Paper short abstract:

This paper comments on the empirical impacts the rise of Chinese aid is having on the allocation of traditional donors' aid globally. This attests to how China is forcing a reorientation and refocussing of global aid efforts and how the rise of Chinese aid should be considered explicitly in aid.

Paper long abstract:

The rise in Chinese Official Development Assistance (ODA) in the last twenty years has rattled the traditional donors of the international development community leading to inappropriately targeted support, a lack of donor coordination, and likely poor ODA effectiveness. Though calls for donor coordination and tripartite cooperation grow louder, they continue to be ignored. A dearth of research considering the interdependence of donors' ODA allocations evades development theory and any hope for future donor coordination and tripartite cooperation. Accordingly, this paper asks whether traditional-Chinese donor competition between 2000-2017 in 144 recipient countries is significant in determining traditional donor ODA and whether this competition, if it exists, is stronger in sectors where Chinese ODA is most prevalent. This paper timely presents a global, empirical, and sectoral study investigating competition between China and traditional donors in the extension of ODA. The results highlight statistically significant elasticities of traditional donor ODA with respect to that of China at the 1% level; only projects in the infrastructure and social sectors retained significance, closely mapping the sectors where Chinese ODA is most notably observed. As such, this paper concludes that donor competition is pertinent, impactful, and highly nuanced. In so doing, this paper helps policymakers reflect upon the motives and distribution of their ODA allocations, and ensure future efforts to improve ODA effectiveness by first focusing attention on donor cooperation and addressing recipient need in ODA allocation.