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• We find a positive link between cofinancing and Chinese overseas infrastructure project outcomes. • Cofinanced projects are 3.3–7.1 percentage points less likely to be cancelled or suspended compared to non-cofinanced projects. • Projects cofinanced with recipient partners are more likely to have localized implementation. • Projects cofinanced with international partners have lower carbon emission intensity and lower biodiversity risk. • Our results underscore the importance of a collaborative approach to developing infrastructure projects in the Global South. Cofinancing from government agencies, development banks, and private actors is acknowledged as an important tool to bridge the infrastructure finance gap in developing countries, but relatively little is known about outcomes for cofinanced projects. To fill this void, we explore the role of cofinancing in shaping Chinese lending and overseas development finance for infrastructure projects in terms of implementation outcomes and environmental performance. We examine a sample of 2997 infrastructure projects committed between 2000 and 2017 that were funded by Chinese finance, among which 15 percent are cofinanced. Our study shows that cofinancing correlates with higher infrastructure project completion rates, as cofinanced projects are 3.3–7.1 percentage points less likely to be cancelled or suspended than non-cofinanced ones. We also find that cofinancing with certain partners suggests specific benefits. Cofinancing with partners from the recipient country is associated with more localized implementation, whereas cofinancing with international partners has demonstrated improved environmental performance, with a 2.7 percent lower carbon dioxide emissions intensity and a 0.42 standard deviation decrease in biodiversity risks. The results suggest that cofinancing could be an effective tool to enhance infrastructure project success and achieve greater sustainable performance in Chinese lending and overseas development finance. [ABSTRACT FROM AUTHOR]

• In the post-financial crisis era, fiscal challenges have led countries adopt a more market-based means of development finance. • The state is not a sheer subsidizer distorting market in favor of policy objectives, but a risk-sharing, profit-seeking equity investor. • China's investment fund offers not only equity shares but also state-related resources to assist private firms' business expansion in Africa. • Stateness has prevented the investment fund from choosing the most financially promising projects or withdrawing from the failing ones. The post-2008 financial crisis era has witnessed a significant change in the global development landscape. Fiscal challenges have led countries that historically provided state-led, gift-like development assistance to adopt a more market-based means of development finance driven by self-interest. This allows us to reconsider the roles of the state and the market in development by focusing on the China-Africa Development Fund (CADFund), China's first official development-oriented investment fund and a subsidiary of the China Development Bank, the world's largest national development bank. This paper draws from interviews and participant observations involving CADFund, its partners, and project companies in Africa to examine how China's official finance mobilizes private investment to facilitate global development. The findings indicate that the state-led equity fund has catalyzed the start-up and expansion of Chinese overseas private enterprises by providing otherwise inaccessible equity support and channeling additional state-related resources to empower long-term business development. Meanwhile, stateness has created an adverse selection problem, preventing CADFund from choosing the most financially promising projects or withdrawing from the failing ones. The paper sheds light on the potential challenges facing development finance institutions in employing equity investment as a tool for reconciling long-term development objectives and short-term commercial objectives. [ABSTRACT FROM AUTHOR]

Summary This is an introduction to the UNU-WIDER special issue of World Development on aid policy and the macroeconomic management of aid. We provide an overview of the 10 studies, grouping them under three sub-themes: the aid–growth relationship; the supply-side of aid (including its level, volatility, and coordination of donors); and the macroeconomic framework around aid. The studies in the special issue demonstrate the centrality of research methodology, the importance of disaggregation, and the need to account for country-specific situations and problems. This introduction concludes that the sometimes “over heated” debate on aid needs redirecting toward more rigorous analysis, in which the advantages—and disadvantages—of using aid for development can be evaluated in a calmer manner. [ABSTRACT FROM AUTHOR]

Summary: In this introductory essay to the special issue, we introduce a new dataset of foreign assistance, AidData, that covers more bilateral and multilateral donors and more types of aid than existing datasets while also improving project-level information about the purposes and activities funded by aid. We utilize that data to provide a brief overview of important trends in foreign aid. Contributors to this special issue draw on AidData as well as other sources to analyze aid transparency, “new” donors (not previously described or analyzed), aid allocation, and aid effectiveness. Our recurring theme in this introductory essay is that AidData and these initial academic projects refine rather than revolutionize our understanding of aid. The database has added significant numbers of new projects, dollar amounts, donors, and details about those projects, though there is much more yet to add. We worry that aid debates have been driven by too little information, and that many claims are based on limited or very poor evidence. Rectifying these problems will not be instantaneous: refining knowledge takes a lot of time and hard work. The common feature of the papers in this special issue is their careful attention to nuance and detail. In spite of what some recent authors have claimed, aid is neither a simple solution nor a sufficient cause of most problems in developing countries; its motivations, distribution, and effects are complex, and shifting. Capturing this complexity requires detailed data, careful thought, and sophisticated methods that allow scholars to make conditional causal and descriptive inferences. [ABSTRACT FROM AUTHOR]

Summary: We predict sovereign ratings for developing countries that do not have risk ratings from agencies such as Fitch, Moody’s, and Standard and Poor’s. Ratings are important in determining the volume and cost of capital flows to developing countries through international bond, loan, and equity markets. Sovereign rating also acts as a ceiling for the foreign currency rating of sub-sovereign borrowers and can be important for their access to international debt and equity capital. We generate shadow ratings for several developing countries that have never been rated and find that unrated countries are not always at the bottom of the rating spectrum. Several of them are projected to have a “B” or higher rating, in a similar range to that of the emerging market economies with capital market access. [ABSTRACT FROM AUTHOR]

This paper analyzes the long-term effects of a liberalized regime of development banking on the growth and investment trajectory of a newly industrializing country using Puerto Rico as a case study. The paper analyzes conflicts between domestic business and the state over the form of state involvement in development during the critical juncture of the 1940s; the leading role of domestic business in the push to liberalize the developmental state project; and the effects this liberalization had on development banking, and on Puerto Rico’s long-term growth trajectory. [Copyright &y& Elsevier]

• Contrary to past conjectures, we do not find that countries close to China have better access to AIIB loans. • Instead, countries economically distant from China have better access. • This is consistent with remedial multilateralism. • Remedial multilateral allows the dominant member to strengthen weak bilateral ties and expand its sphere of influence. • Findings contrast with studies of American influence and reflect the unique circumstances facing China and the AIIB. Starting even before its founding in 2015, the Asian Infrastructure Investment Bank (AIIB) has attracted controversy. Critics—especially the U.S. administration—claim the bank is an instrument of China intended to advance narrow Chinese interests and thereby undermine U.S. influence globally. But does AIIB lending show any Chinese influence? Analysis on AIIB lending patterns has been scant. Based on AIIB loan data through the end of 2019, our analysis suggests the AIIB is facilitating "remedial multilateralism" for China, whereby countries economically distant from China have privileged access to AIIB loans. This is contrary to expectations from "supplementary multilateralism," whereby the multilateral setting reinforces existing bilateral ties. The paper advances the notions of supplementary and remedial multilateralism and provides a comprehensive analysis of AIIB loans in the first four years of the institution's operation. It, thus, contributes to the understanding of how China's rise is affecting the landscape of multilateral development finance. [ABSTRACT FROM AUTHOR]

Chinese aid comes with few strings attached, allowing recipient country leaders to use it for domestic political purposes. The vulnerability of Chinese aid to political capture has prompted speculation that it may be economically ineffective, or even harmful. We test these claims by estimating the effect of Chinese aid on subnational economic development—as measured by per-capita nighttime light emissions—and whether this effect is different at times a jurisdiction is favored politically. Contrary to the conventional wisdom, we do not find that the local receipt of Chinese aid undermines economic development outcomes at either the district level or provincial level. Nor does political favoritism in the allocation of Chinese aid towards the home regions of recipient country leaders reduce its effectiveness. Our results—from 709 provinces and 5,835 districts within 47 African countries between 2001 and 2012—demonstrate that Chinese aid improves local development outcomes, regardless of whether such aid is given to jurisdictions at times they are the birth region of the country's leader. [ABSTRACT FROM AUTHOR]