Chinese development assistance and household welfare in sub-Saharan Africa

Bruno Martorano, Laura Metzger & Marco Sanfilippo

#2018-012

By combing geocoded project-level data on Chinese development assistance with geocoded household-level data from the Demographic and Health Survey (DHS), we investigate the effect of Chinese project assistance on household welfare in 13 sub-Saharan African countries. We exploit the geographic proximity of household clusters across two different DHS survey waves (before and after the influx of Chinese aid) and use a difference-in-difference design in order to investigate the impact of Chinese aid on households' wealth and education. Our results consistently point to an overall positive effect of Chinese project assistance on household welfare: areas that receive Chinese projects are more likely to be wealthier, stay in school longer, and achieve a higher educational attainment than areas which did not receive such projects. Results are robust to various alternative model specifications.

Keywords: OECD-DAC, Aid Allocation, aid effectiveness, China, Africa, emerging donors, project level, household welfare, DHS, geocoded data

JEL Classification: F35, O19, R20