Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/258983 
Year of Publication: 
2022
Series/Report no.: 
KOF Working Papers No. 500
Publisher: 
ETH Zurich, KOF Swiss Economic Institute, Zurich
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.
Subjects: 
development finance
foreign aid
official development assistance
official credits
South-South Cooperation
China
India
geostrategic competition
geospatial analysis
JEL: 
F34
F35
F59
H77
H81
O19
O22
P33
R58
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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