Aid for Trade Facilitation
Does foreign aid spent on trade facilitation increase trade flows of developing countries? There is an on-going and high profile discussion of aid-for-trade associated with the Doha negotiations of the World Trade Organization. There continue also...
| Main Authors: | , , |
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| Format: | Policy Research Working Paper |
| Language: | English |
| Published: |
2012
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| Online Access: | http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20090928110357 http://hdl.handle.net/10986/4255 |
| Summary: | Does foreign aid spent on trade
facilitation increase trade flows of developing countries?
There is an on-going and high profile discussion of
aid-for-trade associated with the Doha negotiations of the
World Trade Organization. There continue also questions
about how best to achieve the Millennium Development Goals.
The analysis in this paper explicitly considers how to
target aid most effectively to increase trade a
fundamental question related to the crisis and policy debate
over restarting the world trading system. Using detailed
data on aid flows from the OECD, the analysis here estimates
the responsiveness of trade flows to specific types of
foreign aid. The findings indicate that aid directed toward
promoting trade enhances the trade performance of recipient
countries: a 1 percent increase in aid directed toward trade
policy and regulatory reform (amounting to about US$11.7
million more such aid) could generate an increase in global
trade of about US$818 million. This yields a "rate of
return" on every dollar of this type of aid of about
US$697 in additional trade. As the dollar aid flow is
relatively small, such targeted aid mitigates concerns about
absorptive capacity and real exchange rate appreciation,
which may accompany larger disbursements. |
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