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Temporal Dynamics of Development Aid in Africa: Comparing China and World Bank Projects : A Difference-in-Differences Study

Year: 2026
Type: dissertation
Abstract: This thesis investigates the extent to which World Bank and Chinese foreign aid causally influence neighborhood-level wealth trajectories in Africa, and how these effects vary significantly by sector and donor. The thesis confronts key evaluation challenges, particularly the scarcity of granular longitudinal outcome data, by employing a Difference-in-Differences (DiD) framework on a balanced panel. The study links high-precision geocoded aid projects from AidData to novel, satellite-derived International Wealth Index (IWI) estimates (Pettersson et al., 2023). Methodologically, it moves beyond conventional Two-Way Fixed Effects (TWFE) models by also using de Chaisemartin & d’Haultfoeuille (dCdH) DiD estimator to correct for known biases introduced by staggered treatment timing and effect heterogeneity. A central finding is that widespread violations of the parallel trends assumption are not merely a methodological challenge but reveal a substantive insight: aid is systematically targeted toward areas already experiencing economic decline. This inherent bias renders conventional TWFE estimates unreliable, as they conflate this targeting with treatment effects, showing large spurious gains for some Chinese projects. In contrast, the dCdH estimates reveal a divergent and complex landscape of aid effectiveness. World Bank interventions, for example, yield significant and persistent positive impacts in social sectors like Health and Education, yet simultaneously show negative effects in others, such as Agriculture. Chinese aid’s strongest positive gains are concentrated in specific infrastructure sectors, including Water Supply and Sanitation and Other Social Infrastructure. The thesis concludes that aid effectiveness is profoundly sectoral and donor-specific and that robust causal estimators are methodologically essential for accurately leveraging modern, high-resolution panel data to understand development aid.
Language: English
Subfield: Development
Open Access status: green
OpenAlex ID: W7139548185
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