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Does German Development Aid boost German Exports and German Employment? A Sectoral Level Analysis

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  • Martínez-Zarzoso Inmaculada
  • Nowak-Lehmann Felicitas

    (Ibero-America Institute for Economic Research, University of Göttingen, Platz der Göttinger Sieben 3, 37073 Göttingen, Germany)

  • Klasen Stephan

    (Department of Economics and Ibero-America Institute for Economic Research, University of Göttingen, Platz der Göttinger Sieben 3; 37073 Göttingen, Germany)

  • Johannsen Florian

    (Department of Economics, University of Göttingen, Platz der Göttinger Sieben 3; 37073 Göttingen, Germany)

Abstract

This paper uses an augmented gravity model of trade to investigate the link between German development aid and sectoral exports from Germany to aid recipient countries with data from 1978–2011. The findings indicate that in the long run each dollar of German aid is associated with an average increase of US$ 0.83 US of German goods exports. The sectors that benefit the most in terms of exports and employment are machinery, electrical equipment and transport equipment. According to our estimates using input-output analysis and a partial equilibrium framework, the aid-induced gains in sectoral exports are associated with the gross employment of approximately 216,000 people.

Suggested Citation

  • Martínez-Zarzoso Inmaculada & Nowak-Lehmann Felicitas & Klasen Stephan & Johannsen Florian, 2016. "Does German Development Aid boost German Exports and German Employment? A Sectoral Level Analysis," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 236(1), pages 71-94, February.
    • Handle: RePEc:jns:jbstat:v:236:y:2016:i:1:p:71-94
    DOI: 10.1515/jbnst-2015-1003
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    Cited by:

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    2. Simplice A. Asongu & Joel Hinaunye Eita, 2023. "Promoting renewable energy consumption in Sub-Saharan Africa: how capital flight crowds-out the favorable effect of foreign aid," Working Papers 23/048, European Xtramile Centre of African Studies (EXCAS).
    3. 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.
    4. Kruse, Hendrik W. & Martínez-Zarzoso, Inma, 2016. "Transfers in the gravity equation: The case of foreign aid," University of Göttingen Working Papers in Economics 288, University of Goettingen, Department of Economics.
    5. Inma Martínez-Zarzoso & F. D. Nowak-Lehmann & S. Klasen, 2017. "Aid and Its Impact on the Donor’s Export Industry: The Dutch Case," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 29(4), pages 769-786, August.

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    More about this item

    Keywords

    international trade; foreign aid; Germany;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F35 - International Economics - - International Finance - - - Foreign Aid

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