Does Aid Improve Local Wealth? Micro‐Level Evidence from Africa

Abstract

AbstractThis paper adopts a micro‐level analysis to assess the effect of aid from China and the World Bank on the wealth of locals residing near aid project sites. We match geospatial data on aid projects financed by China and the World Bank in 35 African countries between 2008 and 2014 to respondents from rounds 5 and 6 of the Afrobarometer survey. The results indicate that aid from these two donors increases the wealth of the local population. Our transmission mechanism test suggests that aid impacts wealth by promoting employment opportunities.