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Effects of Development Aid on Donor’s Exports: A Case of the Czech Republic

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  • Dufková Gabriela

    (University of Economics in Prague, Faculty of International Relations, Department of World Economy, nám. Winstona Churchila 1938/4, 130 67 Praha 3 – Žižkov, Czech Republic)

  • Šálek Pavel

    (University of Economics in Prague, Faculty of Informatics and Statistics, Department of Econometrics, nám. Winstona Churchila 1938/4, 130 67 Praha 3 – Žižkov, Czech Republic.)

Abstract

The main goal of foreign aid should be the support of developing regions; however, due to the rising international requirements on the amount of provided aid, donors start to focus on the benefits aid can bring them as well. Both country-specific and general studies have been conducted to evaluate the return of aid from the donor’s perspective, with the majority of them suggesting that provided aid boosts donor’s exports to the developing countries. As no such analysis exists for the Czech Republic, this paper tries to fill this gap and aims to find out whether there is a positive relationship between the Czech aid and Czech exports. While employing the gravity model of international trade, the study, however, suggests that the Czech aid is not statistically significant for the volume of Czech exports. Unlike other donors, the Czech Republic thus leaves a considerable trade potential arising from the foreign aid untapped. The reasons might be other motives behind the Czech aid (both official and unofficial), poor co-operation of aid and trade policies, or changes in trade patterns.

Suggested Citation

  • Dufková Gabriela & Šálek Pavel, 2022. "Effects of Development Aid on Donor’s Exports: A Case of the Czech Republic," Review of Economic Perspectives, Sciendo, vol. 22(3), pages 171-191, September.
    • Handle: RePEc:vrs:reoecp:v:22:y:2022:i:3:p:171-191:n:1
    DOI: 10.2478/revecp-2022-0008
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    References listed on IDEAS

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    More about this item

    Keywords

    Development aid; donors; exports; gravity model; return of aid;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F35 - International Economics - - International Finance - - - Foreign Aid

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