Transcript China`s impact on governance reform in Angola

China’s Effect on Governance Reform in
Angola
Source: <http://www.chinaafricarealstory.com/>
What Evidence is There?
Bobbie NJ Macdonald
[email protected]
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 &
Acct.
Political
Stability
Gov. Eff.
Regulatory
Quality
Rule of
Law
Control of
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
P-value percentile
rank
WGI
indicators
Africa
Avg
Angola
Avg
Mean
Diff.
T score
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
Corr.
0.012
-0.004
-0.016
-0.362
0.732
0.383
Governance in Angola: 1996-2010
Partial Correlations: Chinese Trade and
Governance in Angola, 1996-2010
Total Trade
Voice & Pol.
Gov.
with China
Acct. Stability Eff.
(%GDP)
Reg. Rule of Control
Quality Law of Corr.
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.
with China
Acct. Stability
(%GDP)
Gov.
Eff.
Reg.
Quality
Rule of Control
Law
of Corr.
No lag
-0.072
-0.143
-0.442*** -0.434*** -0.350***
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.
-0.171*
Fixed Effect Regressions: Trade With China
(1) Gov. Eff.
(2) Rule of Law
(3) Control of
Corr.
- 0.0067 ***
(0.0021)
- 0.0055 **
(0.0028)
- 0.0102 ***
(0.0027)
ODA (%GNI)
0.0024 **
(0.0012)
0.0029 **
(0.0012)
0.0043 ***
(0.0014)
Total FDI (%GDP)
0.0053 ***
(0.0011)
0.0041 ***
(0.0012)
0.0039 **
(0.0016)
- 0.0012
(0.0011)
0.0002
(0.0012)
- 0.0019
(0.0014)
Xit
✔
✔
✔
Year dummies
✔
✔
✔
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
Trade with China (%GDP)
t-4
Trade, all countries exc.
China (%GDP)
F-test for joint signif.
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
[email protected]
MSc Student, London School of Economics and Political Science
London, UK