DAC donors Brazil, Bulgaria, China, Cuba, Cyprus, Czech Republic, Estonia, Hungary, Iceland, India, Israel, Kuwait, Latvia, Lithuania, Malta, Mexico, Poland, Romania, Russia, Saudi Arabia, Slovak Republic, Slovenia, South Africa, Taiwan, Thailand, Turkey, United Arab Emirates, Venezuela
Typologies of non-DAC donors A) OECD countries which are not members of DAC (e. g. Turkey, Iceland, Mexico, Czech Republic, Hungary, Poland Slovakia). B) BRICS countries (China, Brazil, India, South Africa, Russia) C) EU countries not members of the OECD (Bulgaria, Cyprus, Estonia, Latvia, Lithuania, Malta, Romania and Slovenia) D)The Middle Eastern OPEC countries (e. g. Saudi Arabia, UAE, Libya) E) The others (e. g. Venezuela, Chile, Malaysia and Thailand)
Total Trade between Asia and Latin America, 1988– 2010 (Billions of US Dollars) 12
Obama
“Emerging donors are not overtly attempting to overturn rules or replace them. Rather, by quietly offering alternatives to aid-receiving countries, they are introducing competitive pressures into the existing system” (Woods, 2008; 17) Supposed consequences: • Empowerment for recipient donor: donor pluralism has empowered the government to pursue a development agenda of its own on its own terms • Traditional donors are re-evaluating their approaches
“South-South” cooperation approach • Cooperation based on the exchange of resources, technology, and knowledge between developing countries perceived as equals, and without obligations (since there is no colonial history among them).
Debate on Terminology • “Emerging”, “new” or “Non-DAC” donors? • “Development assistance” or “foreign aid’? • “Development partners” or “donors”? • “Postcolonial donors”? rebalancing asymmetric relations?
Debate on Motives Traditional donors’ motives • Charity • Moral obligation to the unfortunate ‘ New’ donors’ motives • Opportunity • Solidarity with other Third World countries • Expertise based on superior knowledge, • Expertise based on direct experience of institutions, science and technology pursuing development in poor country circumstances • Sympathy for different and distant • Empathy based on a shared identity and Others experience • The virtue of suspended obligation, a • The virtue of mutual benefit and lack of reciprocation recognition of reciprocity Source: Mawdsley (2011: 176), edited by the author.
CONCERNS Traditional Donors Emerging donors Reducing aid amounts Expanding aid amounts Support democratic states Support rogue states Support good governance and policies Bypassing regulations Relieving debt Re-indebting debtor states Also use multilateral agencies (the UNDP, Mainly bilateral aid World Bank, IMF, WHO, WTO) Conditional aid Unconditional aid Source: Ngaire Woods (2008)
Aid from China: Concerns 1. ROGUE AID: “Need of recipient is ignored by China” 2. AUTHORITARIAN NEXUS: “China prefers to donate to authoritarian states” 3 a. “China donates to further political self-interests” TAIWAN, UNGA VOTING ON HHRR 3 b. “China donates to further commercial self-interests” ACCESS TO RESOURCES, MARKETS
Question • My research is designed to understand: which are the factors influencing Chinese aid and investment flows to Latin America and the Caribbean? • And measure: How does the region compares to other regions of the world?
MY DATA (DEPENDENT VARIABLES) • Chinese aid to 151 developing countries. • Amount of aid, number of aid projects, quantity of food aid delivered, etc. • Time period: 1956 to 2016, divided into six main historical phases. DATASETS USED • Aid. Data Tracking Chinese Development Finance worldwide • OECD International Development Statistics databases • World Food Programme Food Aid Information System
Methodology • Making use of such data, I empirically test whether and to what extent China’s aid has been motivated by a series of determinants which include recipient country’s development need, the institutional characteristics of the recipient, Chinese political or commercial self-interest • In a series of of nested regressions I interact such explanatory variables with result variables such as amounts of aid, number of projects, quantity of food aid delivered.
What is foreign aid?
What is Official Development Aid (ODA)? Definition by the OECD Development Assistance Committee (DAC) To be considered ODA, grants, loans and technical co-operation must: • be primarily aimed at development; • have a minimum concessionality level of 25% of its total budget; They possess: Ø a grant element (non-repayable funds), Ø or a concessional loan, Ø or a grant-like element such as scholarships, • and the recipient must be on the OECD list of ODA eligible countries (based on country GDP level)
“In Africa and elsewhere, governments needing development assistance are skeptical of promises of more aid, wary of conditionalities associated with aid, and fatigued by the heavy bureaucratic and burdensome delivery systems used for delivery of aid. Small wonder that the emerging donors are being welcomed with open arms” (Woods 2008: 1220)
Other Official Flows (OOF) are projects that do not classify as ODA since are missing some of its criteria: • they do not focus on development (e. g. , their intent is principally commercial or representational) • Or they do not have sufficient percentage of concessionality to qualify as ODA, • Or they are provided to countries not on the OECD-DAC ODA recipient list.
Source: Compiled by the author based on Aid. Data, 2017
Source: Compiled by the author based on Aid. Data, 2017
Source: Compiled by the author based on Aid. Data, 2017
REGIONAL ANALYSIS
SUB-REGIONS Source: Compiled by the author based on Aid. Data, 2017
CHINESE AND US AID TO LAC (2007 -2014), % OF TOTAL LAC BUDGET Source: Compiled by the author based on data from Aid. Data (2017) and OECD (2017)
CLAIM ABOUT CHINA RECIPIENT’S NEED 1. “Need of recipient is ignored by China” RECIPIENT’S CHARACTERISTICS 2. “China prefers to donate to authoritarian states” DONOR’S POLITICAL SELF-INTEREST 3 a. “China donates to further political self-interests” DONOR’S ECONOMIC SELF-INTEREST 3 b. “China donates to further commercial self-interests”
Results of the empirical testing Claim from literature 1. “Need of recipient is ignored by China” What my data indicate GDP per capita not a strong determinant of Chinese aid. Effect found in Eastern Europe & Central Asia.
Results of the empirical testing Claim from literature What my data indicate 1. “Need of recipient is ignored by China” GDP per capita not a strong determinant of Chinese aid. Effect found in Eastern Europe & Central Asia. 2. “China prefers to donate to authoritarian states” Democracy has no negative effect in LAC: democratic countries received more aid than non-democratic countries. Chinese opposition to democratization is found in Sub-Saharan Africa.
Results of the empirical testing Claim from literature What my data indicate 1. “Need of recipient is ignored by China” GDP per capita not a strong determinant of Chinese aid. Effect found in Eastern Europe & Central Asia. 2. “China prefers to donate to authoritarian states” Democracy has no negative effect in LAC: democratic countries received more aid than non-democratic countries. Chinese opposition to democratization is found in Sub-Saharan Africa. 3 a. “China donates to further political self-interests” Recognition of Taiwan is relevant factor for LAC. UNGA voting behavior is not correlated in LAC, it is in East Asia-Pacific and in Europe & Central Asia.
Results of the empirical testing Claim from literature What my data indicate 1. “Need of recipient is ignored by China” GDP per capita not a strong determinant of Chinese aid. Effect found in Eastern Europe & Central Asia. 2. “China prefers to donate to authoritarian states” Democracy has no negative effect in LAC: democratic countries received more aid than non-democratic countries. Chinese opposition to democratization is found in Sub-Saharan Africa. 3 a. “China donates to further political self-interests” Recognition of Taiwan is relevant factor for LAC. UNGA voting behavior is not correlated in LAC, it is in East Asia-Pacific and in Europe & Central Asia. 3 b. “China donates to further commercial self-interests” In LAC oil-rich countries (e. g. Venezuela) receiving Chinese aid. Not in Africa. Bilateral exports not significantly correlated.
CONCLUSIONS AND POLICY IMPLICATIONS • China’s official policy: win-win approach. • Cooperation between China and LAC: called a "marriage made in heaven” • Political aspects play a secondary role in China's relations with Latin America (apart from the active pursuit of a "One China" policy)
Thank you to the University of Pavia and to all the participants to the seminar! Author: Lorenzo Maggiorelli Research Supervisors: Dr. Jean-Marie Chenou (University of Andes, Colombia) Gianni Vaggi (University of Pavia) l. maggiorelli 10@uniandes. edu. co www. lorenzomaggiorelli. com
- Slides: 49