The paradoxical impact of Chinese aid and political favouritism

Introducing Dr John Cruzatti C.
Dr John Cruzatti C.

Dr John Cruzatti C. has been working as an Assistant Professor at the International Institute of Social Studies (ISS) for two years. In this interview, part of our Assistant Professor Portrait series, we introduce you to his work.

Dr John Cruzatti C. was born in Ecuador. He was raised in Guayaquil, the largest city of Ecuador where the nation’s main port attracts most of its trade and commerce. During Cruzatti’s childhood, Ecuador experienced several coup d’états. Furthermore, the so-called ‘bank holiday’ (meaning that the banks stopped working) plummeted the country into a major crisis. Ecuador’s chaotic years influenced Cruzatti C. later economic and political interests and his ensuing academic trajectory.

After obtaining a Bachelor degree in International Business, Cruzatti C. continued his studies at ESPOL (Escuela Superior Politécnica del Litoral) an acclaimed educational institute in Ecuador. His studies there, however, did not completely fulfill his interests in social economics. With questions such as: ‘What drives social action and how is it related to economic shocks?’ he set out for London to pursue a Master degree in economic sociology at LSE (the London School of Economics and Political Science). He returned to Ecuador for a teaching position at ESPOL. After working there for a couple of years, he submitted his PhD proposal to a programme at Heidelberg University. He got accepted and his qualitative research approach was replaced by a more quantitative one. His PhD research revolved around geographic and economic shocks, studying development aid related to children’s health, Free Trade Agreements (FTAs) and their impact on human development, and political favoritism. Two years ago, after completing the PhD, Cruzatti C. came to ISS. The acquittance with the institute and its staff he describes as ‘love at first sight’. He enjoys teaching here and continues doing research in the realm of development economics.

One of your recent articles is on Chinese aid in and its effects on infant mortality. In this article, you and your co-authors refer to a recent trend in development studies. It entails a shift in analyzing the effectiveness of aid from the national level to the sub-national level. What is the story behind this trend?

‘Data on the local level have only relatively recently become available. Approximately fifteen years ago most of it did not exist or did not have this level of quality. Today, these data enable us to compare the effects of aid in a certain (local) area to the effects of aid on a national level. Chinese aid is rather contested and, in some literature, described as negative. It has, however, an interesting way of functioning. Our analysis of the data reveal something that was hidden before: Chinese aid has an inherently different impact at the local level compared to the national level. It negatively impacts infant mortality at the local level, whereas at the national level, we still observe a reduction of infant mortality.’

Chinese aid has an inherently different impact at the local level compared to the national level


How can this paradox be explained? 

‘By fungibility: Chinese aid gives countries leeway to use the resources in a way that they deem best. The World Bank, on the contrary, is more stringent with its funding. Their aid comes with many conditions. The fungibility of Chinese aid money works in two ways: it can displace geographically, and it can displace per sector. Countries that receive Chinese aid money stop investing their own budgets in certain sectors and/or start transferring their money to other regions. For example, Chinese aid can have a particular aim, such as reducing malaria or the spread of HIV. Consequently, interests shift from one health sector to another. Thus, the staff of local Chinese aid projects are not focused on combatting infant mortality and these numbers start climbing again on a local level. However, the geographically displaced (non-Chinese) health development projects still focus on fighting infant mortality and have a bigger impact than the Chinese projects. Therefore, at the national level, we observe a decline in infant mortality numbers.’

In a publication that is still under review in a top journal, you and your co-authors examine ‘pork barrel favouritism' in Latin America and the Caribbean. Can you tell us more about this study?

‘Pork barrel favouritism is a common terminology in political science literature, perhaps not so much in development studies. It refers to the practices of political elites to favour particular groups of people or regions to obtain, for instance, their votes or money. It is a quid pro quo principle. Often, favouritism is studied at the executive level, focusing on presidents and prime ministers and how they favour their places of birth once they come into power. We, on the other hand, have looked at parliamentarian leaders for this study. Do they favour the regions they come? We have found that this is the case. These regions show more economic activity shortly after a leader came into power, and abruptly ends once they leave office.’

Pork barrel favouritism is a quid pro quo principle

In this publication you and the other authors also point to the importance of unstable constitutions and institutions in relation to favouritism, and how they can weaken economic redistribution. 

‘Weak institutions can explain weak economic outputs. We have observed pork barrel favouritism mainly in countries with weak institutions. For instance, countries that often change their constitution also create more space for parliamentary favouritism. Executive favouritism, in comparison, tends to be weaker as well. Presidents are less able to channel their resources to the regions they are from. Our study is coherent with stories of parliamentarians that seem to secure their post-political career by favouring specific industries. They could be building an electoral base, but they could also be building a personal network that can help them once they resign from their political offices. In future articles, we would like to further explore the personal reasons behind this.’

I wish you all the best with that! Thank you very much for this interview. 

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