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Aid for Trade and Recipient Countries’ Export Structure: Does Trade Policy Liberalisation Matter?

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  • Sèna Kimm Gnangnon

Abstract

This article investigates the effect of aid-for-trade (AfT) inflows on beneficiary-countries’ export structure. It additionally examines whether this effect depends on recipient-countries’ level of trade policy liberalisation. Export structure is measured by the ratio of exports of low-skilled and technology-intensive manufactures to total primary export products (LOW), the ratio of exports of medium-skilled and technology-intensive manufactures to total primary export products (MEDIUM) and the ratio of exports of high-skilled and technology-intensive manufactures to total primary export products (HIGH). The analysis has been carried out using an unbalanced panel data set of 121 countries (of which 41 least-developed countries [LDCs]) over the period 2002–2015. Using the two-step generalised methods of moments (GMM) approach, the empirical results show that AfT inflows exert a positive and significant impact on recipient countries’ export ratios LOW and HIGH, but not on the MEDIUM export ratio. For LDCs, AfT inflows influence positively LOW and negatively MEDIUM and HIGH. Furthermore, for both the full sample and LDCs, there is a strong positive effect of the cumulative AfT inflows on the three export ratios. Finally, the effect of AfT inflows on export ratios appears to be dependent on the degree of trade policy liberalisation. JEL: F13, F14, F35, O24

Suggested Citation

  • Sèna Kimm Gnangnon, 2019. "Aid for Trade and Recipient Countries’ Export Structure: Does Trade Policy Liberalisation Matter?," Arthaniti: Journal of Economic Theory and Practice, , vol. 18(1), pages 56-85, June.
    • Handle: RePEc:sae:artjou:v:18:y:2019:i:1:p:56-85
    DOI: 10.1177/0976747918806361
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    More about this item

    Keywords

    Aid for trade inflows; export structure; trade policy liberalisation; recipient-countries;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F35 - International Economics - - International Finance - - - Foreign Aid
    • O24 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy

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