This paper examines whether Chinese development finance is associated with faster progress toward Millennium Development Goal style targets in low- and middle-income countries. We combine AidData’s Chinese Official Finance to the Global South data with World Bank indicators and study progress through the lens of MDG gaps differences between observed outcomes and a target level. We model these gaps as dynamic processes, allowing Chinese finance to shift the trajectory while accounting for strong persistence over time. The results show that under five mortality gaps follow highly persistent AR(1) dynamics consistent with a constant proportional closing of the remaining distance to the target an empirical analogue to Zeno’s paradox in which progress continues but reaching zero is slow and asymptotic. At the same time, improvements in average gaps do not translate into broad cross-country convergence. The distribution of gaps retains high Shannon entropy, indicating that dispersion remains substantial even as mean outcomes improve. Overall, the findings suggest that MDG progress is governed by a sticky law of motion in which external finance may affect levels or rates at the margin, but global development outcomes can improve without the system collapsing into a low entropy configuration where most countries cluster near the target.
References
[1]
AidData (2017). AidData’sGlobalChineseOfficialFinanceDataset,Version1.0(Dataset). AidData at William & Mary. https://www.aiddata.org/data/chinese-global-official-finance-dataset-version-1-0
[2]
Alden, C. (2007). ChinainAfrica. Zed Books Ltd. https://doi.org/10.5040/9781350219106
[3]
Arthur, W. (1994). IncreasingReturnsandPathDependenceintheEconomy. University of Michigan Press. https://doi.org/10.3998/mpub.10029
[4]
Arthur, W. B. (1999). Complexity and the Economy. Science,284, 107-109. https://doi.org/10.1126/science.284.5411.107
[5]
Barro, R. J., & Sala-i-Martin, X. (1992). Regional Growth and Migration: A Japan-U.S. Comparison. Journal of the Japanese and International Economies, 6, 312-346. https://www.sciencedirect.com/science/article/abs/pii/088915839290002L
[6]
Becker, G. S., Philipson, T. J., & Soares, R. R. (2005). The Quantity and Quality of Life and the Evolution of World Inequality. AmericanEconomicReview,95, 277-291. https://doi.org/10.1257/0002828053828563
[7]
Beinhocker, E. D. (2006). The Origin of Wealth:Evolution, Complexity,andthe Radical Remaking of Economics. Harvard Business School Press.
[8]
Boone, P. (1996). Politics and the Effectiveness of Foreign Aid. European Economic Review,40, 289-329. https://doi.org/10.1016/0014-2921(95)00127-1
[9]
Bouchaud, J. (2013). Crises and Collective Socio-Economic Phenomena: Simple Models and Challenges. JournalofStatisticalPhysics,151, 567-606. https://doi.org/10.1007/s10955-012-0687-3
[10]
Bräutigam, D. (2009). TheDragon’sGift:TheRealStoryofChinainAfrica. Oxford University Press.
[11]
Bräutigam, D. (2011). Aid ‘with Chinese Characteristics’: Chinese Foreign Aid and Development Finance Meet the OECD-DAC Aid Regime. JournalofInternationalDevelopment,23, 752-764. https://doi.org/10.1002/jid.1798
[12]
Brautigam, D. (2020). A Critical Look at Chinese ‘Debt-Trap Diplomacy’: The Rise of a Meme. AreaDevelopmentandPolicy,5, 1-14. https://doi.org/10.1080/23792949.2019.1689828
[13]
Bräutigam, D., & Gallagher, K. P. (2014). Bartering Globalization: China’s Commodity‐Backed Finance in Africa and Latin America. GlobalPolicy,5, 346-352. https://doi.org/10.1111/1758-5899.12138
[14]
Brazys, S., & Vadlamannati, K. C. (2021). Aid Curse with Chinese Characteristics? Chinese Development Flows and Economic Reforms. Public Choice,188, 407-430. https://www.jstor.org/stable/48750085
[15]
Buckley, P. J., Clegg, L. J., Cross, A. R., Liu, X., Voss, H., & Zheng, P. (2007). The Determinants of Chinese Outward Foreign Direct Investment. JournalofInternationalBusinessStudies,38, 499-518. https://doi.org/10.1057/palgrave.jibs.8400277
[16]
Burnside, C., & Dollar, D. (2000). Aid, Policies, and Growth. AmericanEconomicReview,90, 847-868. https://doi.org/10.1257/aer.90.4.847
[17]
Clemens, M. A., Radelet, S., Bhavnani, R. R., & Bazzi, S. (2011). Counting Chickens When They Hatch: Timing and the Effects of Aid on Growth. TheEconomicJournal,122, 590-617. https://doi.org/10.1111/j.1468-0297.2011.02482.x
[18]
Cohen, J., & Dupas, P. (2010). Free Distribution or Cost-Sharing? Evidence from a Randomized Malaria Prevention Experiment. QuarterlyJournalofEconomics,125, 1-45. https://doi.org/10.1162/qjec.2010.125.1.1
[19]
Cover, T. M., & Thomas, J. A. (2006). Elementsof Information Theory (2nd ed.). Wiley-Interscience.
[20]
Doob, J. L. (1953). Stochastic Processes. Wiley.
[21]
Downs, E. S. (2011). Inside China Inc China Development Bank’s Cross-Border EnergyDeals. Brookings Institution. https://www.brookings.edu/wp-content/uploads/2016/06/0321_china_energy_downs.pdf
[22]
Dreher, A., Fuchs, A., Hodler, R., Parks, B. C., Raschky, P. A., & Tierney, M. J. (2019). African Leaders and the Geography of China’s Foreign Assistance. Journal of DevelopmentEconomics,140, 44-71. https://doi.org/10.1016/j.jdeveco.2019.04.003
[23]
Dreher, A., Fuchs, A., Hodler, R., Parks, B., Raschky, P. A., & Tierney, M. J. (2016). Aid on Demand: African Leaders and the Geography of China’s Foreign Assistance. SSRNElectronicJournal,118, 50-65. https://doi.org/10.2139/ssrn.2900351
[24]
Dreher, A., Fuchs, A., Parks, B., Strange, A. M., & Tierney, M. J. (2018). Apples and Dragon Fruits: The Determinants of Aid and Other Forms of State Financing from China to Africa. InternationalStudiesQuarterly,62, 182-194. https://doi.org/10.1093/isq/sqx052
[25]
Dreher, A., Nunnenkamp, P., & Thiele, R. (2008). Does Aid for Education Educate Children? Evidence from Panel Data. TheWorldBankEconomicReview,22, 291-314. https://doi.org/10.1093/wber/lhn003
[26]
Easterly, W. (2009). How the Millennium Development Goals Are Unfair to Africa. WorldDevelopment,37, 26-35. https://doi.org/10.1016/j.worlddev.2008.02.009
[27]
Easterly, W., Levine, R., & Roodman, D. (2004). Aid, Policies, and Growth: Comment. AmericanEconomicReview,94, 774-780. https://doi.org/10.1257/0002828041464560
[28]
Farmer, J. D., & Foley, D. (2009). The Economy Needs Agent-Based Modelling. Nature,460, 685-686. https://doi.org/10.1038/460685a
[29]
Gelpern, A., Horn, S., Morris, S., Parks, B., & Trebesch, C. (2022). HowChinaLends:ARareLookinto100DebtContractswithForeignGovernments. https://www.piie.com/publications/working-papers/how-china-lends-rare-look-100-debt-contracts-foreign-governments
[30]
Gertler, P. (2004). Do Conditional Cash Transfers Improve Child Health? Evidence from Progresa’s Control Randomized Experiment. AmericanEconomicReview,94, 336-341. https://doi.org/10.1257/0002828041302109
[31]
Henderson, J. V., Storeygard, A., & Weil, D. N. (2012). Measuring Economic Growth from Outer Space. AmericanEconomicReview,102, 994-1028. https://doi.org/10.1257/aer.102.2.994
[32]
Horn, S., Reinhart, C. M., & Trebesch, C. (2021). China’s Overseas Lending. JournalofInternationalEconomics,133, Article 103539. https://doi.org/10.1016/j.jinteco.2021.103539
[33]
Isaksson, A., & Kotsadam, A. (2018). Chinese Aid and Local Corruption. JournalofPublicEconomics,159, 146-159. https://doi.org/10.1016/j.jpubeco.2018.01.002
[34]
King, K. (2013). China’sAidandSoftPowerinAfrica. Boydell & Brewer.
[35]
Maasoumi, E. (1993). A Compendium to Information Theory in Economics and Econometrics. EconometricReviews,12, 137-181. https://doi.org/10.1080/07474939308800260
[36]
Miguel, E., & Kremer, M. (2004). Worms: Identifying Impacts on Education and Health in the Presence of Treatment Externalities. Econometrica,72, 159-217. https://doi.org/10.1111/j.1468-0262.2004.00481.x
[37]
Mishra, P., & Newhouse, D. (2009). Does Health Aid Matter? JournalofHealthEconomics,28, 855-872. https://doi.org/10.1016/j.jhealeco.2009.05.004
[38]
Pritchett, L. (1997). Divergence, Big Time. JournalofEconomicPerspectives,11, 3-17. https://doi.org/10.1257/jep.11.3.3
[39]
Quah, D. (1993). Empirical Cross-Section Dynamics in Economic Growth. European EconomicReview,37, 426-434. https://doi.org/10.1016/0014-2921(93)90031-5
[40]
Quah, D. T. (1996). Twin Peaks: Growth and Convergence in Models of Distribution Dynamics. TheEconomicJournal,106, 1045-1055. https://doi.org/10.2307/2235377
[41]
Rajan, R. G., & Subramanian, A. (2008). Aid and Growth: What Does the Cross-Country Evidence Really Show? ReviewofEconomicsandStatistics,90, 643-665. https://doi.org/10.1162/rest.90.4.643
[42]
Roodman, D. (2007). The Anarchy of Numbers: Aid, Development, and Cross-Country Empirics. TheWorldBankEconomicReview,21, 255-277. https://doi.org/10.1093/wber/lhm004
[43]
Sanyal, P., & Babu, S. (2012). Aid Effectiveness and Capacity Development: Implications for Economic Growth in Developing Countries. Modern Economy, 3, 567-577. https://www.scirp.org/journal/paperinforcitation?paperid=23326
[44]
Shannon, C. E. (1949). A Mathematical Theory of Communication. In C. E. Shannon, & W. Weaver (Eds.), TheMathematicalTheoryofCommunication (pp. 1-55). University of Illinois Press.
[45]
Sims, C. A. (2003). Implications of Rational Inattention. JournalofMonetaryEconomics,50, 665-690. https://doi.org/10.1016/s0304-3932(03)00029-1
[46]
Strange, A. M., Parks, B., Tierney, M. J., Fuchs, A., Dreher, A., & Ramachandran, V. (2017). Tracking Underreported Financial Flows:China’s Development Finance andtheAidData Methodology. AidData, William & Mary.
[47]
Taylor, I. (2006). ChinaandAfricaEngagementandCompromise. Routledge.
[48]
Theil, H. (1967) EconomicsandInformationTheory. North-Holland Publishing Company.
[49]
Wellner, L., Dreher, A., Fuchs, A., Parks, B., & Strange, A. (2022). Can Aid Buy Foreign Public Support? Evidence from Chinese Development Finance. SSRNElectronicJournal, 78 p. https://doi.org/10.2139/ssrn.4070236
[50]
Yakovenko, V. M., & Rosser, J. B. (2009). Colloquium: Statistical Mechanics of Money, Wealth, and Income. ReviewsofModernPhysics,81, 1703-1725. https://doi.org/10.1103/revmodphys.81.1703
