Study On The Economic Development Effects Of China's Aid To Africa In The New Century

Since the beginning of the 21 st century,with the establishment of the Sino-African Cooperation Forum mechanism and the Sino-African Strategic Partnership,especially the establishment of the Community of Sino-African Destiny,China's aid to Africa has adhered to the concept of ‘Righteousness and Benefit',fully demonstrating the characteristics of ‘Equality,Mutual Assistance,Mutual Benefit,Precision,and Tolerance".The intensity and depth of China's aid to Africa have shown an unprecedented increase,and it plays a pivotal role in the field of international assistance to Africa.In the face of the changes in international situation,China adheres to the theme of peace and development in the new era.Building the Community of Sino-African Destiny will become the primary goal and direction of China's aid to Africa in the new century.Although the international and domestic society is paying more and more attention to China's aid to Africa,there are mixed opinions on the purpose and effect of China's aid to Affrica,such as ‘a model of new development experience',‘neocolonialism' and etc.This is related to the complexity of the mechanism of aid itself,the heterogeneity of the two sides and its obvious changes in the international political and economic environment.Deviations of aid definition,statistical caliber differences,and differentiated research methods also lead to mixed results of aid econometrics research.As a large responsible developing country,China has provided the biggest amount of aid to Africa since the new century.Compared to the ‘NorthSouth aid' of major Western donors,China's aid to Africa presents a typical ‘SouthSouth Cooperation and Aid' model,which has significant characteristics of livelihood and equality.Therefore,studying the economic development effects of China's aid to Africa has both far-reaching theoretical value and urgent practical significance for the construction of the Community of Sino-African Destiny in the new century.To study the economic development effects of China's aid to Africa is not only to examine whether the transnational flow of material capital and human capital carried by aid can attract more foreign direct investment for recipient countries,thus promoting the upgrading of African industrial structure,but also to consider whether aid can promote trade facilitation of recipient countries and encourage Africa's nonresources exports,improve the structure of trade commodities and diversify exports.The thesis also tries to examine whether aid can achieve cross-border reproduction and localization of China's experience in poverty reduction in Africa in order to alleviate and eliminate extreme poverty in Africa.Furthermore,the theis explores an effective way to solve the ‘Black Box Effect' in the link between aid and growth;therefore to answer the crucial issue in the field of aid that whether foreign assistances are capable of contributing to the development of recipient countries.The thesis is based on multidisciplinary theories such as macroeconomics,development economics,and international political economics,following the research path from theory to empirical research,and under the logic framework of ‘Deduction and Summary' to expand the research on economic development effects of China's aid to Africa in the new century.The main contents of the paper are as follows:During the era of the booming development of China's aid to Africa,the thesis explores the economic development effects of aid on recipient countries by integrating aid,investment,trade,poverty reduction and growth in a collaborate framework.Firstly,the thesis systematically summarizes the literature review of foreign aid theory and aid economic development effects.Secondly,it analyzes the theoretical basis of foreign aid from the perspectives of development economics,international political science,international sociology and interdisciplinary perspective.It also analyzes the theoretical basis of aid economic development effects from the ‘Double Gap Theory'and the theory of inclusive development.Then,based on the analysis of the evolution of the historical stage of China's aid to Africa and the characteristics of reality,the thesis puts forword dialectical views on domestic and foreign disputes about aid to Africa.Then,drawing on the theoretical framework of economic growth “troika”,the thesis will build a unified analytical framework for aid,FDI,trade,poverty alleviation and economic growth,and regard aid,FDI,trade and poverty reduction as four driving forces of economic growth for recipient countries.Furthermore,it analyzes the path of action from the four levels of international direct investment,bilateral trade,poverty eradication and economic growth from perspective of inclusive development,and conducts empirical tests.Based on the connotation analysis of ‘South-South Cooperation and Aid' model for China's aid to Africa,the thesis discusses the impacts of China's aid to Africa from foreign direct investment,Sino-Africa trade,poverty reduction and economic growth of African recipient countries aspects with an economic perspective.The thesis systematically discusses the mechanism and path of China's foreign aid exerting economic development effects in recipient countries.In the first of all,the study demonstrates that China's aid to Africa promotes direct investment in Africa through infrastructure effects,pilot effects,and institutional friction mitigation effects.The mechanism analysis shows that the cost of FDI logistics can be reduced by assisting in the construction of infrastructure;the pilot effect of aid can be used to reduce the risk of FDI investment;at the same time,the institutional distance can be shortened through aid,and the effect of easing institutional friction can be released.Empirical analysis shows that under the control of other variables,aid has a promoting effect on direct investment,and there is a‘threshold effect'.That is,in the early stage of China's aid to Africa,due to the large amount of aid to infrastructure,it created a favorable social environment for foreign capital inflows,and its ability to attract investment continued to increase,but the effect of aid on investment was not lasting.In the later stages of aid,attentions should be paid to aid classification,strengthening aid to enhance education and production sectors,and promoting the establishment of manufacturing systems and industrialization systems in recipient countries.As aid continues to increase,direct investment in host countries will also increase.Secondly,China's aid to Africa promotes Sino-African trade through trade cost reduction effects,trade liberalization transmission effects,and trade mitigation optimization effects.The mechanism analysis shows that trade-related infrastructure aid brings trade cost reduction effects;trade policy and management-related assistances generate trade liberalization transmission effects;and meanwhile,traderelated development aid produces trade environment optimization effects.Empirical analysis shows that China's aid to Africa can indeed promote the development of bilateral trade between China and Africa.The level of economic development between China and Africa can promote the development of bilateral trade.Chinese enterprises' direct investment in Africa can significantly improve the development of bilateral trade,and is reflected in the effects of imports and exports.The host country's natural resource endowment has a positive role in bilateral trade effects and export effects.Therefore,it is undeniable that in the bilateral trade transactions,the export of natural resource commodities in the African region occupies a very large proportion,which reflects the complementary advantages of the resource endowments of both sides.Thirdly,China's aid to Africa promotes poverty reduction in recipient countries through demonstration effects,independent development effects,and debt mitigation effects.The mechanism analysis shows that China's experience in poverty reduction has been demonstrated internationally through aid to Africa;recipient countries' selfdevelopment capabilities have been enhanced;and recipient countries have been relieved the debt levels.Empirical analysis shows that poverty elimination in African recipient countries is closely related to aid,and aid can promote poverty reduction in recipient countries.In particular,the promotion of human capital has a long-term improvement effect on poverty reduction in recipient countries.China's aid to Africa does help poverty eradication in the recipient countries,but the impact is slow,that is,poverty reduction is a long-term process.Considering the heterogeneity of aid,the aid is divided into ODA-like and OOF-like,and the results show that both assistances can help the recipient countries reduce poverty.As far as the aid effect is concerned,OOFlike aid effect is more obvious.As a large country with both donar and recipient experiences,China,in combination with its own development experience,provides efficient development programs and development aid to aided countries,builds production systems in recipient countries,and enhances independent development capabilities.At the same time,debt relief for government departments has reduced financial crises,enabling the government to provide financial support for economic development,create a good macro environment,and provide substantial support for long-term poverty reduction projects.At the same time,China's aid to Africa promotes economic growth in recipient countries through the effects of physical capital replenishment,human capital enhancement,and technology spillover effects.The mechanism analysis shows that there is a material capital supplement effect between China's aid to Africa and the economic growth of the recipient country;there is also a human capital promotion effect between Africa's aid and the economic growth of the recipient country,which is reflected in the quality of labor in the recipient country.The increase is also reflected in the increase in the number of workers in the recipient countries.At the same time,China's aid to Africa and the economic growth of the recipient countries are also reflected in technology transfer and spillover effects.The main purpose of China's aid to Africa is not to provide financial aid,but to establish South-South cooperation,especially to provide technical aid.China's aid projects in Africa include strengthen its capabilities such as infrastructure,medical care,cultural education,people's livelihood services,technical personnel,and agricultural and industrial cooperation.Empirical analysis shows that China's aid to Africa directly promotes the economic development of recipient countries through material capital effects,human capital effects,technology transfer and spillover effects.China's aid to Africa is effective for the economic growth of recipient countries,but it is still uncertain whether aid has a threshold effect on economic growth.Labor factors,capital factors,and the degree of opening to the outside world have positive correlations with the economic growth of the recipient countries,and also conform to the logical theme of classical economic growth theory.Based on the research conclusions,the thesis proposes countermeasures to further improve China's aid to Africa's economic development effects.It is time to further establish the aid methodology of inclusive development,respect recipient countries,and enhance the opportunities for recipient countries to participate in global development.It is crucial to build new fair and effective aid system,starting from the implementation path of China's aid to Africa,and developing a diversified aid cooperation mode to enhance the actual effect of aid.It is also important to strengthen effective communication between the two sides,promote communication between North and South donor countries,and reduce transaction costs for aid implementation.All these suggestions are aimed at improving the economic development effects of aid to recipient country.The main innovations of the paper are:First,to promote the construction of a China-Africa Community of Human Destiny with a shared future,the thesis will regard aid inflows,FDI in recipient countries,trade,and poverty reduction(poverty elimination will help increase the disposable income of people in recipient countries,thereby stimulating consumption and driving economic growth.)as the “four-wheel driving force” for stimulating the economic growth of recipient countries.The paper proposes that the economic growth effect analysis framework of China's aid to Africa includes both the macroeconomic growth effect of aid inflows on recipient countries and the international direct investment effect that affects economic growth,bilateral trade effect and poverty reduction effect from the demand side.The academic community pays more attention to the aid of OECD main donor countries to Africa,but pays relatively little attention to the issue of China's aid to Africa.At the same time,the past relevant researches also pay more attention to aid effectiveness and policy motives unilaterally,demonstrating the unilateral impact of aid on the economic growth,investment,or trade,or poverty reduction of recipient countries.It can be seen that the systematic research on the economic growth effect of China's aid to Africa is still in its infancy.Based on the analysis of the impact of aid on the recipient country's direct investment and bilateral trade,this article further explores the role of aid in eliminating poverty in the recipient country,and finally returns to exploring the impact on the recipient country's macroeconomic growth and fully integrates into inclusive development.Second,the thesis systematically analyzes the mechanism and path of China's aid to Africa's economic growth effect in recipient countries,and combines the econometric testing of the system GMM model,quantile regression,extended trade gravity model,and FGLS model to test the international direct investment effect,bilateral trade effect,poverty reduction effect and macroeconomic growth effect of China's aid to Africa in the new century.Through empirical testing,it is found that China's aid to Africa has obvious characteristics of “equality,mutual assistance,mutual benefit,precision,and tolerance”,presenting a typical “South-South Cooperation and Assistance” and “Symbiotic Destiny” aid model which strongly refutes the Western views on China's aid to Africa as "neo-colonialism" and "resource seizure theory." China's aid to Africa's international direct investment in recipient countries has both an infrastructure effect and a pilot effect,as well as a systemic friction mitigation effect.It has a cost-cutting effect on the trade of the recipient country,the conduction effect of trade liberalization and the optimization effect of the trade environment.China's aid to Africa can not only provide demonstration effect of China's poverty reduction experience,but also enhance the independent development capacity of recipient countries,and also improve the debt level of recipient countries through aid.Whether aid can promote the macroeconomic growth of recipient countries is a central issue in the discussion of the economic growth effect of aid in Africa.Through theoretical analysis and empirical testing,the paper finds that China's aid to Africa helps to play a supplementary effect on the physical capital of the recipient country and enhance the human capital of the recipient country.At the same time,technical aid has a significant spillover effect,thereby promoting the macroeconomic growth of the recipient country.Third,the thesis also conducts Questionnaire research.The survey format is to distribute the Chinese and English version of the questionnaire on the quality of aid to Africa to the World Bank,the China-Africa Development Fund,and scholars from universities engaged in aid to Africa.Through the analysis of effective questionnaires,it is found that the respondents' perceptions of the aid scale,aid quality,and aid prospects of China's aid to Africa are not uniform,but also show obvious heterogeneous characteristics.In terms of empirical testing,the paper divides China's aid to Africa into Official Development Aid-like(ODA-like)and Other Official Flows-like(OOF-like)similar to those defined by the OECD,and introduces a lag period in aid to empirically test the international direct investment effect,bilateral trade effect,poverty reduction effect,and macroeconomic growth effect of China's aid to 43 sample countries in sub-Saharan Africa.