Foreign aid, national interest, and economic development, the case of China, 1949--2000

Foreign aid has emerged as a central component of international relations since World War II and thereby attracted attention from a large number of scholars. Yet few scholars have examined the determinants of developing countries' policies toward seeking and utilizing foreign aid and the policies' impact on economic development. This thesis is an attempt to fill this vacuum by studying the case of China.; Using the public choice theory of state behavior, this thesis develops a leadership model and a bureaucratic model. The two models are used to guide the inquiry into the determinants of China's foreign aid policy by explaining major shifts in the policy across time. The public theory of the state's economic role is also utilized to refine the World Bank's “market-friendly approach” and apply it to China as a test case.; Substantively, the thesis found that China's foreign aid policy has experienced three major shifts: the 1950s of relying on Soviet aid, the 1960s and 1970s of rejecting aid, and the 1980s and 1990s of attracting Western aid. The leadership incentives, which include leaders' personal and factional interests in intra-elite power struggles and their encompassing interests in economic development, explain most of variations. The bureaucrats' interests in expanding their budgets and domains and the bureaucratic structure explain the rest of variations.; The study of China's aid policy during the pre-reform era shows that under a command economy, foreign aid resources serve only the narrow interests of central planners and heavy industrial bureaucrats. This finding indicates that under a distorted policy system, the long-term economic impacts of aid, if the scale of aid is large enough to have such impacts, are bound to be negative. On the contrary, the study of China's aid policy during the reform era demonstrates that when the state takes a “market-friendly approach,” foreign aid may contribute to a significant degree to economic development.