Assessment of effectiveness of Chinese aid in competence building and financing development in Sudan

Samia S. O. M. Nour

#2014-014

This paper discusses the effectiveness of Chinese aid for competence building and financing development in Sudan using new primary data at the micro level. We find that Chinese aid and loans to Sudan caused mixed positive-negative impacts. The positive impact is competence building and providing alternative complementary sources of finance to complement domestic capital and financing development projects; the negative impact is increasing Sudanese debts to China. We find that the effectiveness of Chinese aid to Sudan is undermined by offering aid tied to trade, FDI and the importance of oil to the Chinese economy. Despite the global economic crisis, China has continued to offer tied aid to maintain access to oil in Sudan. Despite a long period of economic sanctions, Sudan was able to grow thanks to the robust and increasing intensification of special economic relations with China which relaxed the development finance constraint. From the perspective of new approaches to financing development, our findings imply that even when a country is facing binding political and economic sanctions, it can still proceed with competence building and finance a high growth strategy if it is endowed with natural resources and a partner that is in need of such resources. In addition to aid in the form of financial capital, Chinese aid and development assistance include technical assistance in the form of scholarships for training and education. The outcome of Chinese aid directed towards capacity building in Sudan implies that the majority of scholarships provided for specialization fields of Engineering, followed by Science and related fields, and finally Arts, Social Science and related fields respectively, and provided for PhD degree, followed by MSc degree, research and training respectively over the period (1999-2013).

Keywords: Competence building, financing development, aid effectiveness, China, Sudan.

JEL Classification: F35, O19

  


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