Does India Use Development Finance to Compete With China? A Subnational Analysis
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Date
2022-01
Publication Type
Working Paper
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yes
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Abstract
China and India increasingly provide aid and credit to developing countries. This paper explores whether India uses these financial instruments to compete for geopolitical and commercial influence with China (and vice versa). To do so, we build a new geocoded dataset of Indian government-financed projects in the Global South between 2007 and 2014 and combine it with data on Chinese government-financed projects. Our regression results for 2,333 provinces within 123 countries demonstrate that India’s Exim Bank is significantly more likely to locate a project in a given jurisdiction if China provided government financing there in the previous year. Since this effect is more pronounced in countries where India is more popular relative to China and where both lenders have a similar export structure, we interpret this as evidence of India competing with China. By contrast, we do not find evidence that China uses official aid or credit to compete with India through co-located projects.
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published
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Journal / series
Volume
500
Pages / Article No.
1 - 53
Publisher
KOF Swiss Economic Institute, ETH Zurich
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Edition / version
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Software
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Date collected
Date created
Subject
Development finance; Foreign aid; Official Development Assistance; official credits; south-south cooperation; China; India; geostrategic competition; Geospatial analysis
Organisational unit
02525 - KOF Konjunkturforschungsstelle / KOF Swiss Economic Institute
06330 - KOF FB Konjunktur / KOF Macroeconomic forecasting
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