Joris Mueller (Northwestern University): "China's Outward Foreign Aid and Domestic Strategic Motives"
Abstract: This paper tests whether China uses outward foreign aid to pursue domestic policy goals. First, I show that aid projects are allocated to firms that internalize the government's goal of stabilizing domestic employment in prefectures experiencing labor unrest. I then show that local unrest in China also influences which countries receive foreign aid and when. Finally, I exploit this variation to construct an instrumental variable for foreign aid and find positive short-term effects on recipient country GDP and consumption.
Economics
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