Official Finance Research Articles

Heterogeneous effects of economic assistance on mortality risk in violent conflicts in Africa

ABSTRACT Armed conflicts in Africa have serious harmful impacts on human well-being. Existing evidence on whether economic aid (Official Finance, OF) reduced conflicts is diverse and contested. China has become one of the world’s largest overseas financiers. Taking the impacts of China’s OFs on conflict-related mortality risk (CRMR) as a case study is representative of addressing the issue. Combining the data of China’s OFs covering 52 African countries with armed conflict data from 2000 to 2017, we employ the instrumental variable and two-stage least squares estimation to explore the relationship between China’s OFs and CRMR. Our results indicate an 18% decrease (95% confidence interval (CI): 2–34%) in CRMR in a year after the OF commitment for a 1% increase in OF amounts. The OFs in social infrastructures (e.g. health, education and civil society) had greater positive impacts on the CRMR reduction than those in economic and production sectors. More pronounced effects of OFs are observed on small-scale state-based conflicts, in countries with low-level road infrastructures than their counterparts. Our findings give the references for policy-makers to optimize the pathway of the OFs for providing better relief to war-torn regions.

Towards complete development finance data: Quantifying China's international education co‐operation and presence in the Global South

AbstractMotivationChina does not participate in the development co‐operation reporting mechanism of the Organisation for Economic Co‐operation and Development's (OECD) development co‐operation reporting mechanism, nor does it voluntarily publish overseas development finance data. Despite recent quantitative research on China's foreign aid to other sectors, such as health, no precedent exists for quantifying China's international education co‐operation (IEC).PurposeThis article will use AidData's Chinese Official Finance Dataset (AidData 2.0) to estimate the IEC using the OECD's internationally standardized definitions of development finance and frameworks for classifying IEC projects.Approach and methodsWe thoroughly examined all types of IEC projects, including official finance projects other than those that meet the definition of official development assistance (ODA). In our comparative analysis of educational aid between China and traditional donors, we focused on ODA‐like projects and examined the number of projects and funding amounts to determine China's IEC priorities.FindingsThe result shows that, between 2000 and 2017, China's IEC commitments totalled 1,524 education‐related international projects, representing 12% of the total international finance project portfolio, most of which are in Africa. Compared to the OECD framework, China prioritized higher education (n = 784, 51%) and education facilities and training (n = 244, 16%). An estimate of cumulative funding between 2000 to 2017 showed that China was the 10th largest donor of education aid to African countries, behind France, the World Bank, Germany, the United States, the EU, the United Kingdom, Canada, Japan, and the Netherlands.Policy implicationsThe findings of this study help our understanding of China's IEC finance. With China's involvement in education development aid growing in recent years and donors looking for solutions to developing countries' debt crises, this will allow for more effective collaboration, co‐ordination, and resource mobilization for both donor and recipient countries.

The sustainability of developmental programs by the U.S. and China in Sub-Saharan Africa: a comparison of effectiveness

This descriptive comparative qualitative case study examines the sustainability of development programs in Sub-Saharan Africa. We evaluated economic, social, environmental, and institutional development programs from the People’s Republic of China (PRC) and the U.S. to Sub-Saharan Africa for sustainable development to fill the research gap on these technique’s success and effects on Sub-Saharan Africa. Using purposive sampling, we chose eight Sub-Saharan African countries representing distinct geographies and economies. The College of William & Mary’s AID Data-GeoCoded Chinese Official Finance Dataset, China Africa Research Initiative, and USAID’s Foreign Aid Explorer provided data. Results revealed a complex view of Sub-Saharan Africa’s development policy success. Proposition 1, which claims China’s economic tactics exceed those of the U.S., is supported by significant infrastructure investments but presents sustainability problems. Proposition 2, praising the social development initiatives of the U.S., is supported by gains in healthcare and education in other countries. However, context-specific issues persist. Proposition 3 shows that U.S. conservation collaborations have improved environmental preservation. Proposition 4 claims that both countries’ institutional development plans fail. The results highlight local government buy-in issues and the need for adaptation. Some of the ideas find support in recent research; however, country and context differences require unique tactics. Development efforts in Sub-Saharan Africa should focus on long-term sustainability, local objectives, and environmental implications. Effective institutional growth requires adaptation and a strong awareness of local governing dynamics, and policymakers, development practitioners, and scholars may gain insight into sustainability and development projects in Sub-Saharan Africa from this research. A holistic approach that balances economic, social, environmental, and institutional factors is needed to attain sustainable development goals.

ГАРМОНІЗАЦІЯ ІНФОРМАЦІЙНОГО CЕРЕДОВИЩА СТРЕСОСТІЙКОСТІ КОРПОРАТИВНОГО СЕКТОРУ ЕКОНОМІКИ

Уже майже півтора року від початку повномасштабного вторгнення російських військ до України наш народ демонструє всьому світові наявність безцінних вітчизняних нематеріальних активів: культурних, етнічних, генетичних, інтелектуальних – у форматі мужності, рішучості, комунікативності, лідерства і стійкості. Завдяки синергійному ефекту їх поєднання з матеріальною складовою в цілому збережено макроекономічну, фінансову і зовнішню стабільність, хоча загрози деструктивних явищ посилюються. Тому, незважаючи на нашу незламність і підтримку Міжнародного валютного фонду та інше значне офіційне фінансування ззовні, перед Україною й надалі поставатимуть серйозні виклики й залишатимуться істотні потреби в грошово-кредитному ресурсі. Корпоративний сектор економіки потребує високих обсягів капіталовкладень, які є неможливими без гармонізації інформаційного простору ділової активності підприємців і роботодавців із світовими нормами і правилами дотримання принципів транспарентності, підзвітності, захисту прав власності, а також поліпшення інвестиційного клімату й подолання корупції на всіх рівнях. З використанням сучасних економічних теорій, досліджень, з одного боку, і досвіду корпоративного підприємництва в координатах регулюючої ролі наднаціональних, державних структур – з іншого, визначено методологічні засади просування найкращої практики звітування підприємств про сталий розвиток з метою їх подальшої імплементації в Україні. На основі аналізу ключових змін, які вносяться до Директив ЄС, інших міжнародних регламентів, запропоновано шляхи подальшої стандартизації розкриття інформації про стресостійкість, а також сталий розвиток суб’єктів господарювання. Обґрунтовано доречність інтеграції до звітного циклу підприємств даних щодо потенціалу шокової резилієнтності в умовах війни і повоєнної відбудови, які є вельми суттєвими.

Chinese health funding in Africa: The untold story.

The motivations behind China's allocation of health aid to Africa remain complex due to limited information on the details of health aid project activities. Insufficient knowledge about the purpose of China's health aid hinders our understanding of China's comprehensive role in supporting Africa's healthcare system. To address this gap, our study aimed to gain better insights into China's health aid priorities and the factors driving these priorities across Africa. To achieve this, we utilized AidData's Chinese Official Finance Dataset and adhered to the Organisation for Economic Co-operation and Development (OECD) guidelines. We reclassified all 1,026 health projects in Africa, originally categorized under broad 3-digit OECD-DAC sector codes, into more specific 5-digit CRS codes. By analyzing the project count and financial value, we assessed the shifting priorities over time. Our analysis revealed that China's priorities in health aid have evolved between 2000 and 2017. In the early 2000s, China primarily allocated aid to basic health personnel and lacked diversity in sub-sectors. However, after 2004, China shifted its focus more toward basic infrastructure and reduced emphasis on clinical-level staff. Furthermore, China's interest in addressing malaria expanded both in scale and depth between 2006 and 2009. This trend continued in 2012 and 2014 when China responded to the Ebola outbreak by shifting its focus from basic infrastructure to infectious diseases. In summary, our findings demonstrate the changes in China's health aid strategy, starting with addressing diseases already eliminated in China and gradually transitioning towards global health security, health system strengthening, and shaping the governance mechanisms.

Does China's aid boost firm performance in recipient countries?

The effectiveness of China's aid has been highly debated. Our study uses firm-level data from the WBES and Global Chinese Official Finance Dataset to explore the impact of China's aid on firm performance using an instrumental variable analysis. The results show that China's aid has a positive impact on enterprise performance. We complemented our empirical tests by investigating the potential channels. China's aid may promote firm performance through the alleviation of infrastructure constraints. And it also relaxes financing constraints for firms. This study contributes to the literature by confirming the effectiveness of China's aid and highlights its implications for policymaking.

KEY ASPECTS AND PRIORITIES OF POST-WAR DEVELOPMENT FOR UKRAINE

Purpose. The purpose of the article is to analyze the current state of affairs of the Ukrainian economy, the legal system, as well as the position on the world political arena, in order to determine the priority steps that should be taken in the post-war period as a priority, as well as the main provisions that should be taken into account already today. Methodology of research. The theoretical and methodological basis of the article is the fundamental provisions of modern science. General scientific and special methods were used in the research process, in particular: induction and deduction – at the stage of collecting, systematizing and processing the necessary information; analysis and comparison – in the process of identifying the reflection of the current state of affairs of the Ukrainian economy; graphic – for visualization of research results; abstract and logical – for the formation of theoretical conclusions. Results. An analysis of the current state of development of the Ukrainian economy was carried out. The functioning of the legal system of Ukraine in the context of European integration is substantiated. Ukraine's priority steps on the way to post-war reconstruction are outlined. The theoretical foundations were considered and the essential characteristics of the country's reforms on the way to EU membership were systematized: law enforcement agencies, the judicial system, decentralization, the introduction of the Prozorro online public procurement system, etc. The list of necessary procedures for obtaining the status of a candidate for Ukraine in the EU was revealed. Originality. The essence of the implementation of Ukraine's obligations to obtain the status of EU membership has been scientifically substantiated. For the successful post-war reconstruction of Ukraine's economy, it is proposed to increase the share of foreign grants to 40-50% in 2024‒2026 in the structure of external official financing of the government of Ukraine, which, unlike the existing one, will make it possible to diversify sources of financing. Practical value. Conclusions and proposals based on the results of the research can be used in determining the strategic vector of Ukraine on the way to EU membership. Key words: reforms, reconstruction, post-war period, EU, state policy, institutions, budget

Analysis of Dollarization Hysteresis among North Korean Consumers

This paper quantitatively analyzes the current status of North Korean consumer payment instruments through a questionnaire survey of 292 North Korean defectors. In the 2010s, it was found that the payment experience ratio of domestic currency cash and grain decreased, while the payment experience ratio of foreign currency cash increased. The use of foreign currency reached a stage where it was spread not only as a store of value but also as a medium of exchange. However, the most frequently used payment instrument by North Korean consumers was still domestic currency cash. By region, in inland urban areas both domestic currency cash and U.S. dollars are used and in the North Korea-China border region both domestic currency cash and Chinese yuan are used, while in inland rural areas dollarization does not occur because both domestic currency cash and grain are used. Meanwhile, despite the stable price trend during 2013-2019, the dollarization hysteresis effect is appearing, and both the purchasing power risk theory and the network externality theory are considered to have explanatory power for the cause. The results of this paper suggest that as dollarization is intensifying, it is expected that more costs such as shortages of commodities will be incurred than in the past if North Korea’s de-dollarization policy is reimplemented. Also, in the case of domestic currency cards, which the North Korean authorities introduced in 2015 as part of a means of financial reform, this paper suggests that it may continue to be difficult for domestic currency cards to normalize official finance under the dollarization hysteresis.

대동법 이후 쇄마역 정비와 운영 - 남원, 임천 사례를 중심으로 -

During the Joseon dynasty, swaema refers to the conscription of horses and drivers for local administration purposes that was levied as a form of service on the local residents. Along with a majority of state- and locally-imposed services, swaema was regulated under the Daedong Law and was officially included in the system. However, Daedong Law created a structure where the official finance for the local administration was defined, it became a burden for the local administrative offices to manage the horse conscripting services while meeting the regulations. Consequently, different local administrative offices each developed diverse non-statutory countermeasures to fund the cost of horse conscription and provision. By analyzing the cases of the 18th century local administration, this article argues the following points: First, at least in the southern parts of Joseon, hiring horses was mainly related to the administrative demand and even though its expenses could not be structurally covered under the regulations, there always had to be horse conscription. Second, in these cases, the cost was distributed and paid by among the local administration, the residents, and the horse providers, implying that it was to remove imbalance of the financial burden caused by the swaema services.

중국 원조의 결정요인 분석

The purpose of this study is to examine what factors China’s foreign aid allocation affected based on the case of Mozambique. Dreher et al.(2018), the most pioneering research on Chinese aid argue that China’s foreign policy interests determine its allocation of Official Development Assistance(ODA) flows and that economic considerations determine less concessional forms of official financing(Other Official Flows, OOF). However, existing studies examining the factors of aid allocation in Western donor countries show a mixture of factors such as donors’ interest and recipients’ development. This study argues that through the Mozambique case, China’s aid is also allocated by the interaction of various factors. Utilizing the Granger Causality test, we find that while ODA flows affect exports from China to Mozambique, exports do not cause ODA. In terms of OOF, the argument of Dreher et al.(2018) was not supported. OOF is not distributed according to economic purpose. Investigating aid to the agriculture, social infrastructure, health, and education sectors, this study shows that aid is distributed for different purposes depending the sector.

Estimating Chinese bilateral aid for health: an analysis of AidData’s Global Chinese Official Finance Dataset Version 2.0

BackgroundAlthough it is difficult to quantify, previous estimates suggested that China’s global health aid has increased sharply since the early 2000s. Unlike many donors, China has no official aid reporting...

China’s Official Finance in the Global South: Whatʼs the Literature Telling Us?

Abstract In the last two decades, there have been exponential increases in Chinese loans and grants, particularly flowing to the Global South. The subsequent growth effects in the South have led to speculation about China’s development models that govern its official finance and the overall macroeconomic effects. Consequently, a considerable body of research has investigated how different Chinese development policies affect the allocation patterns and outcomes in the Global South. This paper critically reviews related scholarly works, emphasising empirical literature. It identifies that the One China Policy is unanimously the most important strategy in explaining Chinese funding, although this policy tool may not be linked to trade with China and its humanitarian assistance. Chinese finance undermines efforts to promote good governance and contributes to political extortion and environmental degradation in recipient countries by not imposing governance reform conditionality on official financing. However, this argument must be carefully weighed against the positive impact of Chinese finance on health and economic growth, among other benefits. Despite intense research efforts, further research is still needed to understand vulnerabilities associated with China’s development models. The information conveyed by the review will be of interest to foreign aid spectators seeking to learn from China’s experience.

The Janus face of stateness: China's development-oriented equity investments in Africa

The post-2008 financial crisis era has witnessed a significant change in the global development landscape. Fiscal challenges have led countries that historically provided state-led, gift-like development assistance to adopt a more market-based means of development finance driven by self-interest. This allows us to reconsider the roles of the state and the market in development by focusing on the China-Africa Development Fund (CADFund), China's first official development-oriented investment fund and a subsidiary of the China Development Bank, the world's largest national development bank. This paper draws from interviews and participant observations involving CADFund, its partners, and project companies in Africa to examine how China's official finance mobilizes private investment to facilitate global development. The findings indicate that the state-led equity fund has catalyzed the start-up and expansion of Chinese overseas private enterprises by providing otherwise inaccessible equity support and channeling additional state-related resources to empower long-term business development. Meanwhile, stateness has created an adverse selection problem, preventing CADFund from choosing the most financially promising projects or withdrawing from the failing ones. The paper sheds light on the potential challenges facing development finance institutions in employing equity investment as a tool for reconciling long-term development objectives and short-term commercial objectives.

Chinese or western finance? Transparency, official credit flows, and the international political economy of development

Why do some developing countries obtain more official finance from China vis-a-vis Western sources? This study finds borrower transparency significantly affects which governments borrow more from China. From a supply side perspective, Chinese lending agencies have incentives to lend more to untransparent borrowers. From a demand side perspective, untransparent borrowers have incentives to use Chinese finance to avoid Western pressure to become more transparent. These findings and explanations have three implications. First, they help explain variation in external debt composition across developing countries using official credit. Second, they have implications for the international political economy of developing countries’ financial ties to China. Third, they imply the use of Chinese finance may allow untransparent governments to remain so, an important implication for the political economy of development.

China's Global Finance Footprint 2005–2014: Comparing AidData and CGIT

AbstractThe growth of Chinese global official finance has stimulated great interest among foreign aid advocates. Yet, until now, a lack of systematic data reporting has limited our understanding of Chinese official finance. Against this background, this article describes and compares two internationally comparable Chinese datasets from 2005 to 2014: AidData and the China Global Investment Tracker (CGIT). This study summarises China's priority areas of investment and the actual volume of Chinese finance, including a breakdown of these estimates by region and sector. Despite significant disparities between the two databases, this study shows that Chinese investment preferences in terms of locality and priority sectors are broadly consistent with the existing pattern.

Comparing the Effects of Chinese and Traditional Official Finance on State Repression in Africa

Redressing biases in extant literature linking Chinese official finance and state repression, this article employs standard multiple regression analysis to comparatively assess the effects of different attributes of Chinese and traditional official finance on variations in rates of repression across Africa over the period of 2001-2018. Statistical outputs reveal more similarities than differences in the effects of Chinese and traditional official finance on repression. To prevent diversionary use of foreign official finance on repression, reforms towards specification of purposes of inflows in recipient African states are recommended.

Explaining digital campaign expenses: The case of the 2018 legislative elections in Colombia

ABSTRACT This paper analyses the investment in digital tools and the allocation of communication expenses in a Global South country with an uneven digital penetration rate. Data were collected for 2,563 candidates in the 2018 legislative election in Colombia, based on the official campaign finance disclosure documents. A multivariate analysis shows that particularly challengers invest in social media tools, which is a strong indication in favor of the equalization model. That such an effect is not found for radio and television expenses confirms this interpretation. Candidates on open lists are more inclined to spend on both digital and radio and television tools than candidates on closed lists. At the district level, the odds of spending on digital media increase with the digital media use, but so does the odds of spending on radio and television ads.

Financing African infrastructure: The role of China in African railways

In recent decades China has become an important source of official finance for African countries, especially for infrastructures. Most railways in Africa, built in the colonial period and then managed by state owned companies, experienced poor performances and deteriorated since independence. From the end of the last century, international financial institutions and traditional donors promoted private concessions in the railway sector, but results were generally below expectations. Based on project level data about official financial flows from the World Bank and from China, the study shows that China is now a main foreign finance provider for the railway systems in Africa. Through panel data regressions on flows at country leveland considering the determinants of funding, we find that financial allocation by China does not seem to be biased in favour of public or private management, nor to favour countries supported by the World Bank before the privatization phase. The needs of recipient countries seem to shape the allocation of funds by China, but also commercial interests play a role in this allocation. Overall funding from China seems to complement World Bank funding in the effort to fill the financing gap of the sector.

A Country-Level Analysis of Worldwide Official Financing by International Financial Institutions

This study aims to evaluate worldwide official financial flows by international financial institutions to selected 123 countries of the world. The design of the study is composed of a review of literature elicited from research databases, extraction of secondary data of World Development Indicators (WDI) 2020, and mathematical analysis. In real time, cross-sectional country-level data, a classical process of Grey Relational Analysis (GRA) has been applied. Results of the study show that Argentina, Ethiopia, Bangladesh, India, Egypt, Arab Rep., Kenya, Costa Rica, Vietnam, Chad, Tanzania, Colombia, Uzbekistan, Nepal, Indonesia, Nigeria, Rwanda, Cameroon, and Uganda have exceptionally high grey relational grade meaning thereby, having an effective system of obtaining official international financial flows. Zimbabwe, Russian Federation, Botswana, Afghanistan, Bulgaria, South Africa, Burundi, Belarus, Kazakhstan, Armenia, Pakistan, Peru, Romania, and Ukraine have poor grey relational grade meaning thereby, having a relatively weak system of obtaining official financial flows. It is a unique study that provides extensive information on the official financial flows of more than a hundred countries of the world and provides the basis for the informed opinion of policymakers, political governments, economic policymakers, researchers, and academia. It also provides valuable information useful for international financial institutions.

Aid, China, and Growth: Evidence from a New Global Development Finance Dataset

This article introduces a new dataset of official financing from China to 138 developing countries between 2000 and 2014. It investigates whether Chinese development finance affects economic growth in recipient countries. The results demonstrate that Chinese development finance boosts short-term economic growth. An additional project increases growth by between 0.41 and 1.49 percentage points 2 years after commitment, on average. While this study does not find that significant financial support from China impairs the overall effectiveness of aid from Western donors, aid from the United States tends to be more effective in countries that receive no substantial support from China. (JEL F35, O19, O47, P33, P34)