IDEAS home Printed from https://ideas.repec.org/a/taf/jdevst/v50y2014i9p1275-1288.html
   My bibliography  Save this article

Who Benefits from Aid for Trade? Comparing the Effects on Recipient versus Donor Exports

Author

Listed:
  • Philipp H�hne
  • Birgit Meyer
  • Peter Nunnenkamp

Abstract

Recent studies offer an ambiguous picture on the effectiveness of foreign aid in strengthening the export capacity of recipient countries. Moreover, the literature on aid for trade (AfT) has often neglected the fact that exporters in the donor countries may be among the main beneficiaries. We simultaneously estimate and compare the effects of AfT on trade in both directions. We find that AfT increases recipient exports to donors as well as recipient imports from donors. The first effect tends to dominate the latter, which contradicts the sceptical view that donors grant AfT primarily to promote their own export interests.

Suggested Citation

  • Philipp H�hne & Birgit Meyer & Peter Nunnenkamp, 2014. "Who Benefits from Aid for Trade? Comparing the Effects on Recipient versus Donor Exports," Journal of Development Studies, Taylor & Francis Journals, vol. 50(9), pages 1275-1288, September.
    • Handle: RePEc:taf:jdevst:v:50:y:2014:i:9:p:1275-1288
    DOI: 10.1080/00220388.2014.903246
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/00220388.2014.903246
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/00220388.2014.903246?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Christopher S. Adam & David L. Bevan, 2006. "Aid and the Supply Side: Public Investment, Export Performance, and Dutch Disease in Low-Income Countries," The World Bank Economic Review, World Bank, vol. 20(2), pages 261-290.
    2. Peter Nunnenkamp & Rainer Thiele, 2013. "Financing for Development: The Gap between Words and Deeds since Monterrey," Development Policy Review, Overseas Development Institute, vol. 31(1), pages 75-98, January.
    3. Laurent Wagner & Mariana Vijil, 2012. "Does Aid for Trade Export Performance? Investigating the Infrastructure Channel," Post-Print halshs-00726435, HAL.
    4. Matthias Helble & Catherine Mann & John Wilson, 2012. "Aid-for-trade facilitation," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 148(2), pages 357-376, June.
    5. Felicitas Nowak-Lehmann D. & Inmaculada Mart�nez-Zarzoso & Stephan Klasen & Dierk Herzer, 2009. "Aid and Trade - A Donor's Perspective," Journal of Development Studies, Taylor & Francis Journals, vol. 45(7), pages 1184-1202, August.
    6. Lahiri, Sajal & Raimondos-Moller, Pascalis, 1997. "Competition for aid and trade policy," Journal of International Economics, Elsevier, vol. 43(3-4), pages 369-385, November.
    7. Thierry Warin & Phanindra V. Wunnava & Hubert P. Janicki, 2009. "Testing Mundell's Intuition of Endogenous OCA Theory," Review of International Economics, Wiley Blackwell, vol. 17(1), pages 74-86, February.
    8. Mayer, Thierry & Zignago, Soledad, 2006. "Notes on CEPII’s distances measures," MPRA Paper 26469, University Library of Munich, Germany.
    9. Wagner, Don, 2003. "Aid and trade--an empirical study," Journal of the Japanese and International Economies, Elsevier, vol. 17(2), pages 153-173, June.
    10. Hristos Doucouliagos & Martin Paldam, 2009. "The Aid Effectiveness Literature: The Sad Results Of 40 Years Of Research," Journal of Economic Surveys, Wiley Blackwell, vol. 23(3), pages 433-461, July.
    11. Simone Juhasz Silva & Douglas Nelson, 2012. "Does Aid Cause Trade? Evidence from an Asymmetric Gravity Model," The World Economy, Wiley Blackwell, vol. 35(5), pages 545-577, May.
    12. Redding, Stephen & Venables, Anthony J., 2004. "Economic geography and international inequality," Journal of International Economics, Elsevier, vol. 62(1), pages 53-82, January.
    13. Anke Hoeffler & Verity Outram, 2011. "Need, Merit, or Self‐Interest—What Determines the Allocation of Aid?," Review of Development Economics, Wiley Blackwell, vol. 15(2), pages 237-250, May.
    14. Mariana Vijil & Laurent Wagner, 2012. "Does Aid for Trade Enhance Export Performance? Investigating the Infrastructure Channel," The World Economy, Wiley Blackwell, vol. 35(7), pages 838-868, July.
    15. Head, Keith & Mayer, Thierry & Ries, John, 2010. "The erosion of colonial trade linkages after independence," Journal of International Economics, Elsevier, vol. 81(1), pages 1-14, May.
    16. Jean‐Claude Berthélemy, 2006. "Bilateral Donors’ Interest vs. Recipients’ Development Motives in Aid Allocation: Do All Donors Behave the Same?," Review of Development Economics, Wiley Blackwell, vol. 10(2), pages 179-194, May.
    17. Akiko Suwa-Eisenmann & Thierry Verdier, 2007. "Aid and trade," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 23(3), pages 481-507, Autumn.
    18. Rajan, Raghuram G. & Subramanian, Arvind, 2011. "Aid, Dutch disease, and manufacturing growth," Journal of Development Economics, Elsevier, vol. 94(1), pages 106-118, January.
    19. Lucia Tajoli, 1999. "The impact of tied aid on trade flows between donor and recipient countries," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 8(4), pages 373-388.
    20. Lahiri, Sajal & Raimondos-Moller, Pascalis & Wong, Kar-yiu & Woodland, Alan D., 2002. "Optimal foreign aid and tariffs," Journal of Development Economics, Elsevier, vol. 67(1), pages 79-99, February.
    21. Fuchs, Andreas & Dreher, Axel & Nunnenkamp, Peter, 2014. "Determinants of Donor Generosity: A Survey of the Aid Budget Literature," World Development, Elsevier, vol. 56(C), pages 172-199.
    22. Jan Pettersson & Lars Johansson, 2013. "Aid, Aid for Trade, and bilateral trade: An empirical study," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 22(6), pages 866-894, September.
    23. Paul Brenton & Erik von Uexkull, 2014. "Product specific technical assistance for exports – has it been effective?," World Scientific Book Chapters, in: INTERNATIONAL TRADE, DISTRIBUTION AND DEVELOPMENT Empirical Studies of Trade Policies, chapter 18, pages 373-392, World Scientific Publishing Co. Pte. Ltd..
    24. Elhanan Helpman & Marc Melitz & Yona Rubinstein, 2008. "Estimating Trade Flows: Trading Partners and Trading Volumes," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 123(2), pages 441-487.
    25. Mark McGillivray & Oliver Morrissey, 1998. "Aid and Trade Relationships in East Asia," The World Economy, Wiley Blackwell, vol. 21(7), pages 981-995, September.
    26. James E. Anderson & Eric van Wincoop, 2003. "Gravity with Gravitas: A Solution to the Border Puzzle," American Economic Review, American Economic Association, vol. 93(1), pages 170-192, March.
    27. Bettina Kretschmer & Michael Hübler & Peter Nunnenkamp, 2013. "Does Foreign Aid Reduce Energy And Carbon Intensities Of Developing Economies?," Journal of International Development, John Wiley & Sons, Ltd., vol. 25(1), pages 67-91, January.
    28. Baier, Scott L. & Bergstrand, Jeffrey H., 2007. "Do free trade agreements actually increase members' international trade?," Journal of International Economics, Elsevier, vol. 71(1), pages 72-95, March.
    29. Mak Arvin & Bruce Cater & Saud Choudhry, 2000. "A causality analysis of untied foreign assistance and export performance: the case of Germany," Applied Economics Letters, Taylor & Francis Journals, vol. 7(5), pages 315-319.
    30. Jacques J. Polak, 1996. "Is APEC a Natural Regional Trading Bloc? A Critique of the ‘Gravity Model’of International Trade," The World Economy, Wiley Blackwell, vol. 19(5), pages 533-543, September.
    31. Hoekstra, Ruth, 2013. "Boosting Manufacturing Firms' Exports? The role of trade facilitation in Africa," IEE Working Papers 197, Ruhr University Bochum, Institute of Development Research and Development Policy (IEE).
    32. Tseday Jemaneh Mekasha & Finn Tarp, 2013. "Aid and Growth: What Meta-Analysis Reveals," Journal of Development Studies, Taylor & Francis Journals, vol. 49(4), pages 564-583, April.
    33. Matthias Busse & Ruth Hoekstra & Jens Königer, 2012. "The Impact of Aid for Trade Facilitation on the Costs of Trading," Kyklos, Wiley Blackwell, vol. 65(2), pages 143-163, May.
    34. Mark McGillivray & Simon Feeny & Niels Hermes & Robert Lensink, 2006. "Controversies over the impact of development aid: it works; it doesn't; it can, but that depends …," Journal of International Development, John Wiley & Sons, Ltd., vol. 18(7), pages 1031-1050.
    35. Felicitas Nowak-Lehmann & Inmaculada Martínez-Zarzoso & Dierk Herzer & Stephan Klasen & Adriana Cardozo, 2013. "Does foreign aid promote recipient exports to donor countries?," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 149(3), pages 505-535, September.
    36. Inmaculada Martínez‐Zarzoso & Felicitas Nowak‐Lehmann D. & Stephan Klasen & Mario Larch, 2009. "Does German Development Aid Promote German Exports?," German Economic Review, Verein für Socialpolitik, vol. 10(3), pages 317-338, August.
    37. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
    38. Slobodan Djajić & Sajal Lahiri & Pascalis Raimondos‐Møller, 2004. "Logic of Aid in an Intertemporal Setting," Review of International Economics, Wiley Blackwell, vol. 12(1), pages 151-161, February.
    39. Kemp, Murray C & Kojima, Shoichi, 1985. "Tied Aid and the Paradoxes of Donor-Enrichment and Recipient-Impoverishment," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 26(3), pages 721-729, October.
    40. Jonathan Munemo, 2011. "Foreign aid and export diversification in developing countries," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 20(3), pages 339-355.
    41. Calì, Massimiliano & te Velde, Dirk Willem, 2011. "Does Aid for Trade Really Improve Trade Performance?," World Development, Elsevier, vol. 39(5), pages 725-740, May.
    42. Samuel Bazzi & Michael A. Clemens, 2013. "Blunt Instruments: Avoiding Common Pitfalls in Identifying the Causes of Economic Growth," American Economic Journal: Macroeconomics, American Economic Association, vol. 5(2), pages 152-186, April.
    43. Subhayu Bandyopadhyay & Arabinda Basistha & Jonathan Munemo, 2007. "Foreign aid and export performance: a panel data analysis of developing countries," Working Papers 2007-023, Federal Reserve Bank of St. Louis.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Hühne, Philipp & Meyer, Birgit & Nunnenkamp, Peter, 2014. "Aid for trade: Assessing the effects on recipient exports of manufactures and primary commodities to donors and non-donors," Kiel Working Papers 1953, Kiel Institute for the World Economy (IfW Kiel).
    2. Barthel, Fabian & Neumayer, Eric & Nunnenkamp, Peter & Selaya, Pablo, 2014. "Competition for Export Markets and the Allocation of Foreign Aid: The Role of Spatial Dependence among Donor Countries," World Development, Elsevier, vol. 64(C), pages 350-365.
    3. Liu, Ailan & Tang, Bo, 2018. "US and China aid to Africa: Impact on the donor-recipient trade relations," China Economic Review, Elsevier, vol. 48(C), pages 46-65.
    4. Felicitas Nowak-Lehmann & Inmaculada Martínez-Zarzoso & Dierk Herzer & Stephan Klasen & Adriana Cardozo, 2013. "Does foreign aid promote recipient exports to donor countries?," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 149(3), pages 505-535, September.
    5. Bernard Hoekman & Anirudh Shingal, 2020. "Aid for trade and international transactions in goods and services," Review of International Economics, Wiley Blackwell, vol. 28(2), pages 320-340, May.
    6. Léopold BIARDEAU & Anne BORING, 2017. "L’impact de l’aide au développement sur les flux commerciaux entre pays donateurs et pays récipiendaires," Working Paper 464d860e-562e-4ae7-98f5-1, Agence française de développement.
    7. Savin, Ivan & Marson, Marta & Sutormina, Marina, 2020. "How different aid flows affect different trade flows: Evidence from Africa and its largest donors," Structural Change and Economic Dynamics, Elsevier, vol. 55(C), pages 119-136.
    8. Shwe Sin Oo & Masaru Ichihashi, 2015. "How Does Aid For Trade Contribute To ASEAN`s Trading?," IDEC DP2 Series 5-2, Hiroshima University, Graduate School for International Development and Cooperation (IDEC).
    9. Inmaculada Martínez-Zarzoso & Felicitas Nowak-Lehmann & M. D. Parra & Stephan Klasen, 2014. "Does Aid Promote Donor Exports? Commercial Interest versus Instrumental Philanthropy," Kyklos, Wiley Blackwell, vol. 67(4), pages 559-587, November.
    10. Dazoue Dongue Guy Paulin & Nemb Pierre Samuel & Abessolo Yves André, 2017. "Influence of Bilateral Aid on Cameroon's Bilateral Trade Performance with Respect to OECD Donor Countries," EuroEconomica, Danubius University of Galati, issue 2(36), pages 169-178, November.
    11. Inmaculada Martínez-Zarzoso & Felicitas Nowak-Lehmann D. & Stephan Klasen & Florian Johannsen, 2013. "Does German Development Aid Promote German Exports and German Employment? A Sectoral-Level Analysis," Ibero America Institute for Econ. Research (IAI) Discussion Papers 227, Ibero-America Institute for Economic Research, revised 18 Dec 2013.
    12. Inmaculada Martinez-Zarzoso, 2019. "Effects of Foreign Aid on Income through International Trade," Politics and Governance, Cogitatio Press, vol. 7(2), pages 29-52.
    13. 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.
    14. Nowak-Lehmann D., Felicitas & Martínez-Zarzoso, Inmaculada & Cardozo, Adriana & Herzer, Dierk & Klasen, Stephan, 2011. "Does Aid translate into Bilateral Trade? Findings for Recipient Countries," Proceedings of the German Development Economics Conference, Berlin 2011 61, Verein für Socialpolitik, Research Committee Development Economics.
    15. 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.
    16. 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.
    17. Dang Luu Hai, 2021. "Aid for trade and export sophistication in recipient countries," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 30(4), pages 530-548, May.
    18. Hendrik W. Kruse & Inmaculada Martínez‐Zarzoso, 2021. "Transfers in the gravity equation," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 54(1), pages 410-442, February.
    19. Katerina Gradeva & Inmaculada Martínez-Zarzoso, 2016. "Are Trade Preferences more Effective than Aid in Supporting Exports? Evidence from the ‘Everything But Arms’ Preference Scheme," The World Economy, Wiley Blackwell, vol. 39(8), pages 1146-1171, August.
    20. Sèna Kimm Gnangnon, 2016. "Market Access of OECD Donor Countries and Their Supply of Aid for Trade," Journal of International Commerce, Economics and Policy (JICEP), World Scientific Publishing Co. Pte. Ltd., vol. 7(01), pages 1-38, February.

    More about this item

    JEL classification:

    • F35 - International Economics - - International Finance - - - Foreign Aid
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:jdevst:v:50:y:2014:i:9:p:1275-1288. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/FJDS20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.