Working Paper 129 - China’s Engagement and Aid Effectiveness in Africa

Chinese aid, finance, trade and investment flows to Africa are growing fast. We consider the consequences of these trends using a quantified framework. Very often, adequate data are simply non-available, but we find that existing data provide useful insights on what is ongoing. We first discuss the allocation of Chinese aid, using data on turnover of economic cooperation, and we find it is at least partially comparable to other bilateral aid. We also consider the potential issue created by re-indebtedness of African countries borrowing to China. Second, we show, through studying African import patterns, that the growing importation of Chinese products in Africa can be interpreted as trade creation instead of trade diversion. Hence it has positive rather than negative impact on African economies. Third, we study the influence of Chinese engagement on economic diversification. We show that the usual “Dutch disease” argument is debatable. We find that none of the various dimensions of China engagement has had so far a significant impact, positive or negative, on African economic diversification. For the future, the evolving preferential trade regime offered by China, and its policy of creating special economic zones, could help tip the balance on the positive side.

HIPC debt relief and policy reform incentives

In this paper, I discuss the incentives that the HIPC Initiative could create in debtor countries in favour of economic adjustment and reform. The usual debt-overhang argument, stating that debt relief will increase the net benefits of reforms, needs to be revisited in this context. First, the HIPC Initiative does not provide pure debt relief, but also creates new public spending obligations on poverty reduction programmes. Second, not all HIPCs can be considered as enjoying good economic governance, while the debt-overhang argument assumes a welfare-maximizing government. I show that standard positive incentives can be obtained only in good economic governance instances. I suggest that, in other instances, the outcome of HIPC programmes could be improved if external shocks were taken into account in their design

Bilateral donors' interest vs. recipients' development motives in aid allocation : do all donors behave the same ?

In this paper, I provide an overall empirical assessment of the motivations of official development assistance granted by rich countries to developing countries, as they are revealed by their aid allocation behaviours. Such behaviours result from a combination of self-interest purposes and of more altruistic development objectives. To perform this analysis, I use a three-dimensional panel dataset, combining the donor, recipient and time dimensions. Such data show a lot of heterogeneity in donor behaviours. Thanks to the width of this dataset, I can properly test differences of parameters among donors. In particular, these tests provide a way to compare the degree of altruism of the different donors.International aid allocation, altruism.

Bilateral donors' aid allocation decisions: A tree-dimensional panel analysis

The present paper adds to the already large existing literature on aid distribution as it runs an equation on bilateral aid allocation on a very rich dataset, covering 20 years (1980-99), 22 donors and 137 recipients, which permits a three-dimensional panel study (recipient-year-donor) and allows for comparisons between the different donors. Thanks to the length of the observation period, it is also possible to compare aid allocation policy in the 1980s and in the 1990s to test whether the collapse of the communist regime affected the donors’ choices. Both the self-interest of donors, recipient needs and policy outcome variables are introduced. As a first result, the end of the cold war has reduced the bias towards former colonial links, to favour trade partners. Moreover, donors reward good economic policy outcomes since 1990. Second, aid is found generally progressive, for most donors. It appears also that most donors pay a great attention to political governance when making their aid decision

The economics of malaria in Africa

Consultable à http://hdl.handle.net/10419/96345WIDER Working Paper, No. 2014/047Malaria still claims a heavy human and economic toll, specifically in sub-Saharan Africa. Even though the causality between malaria and poverty is presumably bi-directional, malaria plays a role in the economic difficulties of the region. This article provides an analysis of the economic consequences of malaria (with an emphasis on human capital accumulation and productivity), and a discussion of policies aimed at reducing its incidence. A major initiative has been the distribution of insecticidal bed-nets at a highly subsidized price. An economic-epidemiology model is used to explain why such policy is doomed to fail in presence of a very high poverty incidence, as observed in the African region

Between Altruism and the Market: an Economist’s View of the Fight Against Poverty

It is no easy task to conclude this special issue of FACTS Reports, given the sheer breadth and diversity of the analyses it contains. One would need in-depth knowledge of a whole range of fields – anthropology, sociology, history, law, management, economics – to adequately identify all of the lessons that can be drawn from these papers. Let me, then, stay with my own field of competence, and offer a conclusion from the standpoint of an economist. The fight against poverty is, admittedly, an..

Aid Allocation of the Emerging Central and Eastern European Donors

The paper examines the main characteristics of the (re)emerging foreign aid policies of the Visegrád countries (the Czech Republic, Hungary, Poland, Slovakia), concentrating on the allocation of their aid resources. We adopt an econometric approach, similar to the ones used in the literature for analyzing the aid allocation of the OECD DAC donors. Using this approach, we examine the various factors that influence aid allocation of the Visegrád countries, using data for the years between 2001 and 2008. Our most important conclusion is that the amount of aid a partner county gets from the four emerging donors is not influenced by the level of poverty or the previous performance (measured by the level of economic growth or the quality of institutions) of the recipients. The main determining factor seems to be geographic proximity, as countries in the Western-Balkans and the Post-Soviet region receive much more aid from the Visegrád countries than other recipients. Historical ties (pre-1989 development relations) and international obligations in the case of Afghanistan and Iraq are also found to be significant explanatory factors. This allocation is in line with the foreign political and economic interests of these new donors. While there are clear similarities between the four donors, the paper also identifies some individual country characteristics

Diplomazia creativa al servizio di strategie di nicchia di una piccola potenza

In the year marking the centenary since the foundation of the Azerbaijani Diplomatic Service, Baku’s foreign policy is increasingly characterised by a broader understanding of diplomacy, shaped by the gradual yet steady expansion of both areas and the tools for intervention. Guided by the attempt to develop a ‘niche strategy’ aiming at safeguarding and promoting Azerbaijani national interest, the Humanitarian Diplomacy emerges as a privileged field for Baku to adopt a pro-active and creative foreign policy. Building upon the debate around the interests behind the aid-providing activities of traditional and emerging donors, the article aims at introducing the motivations and the aims behind Azerbaijani aid policy. In particular, it aims at demonstrating that Baku’s Humanitarian Diplomacy aims chiefly at achieving immaterial benefits, having to do with international prestige and with the construction and international projection of a Good International Citizenship

Exits from the Poverty Trap and Growth Accelerations in a Dual Economy Model

FERDI Working paper P234, September.We propose a simple theoretical dual economy model to study the dynamics of an economy in which individuals move out of a poverty trap. These dynamics are characterized by growth acceleration. This model implies that poverty reduction could, under some circumstances, cause growth, rather than the other way around. We define a measurement of the growth impulse that could be triggered by independent exits from poverty and correlate it with observed growth accelerations. This correlation is both positive and significant, and it passes various robustness checks.