China�s Impact on Governance in Sub-Saharan Africa by Dk14f7H

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									 China’s Effect on Governance Reform in
                  Angola




                          Source: <http://www.chinaafricarealstory.com/>


                  What Evidence is There?
Bobbie NJ Macdonald
b.n.macdonald@lse.ac.uk
MSc Student, London School of Economics and Political Science
London, UK
        Summary
                                      Source: <www.african-politics.com>

Core Question: ‘What effect is China’s growing presence in
Angola having on governance in Angola?’
Main Results:
 1. Ambiguous and Indeterminate evidence of China’s
    relationship with governance in Angola.
 2. In contrast, a significant negative relationship exists between
    trade with China and several measures of governance in
    Africa.
Discussion:
 1. Strong need for more sophisticated thinking about the political
    economy of China’s impacts on governance in Africa.
 2. ‘China in Africa’ discourse and research should shift to a
    much greater focus on African agency.
The Rise of China in Africa
             The Rise of China in Africa
 China overtook the US to become Sub-Saharan
    Africa’s largest trading partner in 2008.




Source: <http://publicandculturaldiplomacy4.wordpress.com>   Source: <www.chinatalkingpoints.com>
The Rise of China in Africa
The ‘China Alternative’
                                           Source: <www.angolaembassy-china.com>

Chinese aid and finance is purportedly
undermining the West’s efforts at promoting good
governance throughout the African continent.
   Collier (2007): “In the bottom billion it is unusually bad,
   and the Chinese are making it worse, for they are none too
   sensitive when it comes to matters of governance” (p. 86).
Evidence gap:
  Absence of empirical work on relationship between Chinese
  activities and governance across Africa.
                      China in Angola
2002:
 • Official end of civil war, Angola under significant pressure to repay
     loans from private creditors.
 •   To become eligible for debt rescheduling, Angola was heavily
     pressured by the IMF to undertake an intensive program of political
     and economic reform.
2004:
 • Just when Angola was about to agree to the IMF program, China
     Eximbank offered Angola a US$2 billion credit line.
 •   …leading to widespread criticism from the West:
      • Angola “…is avoiding pressure to clean up corruption thanks to aid from
            China” (Swann & McQuillen, November 3 2006).
        •   “The Chinese are not investing to develop the country. They have brought
            more corruption and, consequently, more poverty” (Marques de Morais,
            August 29 2012).
                  China in Angola
• But… It’s not that simple.
   • Between 2000 and 2003, Angola continued to receive billions
       of dollars in loans from Western creditors.
   •   So, what evidence really exists to suggest that China is having
       a negative impact on governance in Angola?


• Since 2004, Chinese finance and investment has become
  increasingly important in the Angolan economy.
   • In recent years, 16% of China’s total oil imports came from
       Angola, accounting for over 30% of Angola’s crude oil
       exports.
• Research question: ‘what effect is
    China’s growing presence in Angola
    having on governance in Angola?’




                                                 Source: <http://www.chinaafricarealstory.com/>
Source: <http://www.chinaafricarealstory.com/>
                       Governance Data
       Worldwide Governance Indicators Data Set:
             Six aggregated continuous measures of governance placed
             on a standardized scale ranging from -2.5 to +2.5
                     Higher score = Better performance
           Six measures:
             Voice and Accountability; Political Stability;
             Government Effectiveness; Regulatory Quality;
             Rule of Law; Control of Corruption
Country       Year      Voice &   Political   Gov. Eff.   Regulatory   Rule of   Control of
                         Acct.    Stability                Quality      Law      Corruption

Ethiopia      2010       -1.314   -1.705       -0.349       -0.884     -0.755     -0.704
         Chinese Trade Data

Total trade with China
   Available from UN Comtrade database, 1962 -
   2010
   Sum of Chinese imports and exports
  Chinese aid data not available



                                   Source: <http://edition.cnn.com>
Mean Differences: Average Changes in Governance,
          2004-2010 (one sample ttests)

                                                               Angola
WGI              Africa   Angola   Mean
                                            T score   P-value percentile
indicators        Avg      Avg     Diff.
                                                                rank

Voice & Acct.    0.003    0.021    0.018    0.057      0.957    0.617

Pol. Stability   -0.012   0.141    0.153    1.878      0.119    0.915

Gov. Eff.        -0.007   0.037    0.044    0.564      0.597    0.809

Reg. Quality     0.005    0.034    0.029    1.041      0.346    0.809

Rule of Law      0.003    0.028    0.024    0.586      0.583    0.745

Control of
                 0.012    -0.004   -0.016   -0.362     0.732    0.383
Corr.
Governance in Angola: 1996-2010
      Partial Correlations: Chinese Trade and
        Governance in Angola, 1996-2010

Total Trade
            Voice & Pol.     Gov.                     Reg. Rule of Control
with China
             Acct. Stability Eff.                    Quality Law of Corr.
(%GDP)

No lag            -0.601       0.094      -0.431      -0.167      0.539    -0.491

2 year lag        0.069        0.274       0.059      -0.198     -0.270    0.607

4 year lag        0.407        0.555       0.371      0.639       0.192    0.297
Note: Pearson’s r reported. *** = p < 0.01; ** = p < 0.05; * = p < 0.10.
      Partial Correlations: Chinese Trade and
         Governance in Africa, 1996-2010

Total Trade
            Voice &  Pol.                 Gov.       Reg.        Rule of Control
with China
             Acct. Stability              Eff.      Quality       Law    of Corr.
(%GDP)

No lag           -0.072      -0.143     -0.442*** -0.434*** -0.350*** -0.171*


2 year lag       -0.074      -0.060     -0.422*** -0.434*** -0.336*** -0.200**


4 year lag        -0.116     -0.081     -0.430*** -0.480*** -0.363*** -0.297***

Note: Pearson’s r reported. *** = p < 0.01; ** = p < 0.05; * = p < 0.10.
      Fixed Effect Regressions: Trade With China
                                                                                            (3) Control of
                                        (1) Gov. Eff.          (2) Rule of Law
                                                                                                Corr.
Trade with China (%GDP)                 - 0.0067 ***              - 0.0055 **               - 0.0102 ***
t-4                                        (0.0021)                 (0.0028)                   (0.0027)
                                          0.0024 **                0.0029 **                 0.0043 ***
ODA (%GNI)
                                           (0.0012)                 (0.0012)                  (0.0014)
                                         0.0053 ***               0.0041 ***                  0.0039 **
Total FDI (%GDP)
                                          (0.0011)                 (0.0012)                    (0.0016)
Trade, all countries exc.                  - 0.0012                  0.0002                   - 0.0019
China (%GDP)                               (0.0011)                 (0.0012)                  (0.0014)
Xit                                           ✔                         ✔                        ✔
Year dummies                                  ✔                         ✔                        ✔
F-test for joint signif.                   6.2 ***                  5.27 ***                  3.91 ***
n                                             374                      374                       374
# of countries observed                       45                        45                       45
Obs per country (avg)                         8.3                      8.3                       8.3
Note: Robust standard errors in parentheses. *** = p < 0.01; ** = p < 0.05; * = p < 0.10.
 Summary of Results: Is There Evidence
    of a ‘China Curse’ in Angola?
1. Ambiguous and indeterminate evidence of China’s
   relationship with governance in Angola.
    • Angola’s annual rate of change in governance has not been
      significantly worse than the average for Sub-Saharan Africa.
2. In contrast, a significant negative relationship exists between
   trade with China and several measures of governance in
   Africa.
    • However: these results do not address endogeneity
      concerns and provide no evidence of a causal effect
      between Chinese trade and governance within African
      countries.
       Discussion: Looking Ahead
1. Strong need for more
   sophisticated thinking about the
   political economy of China’s
   impacts on governance in
   Africa.                                Source: <http://www.zimbio.com>




2. ‘China in Africa’ discourse and
   research should shift to a much
   greater focus on African agency.
                                      Source: <http://corporateforeignpolicy.com>
 China’s Effect on Governance Reform in
                  Angola




                          Source: <http://www.chinaafricarealstory.com/>


                  What Evidence is There?
Bobbie NJ Macdonald
b.n.macdonald@lse.ac.uk
MSc Student, London School of Economics and Political Science
London, UK

								
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