YI CHE, XIAOYU HE and YAN ZHANG exploit time variation in the swift surge in China's demand for natural resources and cross‐sectional variation in countries’ propensity to export resources.
Writing in the Canadian Journal of Economics, the authors find that an increase in resource exports to China increases the probability of voting in line with China in the United Nations. “Interestingly, we observe a stronger effect for resolutions on which China and the United States cast opposite votes. We provide suggestive evidence that public goods and state capacity are possible explanations for our main results.”
To establish causation, the authors, in an article titled ‘Natural resource exports and African countries’ voting behaviour in the United Nations: Evidence from the economic rise of China’, exploited the fact that China's surging demand for natural resources has been driven largely by its rapid economic growth, which was triggered by its own institutional reforms and African countries’ propensity to export resources, which is determined mostly by natural resource endowment.
Using this arguably exogenous interaction term as an instrument for country–resource exports to China, the authors found a positive effect of resource exports to China on the share of the countries’ votes that are in line with China for important human rights resolutions in the UN.
“We further documented that this baseline result is not influenced by the assumption of an exclusion restriction, alternative dependent variable, alternative methods for constructing the instrument, alternative resolutions or subsample analysis. Interestingly, we found that the effect of interest is particularly strong if we restrict the resolutions to those on which the United States and China take different positions, and more resource exports to China actually reduce the share of African votes that are in line with the United States.
To understand the reasons why countries with more resource exports to China tend to vote more in line with China, the authors explored several possible explanations. They found that government revenue, industry value added and capital investment in the society are all increased due to the profits from resource exports to China. In turn, these countries invest more in public goods, including electricity, roads and telecommunications infrastructure. “Because the increased government revenue and public goods provision elevate the opportunity cost of rebellion, in our sample, we found that countries with more resource exports to China have a lower probability of having an intra‐state conflict, providing a safer environment for citizens in the country.
“In this sense, our paper contributes to the resource‐curse literature by showing that resources, when used appropriately, can be beneficial for the country's development.”
Che, Y., He, X. and Zhang, Y. (2021), Natural resource exports and African countries’ voting behaviour in the United Nations: Evidence from the economic rise of China. Canadian Journal of Economics/Revue canadienne d'économique. https://doi.org/10.1111/caje.12514
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