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Heterogeneous effects of Aid‐for‐Trade on donor exports: Why is Japan different?

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  • Shuhei Nishitateno
  • Hayato Umetani

Abstract

This study estimates the Aid‐for‐Trade (AfT)‐export elasticity from the donor perspective, focusing on the top‐five donor countries: Japan, Germany, France, US, and UK. We find the elasticity for Japan is large, suggesting that the Japanese AfT generates a net export expansion, in contrast with the other top donors. We examine the potential mechanism behind the export creation effect of Japanese AfT using unique contract data on infrastructure‐related projects worldwide. The results suggest that Japanese AfT, highly concentrated in economic infrastructure, works as an informal tying arrangement, closely linking aid to donor exports associated with capital goods for infrastructure construction.

Suggested Citation

  • Shuhei Nishitateno & Hayato Umetani, 2023. "Heterogeneous effects of Aid‐for‐Trade on donor exports: Why is Japan different?," Review of International Economics, Wiley Blackwell, vol. 31(3), pages 1117-1145, August.
    • Handle: RePEc:bla:reviec:v:31:y:2023:i:3:p:1117-1145
    DOI: 10.1111/roie.12656
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    1. Shuhei Nishitateno, 2015. "Network Effects on Trade in Intermediate Goods: Evidence from the Automobile Industry," The Japanese Economic Review, Japanese Economic Association, vol. 66(3), pages 354-370, September.
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    More about this item

    JEL classification:

    • F35 - International Economics - - International Finance - - - Foreign Aid
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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