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The impact of aid for trade on horizontal and vertical export diversification: The case of Sub-Saharan Africa and Developing Asia

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  • Vuyolwethu Vellem

    (Hefei University of Technology, Faculty of Economics, Department starts international, City of Hefei, Anhui Province, China)

  • Lukau Matezo Espoir

    (Hefei University of Technology, Faculty of Economics, Department starts international, City of Hefei, Anhui Province, China)

Abstract

This work aims to identify the existing relationship between aid-for-trade flows and export diversification in sub-Saharan Africa and to develop Asia countries. The results of the estimate, conducted by the Generalized Moments Method (GMM) over the period 1995-2019, show a positive impact of Aid for Trade on horizontal and vertical diversification of exports for the entire sample, including positive and significant effects on per capita GDP growth, gross capital formation, commercial freedom, human capital, and population growth. In the sub-Saharan African sub-sample, Aid for Trade positively impacts vertical and horizontal diversification and the other variables, such as GDP by habitat, FDI, gross capital formation, and human capital; on the other hand, in the sub-sample of Asian countries, aid has a negative impact on horizontal and vertical diversification; moreover, GDP, FDI, gross capital formation, human capital, population growth, and inflation have a positive influence. Our study compared to previous studies mainly dealt with the impact of aid on export diversification aggregated forms, but this study fills the gaps in the literature by examining the impact of trade aid on diversification. from its vertical and horizontal dimensions and contribute to the improvement of knowledge in this field. Key Words:Impact of aid, Trade, Export Diversification

Suggested Citation

  • Vuyolwethu Vellem & Lukau Matezo Espoir, 2021. "The impact of aid for trade on horizontal and vertical export diversification: The case of Sub-Saharan Africa and Developing Asia," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 10(5), pages 134-147, July.
    • Handle: RePEc:rbs:ijbrss:v:10:y:2021:i:5:p:135-147
    DOI: 10.20525/ijrbs.v10i5.1310
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    References listed on IDEAS

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    1. Josué Banga, 2019. "The green bond market: a potential source of climate finance for developing countries," Journal of Sustainable Finance & Investment, Taylor & Francis Journals, vol. 9(1), pages 17-32, January.
    2. Josué Banga, 2019. "The green bond market : a potential source of climate finance for developing countries," Post-Print halshs-01841868, HAL.
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