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Does aid for trade promote import diversification?

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  • Dung Ly‐My
  • Hyun‐Hoon Lee
  • Donghyun Park

Abstract

Many studies have found that Aid for Trade (AfT) is effective in promoting the exports and imports of recipient countries. Recently, Gnangnon (The World Economy, 42, 2019 and 396) and Kim (The World Economy, 42, 2019 and 2684) found that AfT also contributes to the export diversification of recipient countries. We extend previous studies by assessing the effects of AfT on import diversification of recipient countries by estimating a two‐step System GMM on a data set of 104 countries in 2003–2016. Our empirical results reveal that AfT contributes to the diversification of both import commodities and import partners. This effect is particularly strong when partner countries are Non‐DAC countries. Our empirical evidence further strengthens the case for AfT because previous literature indicates that both export and import diversification are beneficial.

Suggested Citation

  • Dung Ly‐My & Hyun‐Hoon Lee & Donghyun Park, 2021. "Does aid for trade promote import diversification?," The World Economy, Wiley Blackwell, vol. 44(6), pages 1740-1769, June.
    • Handle: RePEc:bla:worlde:v:44:y:2021:i:6:p:1740-1769
    DOI: 10.1111/twec.13044
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    Cited by:

    1. Gnangnon, Sèna Kimm, 2022. "Effect of Aid for Trade flows on the Accession to the World Trade Organization," EconStor Preprints 261331, ZBW - Leibniz Information Centre for Economics.
    2. Gnangnon, Sèna Kimm, 2022. "Effect of structural economic vulnerability on the participation in international trade," EconStor Preprints 262004, ZBW - Leibniz Information Centre for Economics.
    3. JunYun Kim & Hongshik Lee & Joonhyung Lee, 2022. "Does Aid for Trade Promote Vertical Specialization?," Asian Economic Journal, East Asian Economic Association, vol. 36(2), pages 127-158, June.
    4. Gnangnon, Sèna Kimm, 2023. "Do Aid for Trade flows affect Technology Licensing in Recipient Countries?," EconStor Preprints 273419, ZBW - Leibniz Information Centre for Economics.
    5. 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.

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