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The Impact of Aid for Trade in Ethiopia: A CGE-based Simulation Analysis

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  • Pycroft, Jon

Abstract

Depending on the nature of the aid and the characteristics of the economy, aid and trade can either reinforce or counteract each other in fostering economic development. This paper contributes to the ongoing debate on the interaction between aid and trade by analysing the impact of aid for trade (A4T), which involves different interventions in support of the supply side of the economy. Using computable general equilibrium (CGE) simulations developed around a recently completed social accounting matrix (SAM) for Ethiopia, the impact of different types of A4T interventions have been analysed. The simulations reveal how Dutch disease effects of aid can be ameliorated through A4T policies and taking account of their supply side effects. The results suggest that, if appropriately designed, aid need not be in conflict with trade objectives.

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  • Pycroft, Jon, 2008. "The Impact of Aid for Trade in Ethiopia: A CGE-based Simulation Analysis," Conference papers 331798, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    • Handle: RePEc:ags:pugtwp:331798
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