The efficacy of foreign aid, especially when given to satisfy the objectives of the donor country, is highly controversial. I study this question in the context of Chinese infrastructure aid, which has received much attention from policymakers. I build a novel project and firm-level dataset to identify political determinants of Chinese aid and its economic consequences for recipient countries. I document that when there is local labor unrest in China, contracts for Chinese aid projects are allocated to large state-owned firms in the area, and employment by these firms increases. Connections between these firms and other countries mean that China's response to domestic unrest affects the allocation of Chinese aid projects to other countries. I exploit the variation in countries' receipt of aid caused by the timing and spatial variation in local labor unrest in China, together with these connections, to develop an instrument for identifying the causal effects of Chinese aid on recipients. I find large positive effects on GDP, capital formation, consumption, and employment.
Does 3G mobile internet promote the spread of political movements in and across countries?
Why does the Chinese Communist Party get involved in private firms?
Evidence from Europe, 1400-1900
This paper examines the state-building process in an important but poorly understood context: the founding of new, multi-ethnic states in post-colonial Africa. We study the Ujamaa reforms in Tanzania in 1970--1981, one of the largest policy experiments in recent history aimed at building national identity and establishing the central state as a legitimate authority. The reforms dramatically altered the nature of public education by changing the content of the curriculum and expanding access to schooling. To implement the reforms, the Tanzanian government used a concurrent policy, known as villagization, which forced much of the country's population to live together in government administrated villages. We combine differences in intensity of villagization across districts with differences across school cohorts, induced by the timing of the policy, to identify the effect of Ujamaa on citizens' attitudes. We show persistent, positive effects on citizens' identification with the nation, as measured both by survey responses and ethnic intermarriage. Treated cohorts are also more likely to express positive views for a strong central state and less likely to question state authority.