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Aid for Trade and Global Growth

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  • NAITO Takumi

Abstract

Aid for trade increases a recipient's public services, which lower its import and export transport costs. Formulating a two-country endogenous growth model, we obtain two main results. First, a permanent increase in the donor's aid/GDP ratio raises the steady-state growth rate as well as both countries' long-run fractions and cost shares of imported varieties if and only if it lowers the product of transport costs. Second, under a plausible condition, there exists a unique interior growth-maximizing aid/GDP ratio. These results are robust to alternative specifications for congestion and stock-flow nature of public goods.

Suggested Citation

  • NAITO Takumi, 2015. "Aid for Trade and Global Growth," Discussion papers 15025, Research Institute of Economy, Trade and Industry (RIETI).
    • Handle: RePEc:eti:dpaper:15025
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    Cited by:

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    2. Gnangnon, Sèna Kimm, 2022. "Effect of Aid for Trade flows on the Accession to the World Trade Organization," EconStor Preprints 261331, ZBW - Leibniz Information Centre for Economics.
    3. Rym Aloui & Aurélien Eyquem, 2020. "The Welfare Gains of Cooperative Public Infrastructure Policies: A Trade and Supply-Side View," Annals of Economics and Statistics, GENES, issue 140, pages 27-44.
    4. Sena Kimm Gnangnon, 2023. "Duration of the Membership in the World Trade Organization and Aid for Trade Flows," Economies, MDPI, vol. 11(6), pages 1-28, June.
    5. Gnangnon, Sèna Kimm & Iyer, Harish, 2021. "Effect of Aid for Trade and Foreign Direct Investment Inflows on the Utilization of Unilateral Trade Preferences offered by the QUAD countries," EconStor Preprints 238211, ZBW - Leibniz Information Centre for Economics.

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