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Aid for Trade Effectiveness: Complementarities with Economic Integration

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  • Mariana Vijil

Abstract

type="main" xml:id="twec12140-abs-0001"> Developing countries are increasingly using regional integration as a main policy lever when pursuing a trade-led growth strategy, and today, ‘deep’ preferential trade agreements go beyond trade policy negotiations and cover trade facilitation issues. Since aid for trade (AfT) has been recognised as a powerful instrument for increasing developing countries' trade capacity by targeting internal trade costs, this article tests whether complementarities exist between this type of aid and economic integration using a gravity model on panel data for the period 1995–2005. Results indicate that AfT, when combined with economic integration, has been effective in increasing trade flows. Both South–South and North–South trade flows have benefited, and the combination of the two instruments has been particularly effective in expanding the South's exports to the North. Finally, when breaking down AfT into categories, assistance to trade-related institutions seems to generate the strongest complementarities with economic integration.

Suggested Citation

  • Mariana Vijil, 2014. "Aid for Trade Effectiveness: Complementarities with Economic Integration," The World Economy, Wiley Blackwell, vol. 37(4), pages 555-566, April.
    • Handle: RePEc:bla:worlde:v:37:y:2014:i:4:p:555-566
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    File URL: http://hdl.handle.net/10.1111/twec.2014.37.issue-4
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    Cited by:

    1. Sevde Arpaci‐Ayhan, 2023. "Foreign aid as a catalyst for improving productive capabilities in recipients," Journal of International Development, John Wiley & Sons, Ltd., vol. 35(5), pages 738-760, July.
    2. Zarlasht Razeq, . "Deep trade integration and North-South participation in global value chains," UNCTAD Transnational Corporations Journal, United Nations Conference on Trade and Development.
    3. Hyo Won Lee & Youngwan Kim, 2020. "Impacts of tangible and intangible elements of Aid for Trade on the globalisation of developing countries," The World Economy, Wiley Blackwell, vol. 43(8), pages 2153-2171, August.
    4. Inmaculada Martinez-Zarzoso, 2019. "Effects of Foreign Aid on Income through International Trade," Politics and Governance, Cogitatio Press, vol. 7(2), pages 29-52.
    5. Léopold BIARDEAU & Anne BORING, 2017. "L’impact de l’aide au développement sur les flux commerciaux entre pays donateurs et pays récipiendaires," Working Paper 464d860e-562e-4ae7-98f5-1, Agence française de développement.
    6. Jaime DE MELO & Laurent WAGNER, 2015. "Aid For Trade as finance for the Poor," Working Papers P125, FERDI.
    7. Gnangnon, Sèna Kimm & Iyer, Harish, 2021. "Effect of Aid for Trade and Foreign Direct Investment Inflows on the Utilization of Unilateral Trade Preferences offered by the QUAD countries," EconStor Preprints 238211, ZBW - Leibniz Information Centre for Economics.
    8. Kis, Katalin, 2017. "A Kelet-afrikai Közösség belső kereskedelmére ható tényezők [Factors determining the intra-regional trade of the East African Community]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(9), pages 943-969.
    9. Beata Udvari, 2016. "The Aid for Trade initiative and the export performance of the Iberian EU-countries," IWE Working Papers 225, Institute for World Economics - Centre for Economic and Regional Studies.
    10. Domenico Gattuso & Gian Carla Cassone & Domenica Savia Pellicanò, 2022. "Assessment of freight traffic flows and harmful emissions in euro-mediterranean context: scenario analyses based on a gravity model," Journal of Shipping and Trade, Springer, vol. 7(1), pages 1-18, December.

    More about this item

    JEL classification:

    • F1 - International Economics - - Trade
    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations
    • O24 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy

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