The Economic Aid To Africa By U.S. And China:A Comparative Study

The role of foreign aid in developing countries has become a subject of debate among economists over the past decade.This has been generated in large part by international attention towards the Millennium Development Goals(MDGs).Over the last two decades,the world's two largest economies,the United States and China,have emerged as the preeminent aid donors to the African continent.These two global economic powerhouses have taken two vastly different tracts concerning aid and its structuring.America's aid structure remains tethered to the notion wherein aid is based on three primary aspects: the promise of democratic change,the directed use of the funds and allocation and usage transparency.China,however,is often the opposite.Upon understanding aid and its proper quantification,it is also important to understand the goal of aid as well as the history of both the United States' and China's aid on the continent.The goal of aid may be fairly straightforward at a cursory glance.One may believe the goal of aid is simply the reduction of suffering brought on by poverty,but the United States and China also use aid in order to promote their economic interests abroad under the guise of foreign aid.Due to their varying motives,it is not surprising that the two countries' aid paradigms have also differed extensively.There are primarily three types of foreign aid: humanitarian,charity-based and bilateral.This paper will not assess the poverty reduction of the humanitarian and charity based aid categories.Humanitarian aid is used in response to catastrophes and is rarely sustained for a lasting effect Charity-based aid is also dubious for poverty reduction measurements because of their high administrative costs and poor implementation.Instead,the paper will focus on the impact of economic aid.The literature on the impact of aid on economic growth are mainly in the cross sectional analysis of developing countries.Most of these cross sectional analysis suggest that the growth impacts of foreign assistance vary among countries that pointed out the need for empirical study for individual countries.Particularly,in Niger case,the number of studies conducted so far is limited in number and scope,in which further study is requiredAssuming that a comparison of the two countries' foreign aid in Africa might enrich the study of foreign aid and deepen our understanding of the field,the study examines and compares the Chinese and the U.S.foreign assistance to African countries in terms of aid policies,management,activities and motivations then I will explore the impact of US and China‘s aid to Africa on economic.This study explores the effect of AID from US and China on economic growth in Niger over the period 1990–2014.We explore the hypothesis that foreign aid can promote growth in Africa.We test this hypothesis using a multivariate framework with Government Consumption Expenditure,FDI,Domestic investment,Unemployment,education,and Financial Development.The ARDL bounds testing approach to cointegration has been carried out to test the long-run relationship among our variables.While the findings are as follows.China emphasizes the principle of non-interference and bilateral consultation in administering foreign aid.The Chinese foreign aid is focused on infrastructure aid projects.The Chinese foreign aid motivations combine both economic and political interests.The United States foreign aid features the U.S.dominance.In tandem with the motivation to promote democracy,the United States offers a wide range of foreign aid projects designed to make an impact on various social aspects.The United States foreign assistance to the area is predominated by its security motivation.The results of empirical study indicate the existence of a long and short-run relationship between economic growth,US AID,Government Consumption Expenditure,FDI,Domestic investment,Unemployment,education,and Financial Development.We found no long-run between China AID to Niger and economic growth in Niger.We found also an insignificant relationship between China AID and economic growth in Niger.The relationship of AID with economic growth was found to be positive in some studies and insignificant or even negative in other studies.The mingled findings might be imputed to analytical structure and country specific features.This study explores the effect of AID from US and China on economic growth in Niger over the period 1990–2014.The empirical analysis has used a multivariate framework with Government Consumption Expenditure,FDI,Domestic investment,Unemployment,education,and Financial Development.The ARDL bounds testing approach to cointegration has been carried out to test the long-run relationship among our variables.The results indicate the existence of a long and short-run relationship between economic growth,US AID,Government Consumption Expenditure,FDI,Domestic investment,Unemployment,education,and Financial Development.We found no long-run between China AID to Niger and economic growth in Niger.We found also an insignificant relationship between China AID and economic growth in Niger.This paper has been divided into six parts.Chapter 1 is the introduction,including the background and significance of the study,In chapter 2 we have the literature review,The General background of the US and China economic aid to Africa are given in Section 3,Chapter 4 Here,I perform a comparative analysis of Chinese and U.S aid practice in Africa along four indicators: History,Aid Policies,Aid modalities,and Sector Preferences,Taken together,a comparative analysis along these indicators will,I argue,enhance an understanding of how Chinese aid differs from that of U.S aid practice in Africa,and how Chinese aid in Africa relates to the evolving international aid regime.Chapter 5 is the core part of this paper,which provides a comparative,data-based evaluation of the effects of aid to Africa on Sino-African and U.S.Africa economic aid to Africa.In chapter 6 and the last section concludes.This study finally suggests that African countries should accelerate the pace of advancing domestic economies and rely less on foreign assistance,in order to establish a fairer and more equal international economic order.