Geopolitics and Aid Allocation - A Subnational Analysis of US, Chinese, and German Aid
P5-S115-5
Presented by: Tim Röthel
Geopolitics has re-emerged as one of the central motives for providing development aid. This article uses geocoded aid data at the subnational level to examine the extent to which geopolitical considerations influence the allocation of development aid. In a first step, I identify the US and China, but also Germany as the most important geopolitical actors. Subsequently, I analyze their geopolitical behavior when allocating aid projects in 129 countries aid recipient countries between 2000 and 2020. The baseline results show that geopolitical considerations matter for aid allocation. US and German aid projects are significantly affected by Chinese aid projects in the previous period. However, when interacting the aid terms with an indicator of the geopolitical importance of the recipient country, the interaction term has no additional positive effect. The results suggest that even though Chinese Aid influences US and German Aid, the effect is not primarily driven by geopolitical considerations.
Keywords: Geopolitics, Competition, Foreign Aid