Effects of China-Africa Foreign Aid on Developing Countries (Research Paper Sample)

ASSESSMENT OF FOREIGN DONOR’S WILLINGNESS TO DONATE AND THE EFFECTS OF CHINA-AFRICA FOREIGN AID ON DEVELOPING COUNTRIES
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Table of Contents TOC \o "1-3" \h \z \u INTRODUCTION PAGEREF _Toc38105381 \h 3LITERATURE REVIEW PAGEREF _Toc38105382 \h 5Historical background PAGEREF _Toc38105383 \h 5Past evidence to aid PAGEREF _Toc38105384 \h 5HYPOTHESIS TESTING PAGEREF _Toc38105385 \h 7DATA DESCRIPTION PAGEREF _Toc38105386 \h 7RESULTS AND DISCUSSION PAGEREF _Toc38105387 \h 7Sample Description PAGEREF _Toc38105388 \h 7Objective 1: assessing whether foreign aid is good PAGEREF _Toc38105389 \h 8Objective 2: assessing factors influencing donation PAGEREF _Toc38105390 \h 9Objective 3: assessing factors influencing conflicts in Africa PAGEREF _Toc38105391 \h 10CONCLUSION PAGEREF _Toc38105392 \h 11REFERENCES PAGEREF _Toc38105393 \h 12APPENDICES PAGEREF _Toc38105394 \h 13Appendix 1: syntax PAGEREF _Toc38105395 \h 13
INTRODUCTION
Foreign aid as described by Paul and Anke (2004) is stipulated to be assistance for development by large economies to smaller and developing nations. Super economies including France, US, Germany, and Britain have in the longest past engaged in the development transfers. China is coming up and emerging to be among the leading economies in the world and thus its contribution to development of less developed countries has widely been felt. Research has shown, that with transfers only, China had been able to commit $400 billion in 2018. China aid is regulated under its laws and guided by 8 major principles under the assistant development program. China has a long history on aid, drilling from 1950s. China has given aid inform of loans for infrastructural development. They also permit aid for the purpose of military support, generation of primary benefits and reciprocity benefits, and assistance at times of calamities (Joan et.al 2012).
Therefore, from the planned aid to developing countries, foreign aid has been seen to offer a lot to developing countries. For instance, most developing countries have rural electrification thanks to aid. In addition, most electrics and road infrastructural development are facilitated through foreign aid. China for instance, has had a great participation on development of roads, and technology. Also, most countries have benefited with technologies that assist in natural resources extraction, mainly mining and natural gas extraction. In addition, there has been a significant development with respect to health where most developing countries have been able to equip their health facilities. However, there has been a lot of critics to this development. For instance, the Chinese aid has a loan perspective, and a reciprocity perspective. Therefore, critics to the usefulness of aid have argued that aid does not lead to development, but rather slows development (Katherine et.al 2012). A lot more into it, arguments and debates have been raised against aid. Most of the people have argued that the developed economies are not of any good to developing countries. Their interventions are driven by benefits they would leap. Research has shown that most developing economies have become over reliant on aid to a point that it is seen as an automatic sources of funding. In exchange, they give up their industrial manufacturing capability. Consequently, over rely on imports for products that would have been made locally. A critic argued that if they were really for good, they should equip developing economies with all that they need to efficiently allocate their domestic local capabilities. This would have an effect on employment, raise the disposable income, improve the purchasing power, improve wages, and consequently lead to economic development. From research, development for this developing countries has not been significant. This has been used to confirm fears. Some have even alleged that it has led to conflicts in their countries.
The contradiction show that there is no clear line as what aid translates into. Research has offered contradictory arguments to the question. Therefore, it has not been clear as to whether aid leads to development or slows it. It is also not clear in literature whether it leads to conflicts, and are the donor countries giving aid out of self will or they are doing so for self-benefit. All this question, translates to the current research which will be undertaken with the main aim of assessing foreign donors willingness to donate and the effects of China-Africa foreign aid on developing countries. Therefore, the current study will be specific to;
1 Assessing whether aid is good or bad for developing countries
2 Assessing donor’s willingness to donate for aid purposes and the conditioning effect.
3 Assessing effect of aid on developing countries possibility of conflicts.
Therefore, the current research will be of importance to a wide audience. Most important, will be the implication of the study to developing countries governments. Especially results on effect of aid on conflicts and whether aid is good or bad will be useful to countries as they will assess whether they need the aid. In addition, policy makers will make use of the results on conflicts and effect to align policy that favour their countries. Also, the donors will use the information to assess whether the donations have been having positive or negative effect so that they can align them with the general objective of development.
LITERATURE REVIEW
Historical background
Aid has a long history dating back to the colonial period. It has been reported that aid from China dates back in the 1950s. The aid has been monitored and regulated through the Chinese development assistant funds. The aid had earlier been classified as a national government activity with a contribution of about 1.2% of the national budget (Katherine et.al 2012). Later aid was defined to encompass 8 principles including; equality, mutual benefits, no strings attached, respect of sovereignty, and no room for privileges among others.
Past evidence to aid
Aid development has taken root for a long period in Africa. Earlier aid was dependent on the colonising country. Later, the aspect of mutual benefit came in and thus governments looked for aid where it was favourable. This is how China got to the picture of giving aid. It was able to do so as it was growing at a very fact rate industrially and technologically. Most developing countries infrastructure, especially with regards to roads, electricity, and technological development are all thanks to aid assistance. Research has shown that aid has a positive effect on development. For instance, countries like Burundi, Kenya, Tanzania, and Congo have been able to engage a lot in technological development and road development using foreign development funds. This has been necessitated by the low domestic revenue raise which cannot be enough to provide for public goods. Other countries like south Sudan, Ethiopia, and Somalia have benefited a lot with military support and food aid (Matthew 2014).
According to Paul and Anke (2004), foreign aid has a lot of positive effects on development for both the donor and the developing countries. The report key finding was that foreign aid has led to 1.9% growth in infrastructural development. The study also revealed that most developing countries are endowed with natural resources which they have been able to extract thanks to aid support given. The study recommended for further studies to measure the monetary impact of aid in developing countries.
Another study by Katherine et.al (2012) reported that aid has led to reduced conflicts as people have been able to increase their income. Most countries have been able to open their industries and have also been able to increase employment. The developments have led to raised wages and economic development has been witnessed.
However, there are studies that have shown negative effects of aid. A report by Burcu and Daniel (2011) alleged that aid slowed development in Africa. Making reference to Burundi, Congo, Nigeria, and Liberia, the study revealed that the countries were becoming over reliant on aid to a point that they were not developing strategies for self-sustenance. Similarly, Joan et.al (2012) reported that African has not been able to develop sustainably. They still rely heavily on Agriculture with little or no transformation. Therefore, arguing that the technologies given through aid have not been able to achieve transformation which is key to development. Another study by Paul and Anke (2004) reported that African countries with the support were growing at a negative rate. The study projected that use of local resources to develop industries would led to a significant growth of about 3%.
The studies clearly indicate a deficiency either in understanding of foreign aid, its scope, and developments expected. Or there has been poor measure of the impact. The current study will thus make use of empirical models to assess and measure the effect of foreign aid.
Past evidence to donor willingness has been scanty. The available literature document that most people donate self-willingly. However, the extent of the donation is reliant on the existing condition. A research by Matthew (2014) revealed that most people were willing to donate for serious and severe conditions which threatened humanity. There were less donations for less calamities. However, a study by Katherine et.al (2012) revealed that donors were indifferent of the condition and were thus giving foreign donation equal weights. Another study by Joan et.al (2012) revealed that donation were more significant for cases that proved severe. From the description, there appears to be ...