How does Chinese aid interact with level of democracy in poor countries?

It is a commonly accepted idea in IR theory that states have the habit of externalizing their domestic institutions [and accompanying economic and political systems] in their engagements within the international system (See Katzenstein, 1976 [pdf, gated]) – think democracy promotion, Reagan-Thatcherist free market evangelism, or Sino-Russian coziness with states that have an authoritarian bend. 

This phenomenon has non-trivial implications for development assistance. For instance, poor countries receiving capacity development assistance from say a Scandinavian liberal democracy often need to also adopt related practices beyond the narrow specific field (say tax reform) that is being addressed by the capacity development program. Many projects fail to produce the desired results because of this. Indeed past research has shown that “though aid [from wealthier, mostly Western democracies] does not affect quality of life in the aggregate, it is effective when combined with democracy, and ineffective (and possibly harmful) in autocracies.” [Kosack, 2003- pdf]

So does the effect of Chinese aid/finance to poorer countries follow this pattern? In other words, does the institutional incongruence effect also hold for autocratic donors? Image

The folks at Aid Data blog think it does: 

…… we estimate the relationship between Chinese development finance and human development in democratic and autocratic recipient countries. Our results show a negative relationship between Chinese development finance and human development in democratic countries. Interestingly, these results also suggest that Chinese development finance can successfully promote HDI growth for autocratic recipients. Kosack found the opposite pattern in his study of Western aid.

The findings are preliminary and may not withstand robustness checks, but all the same interesting.

More on this here.

Also, check out the Economist for a neat analysis of the potential impact of a Chinese economic slowdown on African economies.

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What Obama’s re-election means for US Africa Policy

On the 14th of June this year President Obama outlined his policy for Sub-Saharan Africa. Included in the policy statement were four key strategic objectives: (1) strengthen democratic institutions; (2) spur economic growth, trade, and investment; (3) advance peace and security; and (4) promote opportunity and development.

In my view, of the four aspirational goals the one that will receive the most attention in the near future will be the third (especially security).

US strategic security interests in Africa mainly involve two key concerns: (1) China’s growing economic presence in the region and (2) the spread of Al-Qaeda linked groups in the region, stretching from Somalia to Mauritania (This is why Mali featured more prominently than the EU in the Presidential foreign policy debate). Before talking about China, here are my thoughts on the US campaign against  al-Qaeda in Africa.

While I don’t foresee any success in the creation of an African base for AFRICOM, the US will continue to cooperate with AU member states in fighting Islamist extremism in the region. The “successful” AU mission in Somalia could provide a blueprint for future operations against potential terror groups. The biggest lesson from Somalia is that the US cannot just pick one nation (in this case Ethiopia) to fight its wars in the region, and that a collaborative effort with the blessing of the regional umbrella organization (the AU) and others such as IGAD can deliver results.

Having helped (both directly and indirectly) in the ouster of Al-Shabaab from strategic locations in Somalia, the next big task will be dealing with the mushrooming Islamist extremism in the Sahel (especially in northern Mali but also in Niger and Nigeria).

The problem of extremism in the Sahel is further compounded by the link of some of the groups to the drug trade flowing from Latin America and into Europe. There is significant evidence that drug money has financed the activities of separatist groups in northern Mali. The fight against these groups will necessarily involve dealing with this crucial source of finance. This means that for the operation to succeed the US will have to engage in capacity building and the strengthening (and clean-up) of security institutions (especially the armies) in states like Guinea, Guinea-Bissau, South Africa, Kenya, among others, in which officials in the security sector have been implicated in the drug trade.

The Sahelian challenge might yet prove more formidable than Somalia. The latter case had relatively stable neighbors that served to contain the anarchy. The Sahel (Sahelistan, if you will) is much larger and includes some of the least governed spaces on the planet.

On China, the US (and for that matter, the rest of the West) has to change its present approach of total freak-out overt suspicion over Chinese involvement in Africa. Africans need protection from China only as much as they need protection from the West. China is not out to “exploit” Africa any more than the West has. Nobody should expect China to engage Africa more benevolently than the West did for the better part of the last 60 years (Mobutu and Bokassa were not that different from Bashir and Mugabe).

A constructive approach ought to include policies designed to strengthen African states so that they can engage China on their own terms. It is ultimately African leaders who mortgage their resources and sovereignty to China (or the West). Instead of focusing too much on China, a better approach might be one that creates strong regional organizations (like the SADC or the EAC) that can improve the bargaining power of African states.

The other policy objectives outlined by Obama appear to fall in the business-as-usual category. Democracy promotion will not yield much in the face of other more pressing priorities (notice how security has triumphed over democracy in Mali). And unless the US is willing to get involved in massive infrastructure projects like China has (last time I checked they were in 35 African states), I don’t see how it can help spur economic growth in the region (AGOA was great, but Africa needs something better). Plus the US continues to be hampered in its development-promotion efforts by its aversion to state industrial policy. It’s about time Foggy Bottom realized that it is really hard to have a thriving private sector and American-style free enterprise in places with bad roads, very few (and bad) schools, and governments that are run by personalist dictators. In these instances some corruption-laden developmental state policies may be the best way to go.