Chinese aid and crime: Evidence from Africa

Abstract

AbstractWe study how the allocation of resources impacts localised crime rates. Recent studies on the effects of Chinese aid in Africa have increased rapidly, and this paper contributes by showing the mechanism by which aid increases crime. Using a geo‐referenced dataset of subnational allocation of Chinese projects, geographically matched with 145 701 respondents of four rounds of Afrobarometer surveys from 36 African countries, we use a difference‐in‐difference‐in‐difference (DDD) approach and an instrumental variable (IV) identification strategy to account for endogeneity and capture the effect of living near projects under implementation before or after a survey against those with no projects. We find that Chinese aid projects significantly increased crime rates in the immediate locations where the projects were implemented. The main channel of effect is the increased local economic activities leading to the availability of employable opportunities. There is a similar but smaller magnitude of the effect regarding projects funded by other donor agencies.