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International aid is one tool that has been used to help alleviate global poverty & stimulate development. However, there is not a one-size-fits all approach to giving aid. A Chinese-led, no-strings-attached development approach is now emerging. This fresh approach to aid may provide new opportunities, yet also new challenges.
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1
AUGUST Doug Craig 2013
INTERNATIONAL AID IS ONE TOOL THAT
HAS BEEN USED TO HELP ALLEVIATE GLOBAL
POVERTY & STIMULATE DEVELOPMENT.
HOWEVER, THERE IS NOT A ONE-SIZE-FITS
ALL APPROACH TO GIVING AID. A CHINESE-
LED, NO-STRINGS-ATTACHED DEVELOPMENT
APPROACH IS NOW EMERGING. THIS FRESH
APPROACH TO AID MAY PROVIDE NEW
OPPORTUNITIES, YET ALSO NEW
CHALLENGES.
Research focus DE VE LO PM ENT A ID : DIFF E RI NG M ODE LS
And what this means for the global poor
Introduction
The use of foreign development aid as a
tool for Western countries to influence
policy and spread neoliberal values in de-
veloping countries is a well-documented
phenomenon. Foreign development aid in
these cases is often granted provided that
the recipient countries implement various
reforms that the donor countries deem im-
portant for development, most commonly
related to democratization. Though per-
haps well-meaning in intention, the condi-
tional nature of this type of aid serves to
restrict the sovereignty of the recipient
countries, and does not respect the agency
of these countries to choose for themselves
which governance models suit them best.
But what happens when aid originates from
non-Western countries? Do the same condi-
tions apply? The emergence of South-
South cooperation suggests the possibility
of alternative approaches to the model of
Western aid. China has been particularly
active in this regard, and as the second
largest economy in the world is steadily
becoming more involved in aid projects in
developing countries. China has consist-
ently emphasized South-South collabora-
tion based on respect for state sovereignty
and the non-interference in the domestic
affairs, including methods of governance,
of other countries.
The research question thus presents itself:
is there a qualitative difference in aid, de-
pending on whether it originates from a
Western or non-Western donor country? It
is hypothesized that Western donors im-
pose higher political conditions on aid to
recipient countries, related to democratic
reforms, than do non-Western donors, and
that this translates into less maneuverability
in ‘development space’ for the aid recipi-
ents. To test this argument, this paper will
consider the case of development aid flow-
ing to Ethiopia from Canada and China.
This recipient country was chosen because
it has a significant democratic deficit, and it
is hypothesized that Western countries,
such as Canada, would therefore have a
greater incentive to attach conditions to aid
related to democratic reforms.
The question of whether an alternative
China-led model of aid poses a competition
to Western aid in the developing world is
beyond the scope of this research paper. In
addition, this paper will not focus on the
motivations of donor countries to give aid,
which may be as diverse as political, eco-
nomic, or historical reasons. Instead, this
paper will seek to understand the possible
qualitative differences of aid originating
from these different donor countries, and to
determine what these differences may mean
for the ‘development space’ of policy-
makers in the recipient countries.
This paper will first consider the current
international aid framework and identify
key concepts; will then examine the existing literature
on both the Western and China-led aid models; will
outline the argument; will present the case study of aid
to Ethiopia; and finally will close with an evaluation of
findings and conclusion.
International Aid Framework, Key Concepts
In order to better understand the context of
2
contemporary international aid, it is necessary to
first examine what international aid organizations
exist and how they define foreign aid.
OECD-DAC
The Organization for Economic Coordination and
Development (OECD) is a grouping of countries
which first emerged as the Organization for Euro-
pean Economic Cooperation (OEEC) in 1948 in
order to administer the Marshall Plan; the first
major foreign development assistance program of
its kind (OECD 2013). The Development Assis-
tance Committee (DAC) is a subcommittee of
OECD which is dedicated to administering inter-
national aid. Following the Paris Declaration on
aid effectiveness in 2005, the 34 member coun-
tries of OECD agreed that there should be cooper-
ation and harmonisation of foreign aid among
donors in order to avoid duplication and to in-
crease effectiveness (Söderberg 2010, 110). The
overarching commitment of OECD is to promote
democracy and open market economies abroad
(OECD 2013). Canada is a current member of
OECD through the Canadian International Devel-
opment Agency (CIDA 2013).
OECD defines official development assistance as:
“flows of official financing to developing coun-
tries provided by official agencies which have a
clear development and anti-poverty purpose and
are at least partly concessional in nature” (OECD
2013). Aid conditionality refers to the use of
conditions attached to a loan, debt relief, bilateral
aid, or membership of international organizations,
typically by the international financial institutions,
regional organizations, or donor countries (OECD
2013). Moyo further describes three types of
conditional loans in the Differing Types of Aid
Section. The distinction between official develop-
ment aid and foreign direct investment (FDI) is
thus very clear for OECD members, and it has
been observed that foreign aid responds more
directly to political openness, such as democrati-
zation, while FDI responds more to economic
openness, such as environments that have
trade liberalization and property rights protec-
tion (Alesina and Dollar 2000, 2).
FOCAC
China is not a member of OECD, which is no
surprise, since China’s own domestic political
system is not democratic. In addition, China
has pursued and is still pursuing strong state-
led development in contrast to the open-
market policies advocated by the OECD.
The Forum on China-African Cooperation
(FOCAC) was first launched in October of
2000, during which time forty-four African
countries sent their foreign ministers and eco-
nomic development officers to Beijing. Dur-
ing this initial meeting, Beijing pledged that
China would establish a list of new aid and
development programs in Africa, comprised of
debt relief, training programs, and an invest-
ment fund (Brautigam 2009, 77). The under-
lying goal of the creation of the forum is to
move economic cooperation between Africa
and China forward, with a focus on ‘common
prosperity’. Overall, there have been five
summits to date since the inception of
FOCAC, the most recent taking place in 2012
(FOCAC 2013).
In spite of the creation of FOCAC, several
challenges arise with conceptualizing Chinese
foreign aid. To begin, there is no centralized
foreign aid agency to disburse funds and aid is
often given in an ad hoc manner without coor-
dination or regularization of payments, unlike
the inherent organization and coordination of
OEDC-DAC (Brautigam 2009, 77). In addi-
tion, there are no agreed upon definitions of
aid offered by Chinese policymakers, and thus
the lines between aid and investment become
blurred. The Chinese government does not
release reports on official development aid,
and so estimates vary and Chinese aid is there-
fore difficult to quantify. It can be said, how-
ever, that compared to Western donors, China
commits a relatively small portion of aid as
defined by OECD, which encompasses areas
such as development grants, humanitarian
assistance, social welfare programs, and food
aid (Fischer et al. 2009, 1). Also, China gen-
erally provides little military and security
related aid assistance.
Although few of China’s activities fit the
OEDC definition of official development aid
as described in the previous Section, it can be
said that China’s economic activities in devel-
oping countries are supported by the Chinese
government and provide benefits to recipient
countries that may not otherwise be available.
Indeed, it has been argued that many Chinese-
government economic investments in the de-
veloping world should be considered aid ra-
ther than FDI because they are secured by
official bilateral agreements, do not impose
financial risk on the involved Chinese govern-
ment-owned businesses, and/or do not neces-
sarily result in the Chinese ownership of for-
eign assets (Fischer et al. 2009, 2). In contrast
to the clear OECD conceptualization of for-
eign aid, the Chinese distinction between aid
and FDI is not as clear. The Chinese model of
aid will be further elaborated upon in the
second part of the next Section.
Differing Approaches to Aid
To understand the role that foreign aid and
conditionality play in development, let us turn
to the literature to uncover the different ap-
proaches. This section will first consider the
Western then non-Western models of aid, and
then provide a critique of each model.
In the West, the project of international devel-
opment aid began with the Marshall Plan after
World War II to rebuild Europe and also fol-
lowing the decolonization process of the
1960s. During the 1980s, international finan-
cial institutions such as the IMF used loan
conditions as part of the structural adjustment
programs to force developing countries to
liberalize their markets and adopt free market
policies and programs (Geo-Jaja and Mangum
2001, 33). This period saw the strict condi-
tions as amounting to blackmail on developing
nations who had little choice but to comply,
and who saw relatively little development as a
result of the forced economic reforms (Geo-
Jaja and Mangum 2001, 39). After the failure
of the structural adjustment programs to stim-
ulate development, the focus of market liberal-
isation remained embedded in foreign aid
projects but increasing attention was starting
to be paid to political liberalisation (Sörensen
2010, 1). This Western approach to aid de-
scribed the problem of underdevelopment in
Africa as largely due to ‘poor governance’,
and thus the remedy was to encourage ‘good
governance’, meaning liberal democracy,
through the provision of conditional foreign
aid (Sörensen 2010, 1).
Arthur Goldsmith focuses his analysis on the
effects of aid on political performance. Gold-
smith’s view of development is largely shaped
by the ‘Washington Consensus’, in that de-
mocracies are economically beneficial for
poor countries; thus aid programs should focus
on rewarding democratic reforms in the
3
developing countries. Implicit in Goldsmith’s
analysis is the assumption that democratization
leads to development. In addition, Goldsmith
speaks of the ‘inherent value’ of democracy for
these underdeveloped regions, however this may
indicate the presence of a normative bias that he is
inserting into his analysis (Goldsmith 2001, 134).
Goldsmith acknowledge what he describes as
‘moral hazard’, in which the provision of aid can
lead to the opposite effect of what the donors are
intending, and indeed “prolong the life of some
corrupt and incompetent regimes by giving them a
sense of security” (Goldsmith 2001, 126). In
order to counteract this effect, donor countries
attach conditions to aid.
Following the Washington Consensus
approach to development, donors will
often give aid with strings attached in
order to spread certain values such as
civil liberties, democratic principles,
respect for human rights, and to support civil soci-
ety (Copson 2007, 63). Goldsmith views foreign
aid therefore as a tool to induce democratic
change, and so by providing conditional loans
with the intent to reward cooperating regimes, aid
or the denial of aid, becomes a carrot-and-stick
tool of developed countries to influence policy in
the developing world (Goldsmith 2001, 138). A
critique of Goldsmith is that he seems to assume
that it is possible for democratic values to be ex-
ternally given to a developing country in a top-
down approach, through the provision of condi-
tional aid, yet he does not consider whether this
arrangement is politically sustainable in the long
term.
He concludes his analysis by asserting that
“African states have gained more than they have
lost by accepting aid”, and that any deficiency in
governance is not due to the presence of foreign
aid but rather the lack of legitimacy and relative
youth of these countries (Goldsmith 2001, 144).
For Goldsmith, therefore, conditional foreign aid
only contributes positively to the development
of countries in the global South.
In contrast to Goldsmith, while Wade is not
specifically opposed to foreign aid itself, he is
rather critical of the spread of neoliberal val-
ues in the developing world, and asserts that
the rules, or conditions, being written into
multilateral/bilateral agreements, including aid
agreements, actively prevent developing coun-
tries from pursuing policies which
were available to currently developed
countries when they were in the pro-
cess of developing (Wade 2003,
622). These conditions thus act to
restrict the ‘development space’ and
also ‘self-determination space’ available to
recipient countries (Wade 2003, 622). The
presence of politically conditional foreign aid
effectively strips the developing countries of
the ability to choose for themselves which
governance models suit them best, thus limit-
ing their agency and sovereignty in the inter-
national arena. This paper will test whether
the development space available to developing
countries is influenced by the type of aid it
receives, and what type of conditions can in-
fluence this development space.
Chang echoes Wade’s assertion, by observing
that currently developed countries were much
less empirically democratic when
they were in the process of devel-
oping than they are today (Chang
2003). Following this line of rea-
soning, it is therefore hypocritical
of Western, developed countries
today to impose conditions on
foreign aid related to democratic reforms with
the expectation that this will lead to economic
development, when historical evidence shows
that it was not through democratization that
Western countries developed themselves.
Opponents of the Western approach to foreign
aid suggest that the act of giving aid is in fact
counterproductive. Moore frames his argu-
ment in terms of fiscal sociology, and he as-
serts that the sources of state revenue have a
major impact on patterns of state formation,
and that taxation is key to developing account-
able and representative governments (Moore
2004, 298). Moore describes how rentierism
often emerges when the government of an
underdeveloped country has access to un-
earned income, including natural resource
rents like oil and minerals and/or strategic
rents like foreign aid. Moore describes rentier
states as those which live off of unearned in-
come and so the state apparatus is funded with
little effort (Moore 2004, 304). Thus, in situa-
tions where governments rely heavily on un-
earned income such as aid, instead of taxation,
the state apparatus becomes largely autono-
mous from societal demands and the citizens
become powerless in relation to the state.
Thus, Moore advocates for a gradual decline
in foreign aid to developing countries, unlike
Goldsmith, who believes that cutting aid
would be mostly detrimental to recipient coun-
tries.
Moyo takes Moore’s argument fur-
ther, by stating that foreign aid is
the underlying cause of underdevel-
opment. She derides the paternal-
istic, carrot-and-stick approach of
developed countries which use aid as a tool to
reward cooperating regimes and which keeps
Africa in a perpetual child-like state (Moyo
2009, 31). Also, Moyo addresses supporters
of the Western aid model who point to the
Marshall Plan as an aid success story. She
says that the comparison of post-WWII Eu-
rope with contemporary Africa is a mistake.
The procurement of aid to Europe was time-
bound, and stopped altogether after a five-year
period, unlike contemporary African aid
which does not appear to have an end in sight.
Also, aid to Europe never amounted to more
than 3% of any country’s GDP, however today
in Africa aid often accounts for upwards of
15% of GDP in many countries. In this way,
aid is now viewed as a source of permanent
income for African leaders, and therefore does
not incentivize long-term financial planning or
fiscal responsibility (Moyo 2009, 36).
Moyo outlines three types of aid conditionali-
ty. The first type is procurement, in which
recipients must spend the aid on goods/
services from the donor. The second type is
when the donor selects the projects that it
wants to fund. The third type is when the
recipient agrees to policy reforms that the
donor stipulates, in order to receive the aid
package (Moyo 2009, 38). This paper will
consider whether political reforms built into
Western aid packages shrink the policy ma-
neuverability of recipients, and whether the
non-Western model of aid avoids this by
avoiding this type of conditionality. Overall,
Moyo argues that conditions in general are
mostly useless because they are difficult for
the donors to reinforce, yet the aid keeps flow-
ing in spite of this. Whether conditional in
nature or not, she is against all forms of aid
because of the inherent incentive structures,
dependency, corruption, laziness of leaders,
and erosion of trust within recipient countries
that is all an outcome of the aid relationship.
Her prescription is to replace aid with
African states have
gained more than
they have lost by
accepting aid.
Foreign aid is
the underlying
cause of under-
development.
4
investment, and that development is best pursued
through market mechanisms.
To counterbalance the dominant Western neolib-
eral approach to foreign aid, an alternative China-
led approach may be emerging. This has been
framed in terms of South-South cooperation, and
is commonly described as no-strings-attached aid
in which an attitude of non-interference in domes-
tic politics of the recipient countries is emphasized
(Sörensen 2010, 3). In contrast to the Western
approach, China does not use the language of
‘donor’ or ‘recipient’ in terms of aid, but rather
talks about partners in mutual benefit and win-win
collaboration. (Söderberg 2010, 109).
Similar to the West, China's foreign assistance
programs date back to the 1950s, at which time
Beijing used aid as a tool to show support for
African independence movements and as a way to
counter U.S. and Soviet influence in the region
during the Cold War period (Leggett 2005).
Though Goldsmith talks of democratization and
the expected economic benefits as the main rea-
sons for why the West chooses to give aid, he fails
to acknowledge that like China, Western countries
also participated in tying aid to political ideology
in the developing world during the Cold War. In
spite of political posturing during the Cold War,
China gradually experienced a shift in policy ori-
entation beginning in 1978 with the ascension of
Deng Xiaoping to the presidency of the People’s
Republic of China (PRC). This shift represented a
business-first for-
eign policy prefer-
ence, and resulted
in the detangling
of business from
international
politics, which
paralleled China’s
domestic transfor-
mation during the
era of opening and
reform (Gilley
2010, 103). Today, China’s foreign aid is
driven primarily by the need to secure access
to natural resources, and only secondarily for
diplomatic or political reasons (Fischer et al.
2009, 4).
As mentioned previously, quantifying and
classifying Chinese aid is difficult. China has
no standardized criteria for what it considers
aid, unlike the OECD, and it is loosely defined
within the framework of South-South coopera-
tion which includes commercial cooperation.
Regarding development grants, which com-
prise the main form of assistance by OECD
countries, China plays a small role; however,
when state-sponsored or subsidized foreign
investments and concessional loans are includ-
ed, China becomes a major source of foreign
aid (Fischer et al. 2009, 4).
Some observers have applauded Chinese aid
and investment as being able to fill gaps in
unmet development needs, and often promot-
ing projects in areas considered too risky,
unfriendly, and infeasible by other major do-
nors (Fischer et al. 2009, 4). Also, Chinese-
led development assistance is often provided
fairly quickly and easily without the usual
political, economic, social, and environmental
restrictions, safeguards, and procedures that
OECD donors generally impose (Fischer et al.
2009, 4). In addition, Chinese companies
operating in Africa are government-owned and
therefore less concerned with short term prof-
its but are instead interested in establishing a
solid foundation for long term gains (Leggett
2005).
A unique characteristic of Chinese aid is that
most of it is conducted bilaterally, and the
central government specifically avoids multi-
lateral pooling of funds, which occurs with the
OECD-DAC programs (Söderberg 2010, 125).
Söderberg describes that there is a general
Chinese emphasis on various projects geared
towards the promotion of trade and FDI op-
portunities for China. Of these, infrastructural
projects are the most common. Additionally,
China will provide commodities and provi-
sions abroad for sale in the recipient country,
and Chinese doctors and construction workers
are also sent abroad (Söderberg 2010, 125).
This represents the first type of conditionality
outlined by Moyo, procurement, but does not
represent conditional aid which is used to
induce governance reform. Sörensen and
Söderberg therefore both find that conditional
aid is used in order to boost China’s own ex-
ports abroad; however, there is a complete
absence of political conditionality.
In this way, Chinese development assistance
more closely resembles Moyo’s prescription
of pursuing development through market
mechanisms, such as investment. Even the
language the Chinese prefer to use when
speaking of aid, such as doing away with the
‘donor/recipient’ terminology, echoes Moyo’s
disdain for the hierarchical and patronizing
attitude that the West has taken when provid-
ing aid to the developing world.
Goldman would argue that China’s lack of
political conditions contributes negatively to
development, because there is no emphasis on
democratization which he sees as essential to
development. Unlike many Western countries
which bar their domestic companies from
doing business with outlaw regimes, it seems
that Beijing has no problem allowing its com-
panies to deal with many brutal and corrupt
leaders in the developing world (Leggett
2005). China has also been criticized by fail-
ing to promote environmental protection, equi-
table and sustainable development, and
democracy in these countries (Fischer et al.
2009, 4). Indeed, many Western policymakers
have expressed their frustration that China’s
use of unconditional foreign assistance is
undermining Western attempts at influencing
the behavior of aid recipients to respect human
rights, and democratic and open market re-
forms (Fischer et al. 2009, 4). Thus, interna-
tional norms surrounding good governance
may be circumvented via the Chinese model
of aid and the associated rhetoric of business
development and South-South partnerships.
Western Model of Aid Chinese Model of Aid
Donor preference for good governance, market, and political liberalisations of recipient countries.
Donor preference for stable economic environment of aid recipients. No political conditionalities.
Frames aid relationship in terms of donor and re-cipient countries.
Frames aid relationship in terms of South-South cooperation, win-win collaboration, mutual benefits.
Member of OECD and DAC, preference for multi-lateral donor harmonisation.
Non-member of OECD and DAC, preference for bilateral aid agreements.
Official development assistance separate from FDI. Official development assistance mixed with FDI.
Policy orientation open to foreign intervention in domestic governance of other countries.
Policy orientation averse to foreign intervention in domestic governance of other countries.
5
Null Hypothesis: There is no qualitative dif-
ference in aid between democratic or non-
democratic donor countries, and thus there is
no effect of donor government type on the
development space of the recipient countries.
OECD donor countries are intent on expand-
ing neoliberal values in the developing world,
such as the liberalization of markets and gov-
ernments. Non-OECD donor countries do not
share these same values, and thus do not share
the same desire to spread neoliberal values in
the developing world.
Case Study, Ethiopia
Ethiopia is a poor, landlocked country com-
prised of 68 million people. Though it lacks
significant natural resource deposits, it has
strategic regional geopolitical influence
(Leggett 2005). This is because it is the
source of the Blue Nile, and therefore can
influence the huge reserves of water flowing
into Egypt. It is the meeting place of the
largely Muslim northern Africa and the Chris-
tian South. In addition, the headquarters of
both the African Union and the United Nations
Economic Commission for Africa (UNECA)
are located in the capital city of Addis Ababa,
and Ethiopia has been described as the politi-
cal capital of Africa (Canada 2012).
In spite of these advantages, Ethiopia faces
ongoing challenges. Between 2011 and 2012
Ethiopia slid to 173rd place out of 186 coun-
tries listed in the 2013 UN Human Develop-
ment Report, and thus is internationally classi-
fied as a country with very low levels of hu-
man development (UNDP 2013). In addition,
Freedom House rates Ethiopia as ‘not free’,
meaning that “basic political rights are absent,
and basic civil liberties are widely and system-
ically denied” (Freedom House 2007, ii).
Weakness of legal institutions, the lack of a
credible government opposition, and wide-
spread government corruption are also cited as
major challenges.
Canada’s Involvement
Canada first established diplomatic relations
with Ethiopia in 1966 and which remain open
to this day (Canada 2012). Ethiopia has been
a particular focus for Canada’s international
development assistance, and in recent years
Canada has been the third largest donor to
Ethiopia. In 2001, Canada focused on estab-
lishing peace between Eritrea and Ethiopia,
and sent 450 peace keepers to the region, a
form of military aid, as part of the UN ground
force to act as a buffer zone. In 2003 Canada
signed a memorandum of understanding with
Ethiopia to allow Ethiopian exports of textiles
and apparel to have tariff-free access to Cana-
dian markets.
In 2009, Ethiopia was selected by CIDA as a
country of particular focus (CIDA 2013). The
recent emphasis of Canadian official develop-
ment aid in Ethiopia has been largely on hu-
manitarian and developmental assistance, in
which Canada provided $176.6 million CAD
through bilateral and multilateral channels
during 2010-11 for these purposes (Canada
2012). With the drought in 2011, Canada
provided an additional $74.6 million CAD in
emergency humanitarian food assistance plus
$86.5 million CAD in regional aid to be dis-
bursed amongst Ethiopia, Somalia, Kenya, and
Djibouti (Canada 2012).
In 2010, Canada participated in the European
Union Election Observation Mission in Ethio-
pia to monitor the 2010 elections, and Canada
has played an ongoing role in closely monitor-
ing the human rights and governance situation
in Ethiopia (Canada 2012).
Canada’s bilateral development cooperation
program in Ethiopia currently targets action
areas such as food security and agriculture,
children and youth development, and enabling
accountable and effective public institutions
(Canada 2012).
In terms of development assistance, Canada
supports the ongoing capacity-building in
Ethiopia of seven key democratic institutions
through the Democratic Initiatives Programme
(Canada 2012). This is a multi-donor fund of
which Canada is a member. According to
CIDA, the purpose of this program is to
“deepen the democratization process by
strengthening key state institutions including
the National Electoral Board of Ethiopia, the
Ethiopian Human Rights Commission, the
Ethiopian Institute of the Ombudsman, the
Federal Ethics and Anti-Corruption Commis-
sion, the House of Peoples' Representatives
and Regional State Councils, and the House of
Federation” (CIDA 2013). The overall pro-
gram is managed by the United Nations De-
velopment Programme (UNDP) and coordi-
nated with OECD, while the technical assis-
tance component is directly managed by
CIDA (CIDA 2013).
Thus, in addition to humanitarian and military
assistance, Canada currently provides a signif-
icant share of its aid to Ethiopia in the form of
technical assistance with the goal of achieving
As can be seen from the literature, there appears to
be a divergence in the foreign aid approach em-
ployed by Western versus non-Western donor
countries. The key differences between the West-
ern and Chinese models of aid are summarized in
the preceding table.
Let us now consider the main argument of this
paper, and turn to the case study of Ethiopia to
determine if there are indeed qualitative differ-
ences of aid originating from Canada compared to
China in practice, and what this means for
Ethiopian policy-makers.
Argument
Hypothesis 1: A Western donor country will be
more likely to attach conditions on aid to influ-
ence democratic reforms in the recipient country,
thus resulting in a shrinkage of development space
for the recipient country.
Hypothesis 2: A non-Western donor country will
be less likely to attach conditions on aid to influ-
ence democratic reforms in the recipient country,
thus resulting in the expansion of development
space for the recipient country.
6
Chinese pledge of $500 million US would be
provided via various concessional projects in
Ethiopia, and the guarantee that Ethiopia
would also receive unconditional support from
China consisting of 1.5 billion US in invest-
ments in telecommunications and infrastruc-
ture and 1.5 million for short term export
credits (van Dijk 2009, 161).
Van Dijk notes that these are soft
loans coming without conditions,
and says that in spite of these
measures, Ethiopian residents
and expatriates do not really trust
Ethiopian government policies
and therefore are not likely to invest them-
selves. President Zenawi has expressed his
disappointment of the neoliberal market re-
forms, which he describes as hallmarks of
western aid, which failed to generate the kind
of wealth many African nations were expect-
ing and, he claims, instead served to weaken
the state (van Dijk 2009, 162). This is why he
believes African leaders have turned to Chi-
na’s outstretched arms, which are free of con-
ditions. Zenawi describes how “the West
assumes that it can buy good governance in
Africa. Good governance can only come from
inside; it cannot be imposed from outside.
That was always an illusion.” (van Dijk 2009,
162). Van Dijk believes that in spite of
Zenawi’s statement about good governance
emerging from within, the reality
is that Zenawi’s regime remains
oppressive, and his political mod-
el which emulates the Chinese
domestic model does not allow
for any real opposition to his pow-
er.
Indeed, David Shinn, former US ambassador
to Ethiopia notes that China’s stance on hu-
man rights and democracy raises no objections
from the majority of Africa’s elites, since most
African leaders are neither bothered by Chi-
na’s human rights record nor its human rights
policy towards Africa (Copson 2007, 63).
Thus it appears that the Chinese model of aid,
with no-strings-attached, seems to suit African
political elites just fine.
Evaluation
From the case study, some findings can be
drawn.
Canada has exhibited a willingness to provide
both humanitarian and military aid. Current
developmental aid from Canada takes the form
of technical assistance in order to achieve
democratization in Ethiopia; thus Canada ex-
hibits a clear preference for democratic re-
forms in developing countries. An emphasis
on strengthening state institutions and achiev-
ing transparency is apparent. In addition,
there is a preference for multilateral coopera-
tion with intergovernmental organizations like
the UNDP and OECD to manage aid projects
and harmonize resources. The evidence sug-
gests that Canada participates in
the second type of conditional
aid as outlined by Moyo, in
which the donor selects the pro-
ject it wishes to fund. In Cana-
da’s case, projects related to
governance reform remain an
area of focus. Though Canada’s democratiza-
tion projects are ongoing in Ethiopia, the ex-
pected outcome of these projects is likely to
limit government corruption and
neo-patrimonial practices in Ethiopia. In this
way, leaders who lack legitimacy would thus
lose the ability, and maneuverability, to con-
solidate power through these practices. Cana-
da’s governance projects in Ethiopia thus
demonstrate an alignment with the Washing-
ton Consensus, in which there is an attempt to
create legitimacy of leaders through democra-
tization in order to stimulate development.
The weakness of this approach, as noted by
Chang and Moyo, is that there is no evidence
to suggest that democracy leads to develop-
ment, especially democracy which is inserted
into a country externally via conditional aid
projects. In addition, this type of aid serves to
limit the actions of leaders in these countries.
In contrast to Canada, China has provided
very little humanitarian or military aid to
Ethiopia. Instead, there is a preference for
investment and contracting Chinese-owned
businesses to complete projects in Ethiopia.
The Chinese-owned businesses are not pursu-
ing governance reforms in Ethiopia, and the
Chinese approach is instead to buy favors of
the local political elite in order to continue
doing business in the country. In this way, the
goal is to make Ethiopian policymakers happy
so that economic cooperation can continue,
and there is no desire from China to contribute
to the wellbeing of Ethiopian citizens who are
not in power. Thus, the Chinese presence in
Ethiopia can further contribute to bribery and
corruption. There is no interest in fostering
democracy, and aid is mixed with business.
Because of the lack of political conditions on
Chinese aid to Ethiopia, this allows Ethiopian
officials the freedom to act as they wish,
though this may mean the persistence of
bribery and neo-patrimonial practices, such as
the Ministry of Defence using the housing
complex to house its own personnel instead of
the displaced people that it was supposedly
institutional reform and democratization.
China’s Involvement
According to Leggett, few countries in the devel-
oping world have been influenced by China as
much as Ethiopia. Official relations between the
two countries were first established in 1970, yet
remained limited until the mid-1990s (Leggett
2005). She notes that these days, Chinese busi-
nessmen often pay bribes to Ethiopian officials in
order to get things done, and cites the example of
the Chinese government-owned Catic Company
which began operating in Ethiopia in 1993. Offi-
cially, bribery is not acknowledged by the Chinese
government; however, it often occurs
to the benefit of both the Chinese
companies and the recipient govern-
ing elites. Another example is the
Jianxi International Economic and
Technical Cooperation Co., another
state-owned enterprise which was
contracted by the Chinese government
to build a new housing complex in Ethiopia fol-
lowing flooding in 2006 which left several hun-
dred people homeless. Beijing pledged $4 million
US to build the new homes, and it was met with
much fanfare from the Chinese ambassador and
Ethiopian officials. However, a year after con-
struction was complete, none of the homeless
families had moved in. The complex was instead
being used by Ethiopia’s Ministry of Defence to
house its own personnel. In response, an official
from Jianxi International was quoted as saying:
“We don’t really care who uses it […] we were
given a task by the Chinese government, and as
long as Ethiopian officials are happy, our goal is
fulfilled” (Leggett 2005).
In 2006 the Ethiopian Prime Minister Meles
Zenawi returned from the third FOCAC summit in
Beijing praising the Chinese government for their
aid and development promises. These included
the promise that more Ethiopian agricultural prod-
ucts would be allowed into China duty-free, a
“As long as Ethiopian
officials are happy,
our goal is fulfilled.”
CHINESE GOVERNMENT
SPOKESMAN
It appears that the
Chinese model of aid,
with no strings attached,
suits African political
elites just fine.
7
given more or less ‘development space’? Can
they be trusted with it? Who should decide
what systems of governance are best suited for
people in developing countries? These
questions form the basis for additional areas of
inquiry.
built for.
Conclusion
This paper has now covered the international
framework of aid and key concepts, has
considered literature on the two contending mod-
els of aid, has detailed the argument, and has
examined the case study of Canadian and Chinese
aid to Ethiopia. The findings suggest that there is
indeed a qualitative difference in aid between the
Western model and the China-led model. It was
found that the Western aid model, pursued by
OECD members, preferences the expansion of
neoliberal values such as democratization and this
limits the actions of leaders in recipient countries.
Conversely, the China-led model blurs aid with
investment, and does not attach political
conditionalities. This allows for more room for
local policymakers and does not infringe upon
their decision-making process. The hypothesis is
thus supported and the null hypothesis rejected.
This paper has not sought to suggest a normative
preference of one aid model over another, but
simply serves to highlight the differences between
these two approaches. Indeed, a sort of aid
paradox emerges from this study. On one hand,
the Chinese approach respects the agency of
African elites by not attaching political
conditionalities to aid, yet the elites in these cases
may choose to use their agency in counterproduc-
tive ways in order to maintain and consolidate
power, such as resorting to bribery and neo-
patrimony. On the other hand, the Western
approach largely strips African elites of their
agency by focusing aid projects on democratic and
governance reforms, largely to combat corruption
and inefficiency, yet is an approach which Moyo
finds problematic because it treats African leaders
like children who are unable to make their own
decisions and create their own systems of
governance.
Should policymakers in the developing world be
8
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