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Aid and Trade - A Donor´s Perspective

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Abstract

Foreign aid is given for a combination of economic, political, and humanitarian motives. While its impact on economic development in recipient countries has been the main focus of research recently, we concentrate on the question to what extent it also promotes donor countries’ exports. We examine this issue using Germany as a case study where the positive impact of aid on exports has been found to be extremely high. Using more advanced methods, we compute an average return (between EUR 1.49 to EUR 1.72) of one EUR of aid spent, well below previous findings, but still surprisingly large and robust.

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Bibliographic Info

Paper provided by Ibero-America Institute for Economic Research in its series Ibero America Institute for Econ. Research (IAI) Discussion Papers with number 171.

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Length: 28 pages
Date of creation: 22 Apr 2008
Date of revision:
Handle: RePEc:got:iaidps:171

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Keywords: bilateral aid; donors’ exports; time series properties of panel data; ECM and DOLS estimation in a panel context;

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Cited by:
  1. Martínez-Zarzoso, Inmaculada & Nowak-Lehmann D., Felicitas & Klasen, Stefan & Larch, Mario, 2008. "Does German Development Aid Promote German Exports?," Proceedings of the German Development Economics Conference, Zurich 2008 26, Verein für Socialpolitik, Research Committee Development Economics.
  2. Martínez-Zarzoso, Inmaculada & Nowak-Lehmann D., Felicitas & Klasen, Stephan, 2010. "The Economic Benefits of giving Aid in terms of Donors Exports," Proceedings of the German Development Economics Conference, Hannover 2010 28, Verein für Socialpolitik, Research Committee Development Economics.
  3. Nowak-Lehmann D., Felicitas & Martínez-Zarzoso, Inmaculada & Cardozo, Adriana & Klasen, Stephan, 2010. "Foreign aid and recipient countries' exports: How important are improved bilateral trade relations?," Proceedings of the German Development Economics Conference, Hannover 2010 44, Verein für Socialpolitik, Research Committee Development Economics.
  4. José María, Larrú, 2012. "La relación entre la ayuda al desarrollo y la desigualdad. Evidencia y justificación teórica
    [Aid and inequality relationship. Evidence and theoretical justification]    ," MPRA Paper 38857, University Library of Munich, Germany.
  5. Dierk Herzer & Oliver Morrissey, . "The Long-Run Effect of Aid on Domestic Output," Discussion Papers 09/01, University of Nottingham, CREDIT.

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