Different donors, different curves: comparing non-linear governance outcomes of western and Chinese aid

This article examines the nonlinear effects of development assistance on governance in developing countries, comparing Western (OECD-DAC) and Chinese aid within a comparative policy framework. Challenging linear assumptions about aid, it shows that differences in policy design and delivery generate distinct governance trajectories across recipient states. Using country–year panel data from 2000 to 2023 and quadratic models, the analysis finds that Western aid exhibits diminishing and ultimately negative governance returns as aid intensity increases. Chinese aid, by contrast, follows a U-shaped pattern, with governance effects becoming more positive at higher levels of engagement, especially in countries with greater absorptive capacity. These results are robust across multiple governance indicators and estimation strategies. The findings show that governance outcomes depend not only on aid volume, but also on donor modalities and recipient capacity to absorb and embed external resources.