Foreign Aid and State Legitimacy in Sub-Saharan Africa: What Happens when China Enters the Fiscal Contract

Abstract

Few of the so-called traditional donors can look back on equally long-lasting spending activities as the People’s Republic of China. Yet, profound academic interest for Chinese development assistance has only aroused in the 2000s when the country has significantly augmented its aid volumes directed towards developing countries, particularly Sub-Saharan Africa. As Chinese aid considerably differs from traditional patterns, it has often been subject to harsh Western criticism. But does Chinese aid truly damage state-society relations in host countries? Foreign aid, in general, has repeatedly been suspected of eroding the fiscal contract and undermining state legitimacy in recipient countries as it substitutes the state in one of its most fundamental duties, the provision of public services. In recent times, the academic debate has changed, drawing a more innoxious image of the role of international donors in this respect. Using georeferenced data of Chinese aid projects and matching it with a pan-African survey, in this study, I examine the impact of an exposure to Chinese aid on Sub-Saharan African citizens’ legitimating beliefs and find a moderately positive but statistically significant causal effect. Beyond this, I explore heterogenous effects across different macro-contexts and aid-targeted sectors. By contrasting my results with the impact of World Bank aid projects, I find evidence for a China-induced rather than aid-induced effect. Potential mechanisms that could drive the results appear to be ambiguous.