Assessment of effectiveness of China aid in financing development in Sudan

Nour, Samia Satti O. M. (2011). Assessment of effectiveness of China aid in financing development in Sudan. UNU-MERIT.

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  • Sub-type Working paper
    Author Nour, Samia Satti O. M.
    Title Assessment of effectiveness of China aid in financing development in Sudan
    Publication Date 2011
    Place of Publication Maastricht, NL
    Publisher UNU-MERIT
    Pages n/a
    Abstract This paper fills the gap in the Sudanese literature and discusses the effectiveness of Chinese aid for financing development in Sudan using new primary data at the micro level. We find that the Chinese share in total loans and grants offered to Sudan greatly increased from 17% in 1999 to 73% in 2007 out of total loans and grants offered to Sudan. We find that Chinese aid and loans to Sudan caused mixed positive-negative impacts. The positive impact is providing alternative complementary sources of finance to complement domestic capital and financing development projects. The negative impact is increasing Sudan's debts to China from 0.9% in 1999 to 13.45% in 2007 out of Sudan's total debts. We find that the effectiveness of Chinese aid to Sudan is undermined by offering aid tied to trade, FDI and importance of oil to the Chinese economy. We explain that despite the recent global economic crisis China has maintained offering tied aid to maintain its access to oil in Sudan. We find that 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 the new approaches to financing development our findings imply that even when a country is facing binding political and economic sanctions, it can still be able to finance a high growth strategy if it is endowed with natural resources and a partner that is in need for such resources.
    Keyword Financing development
    Aid effectiveness
    China
    Sudan
    JEL F30
    F34
    F35
    O10
    Copyright Holder UNU-MERIT
    Copyright Year 2011
    Copyright type All rights reserved
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    Created: Wed, 11 Dec 2013, 16:15:02 JST