Does aid for trade enhance export performance? Investigating on the infrastructure channel
AbstractToday, there are few empirical studies assessing the effectiveness of aid for trade on trade pe rformance. Furthermore, existing works do not test channels by which this impact is transiting. We address this question using an empirical analysis constructed in two steps. Following a model of export performance, we first test if institutions and infrastructure, our two potential channels of transmission, are indeed determinants of export performance. Secondly, we test the impact of aid for trade sectoral flows on the determinants that were highlighted in the first part. We show that the infrastructure channel appears to be highly significant in the first step whereas the institutional one turns out to have limited impact on developing countries’ exports. Furthermore, in our second step, aid for infrastructure seems, once instrumented, to have a strong and positive impact on the infrastructure level. Our results indicate that a 10% increase in aid to infrastructure commitments per capita leads to an average increase of the exports over GDP ratio for a developing country of 2.34%. It is also equivalent to a 2.71% reduction of the tariff and non-tariff barriers. This highlights the very high economic impact of aid for trade throughout the channel of infrastructures.
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Bibliographic InfoPaper provided by INRA UMR SMART in its series Working Papers SMART - LERECO with number 201007.
Length: 40 pages
Date of creation: 2010
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Export performance; trade facilitation; aid for trade; infrastructure; institution;
Find related papers by JEL classification:
- O19 - Economic Development, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations
- O11 - Economic Development, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
- F10 - International Economics - - Trade - - - General
- F17 - International Economics - - Trade - - - Trade Forecasting and Simulation
- O10 - Economic Development, Technological Change, and Growth - - Economic Development - - - General
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- David Hummels & Volodymyr Lugovskyy & Alexandre Skiba, 2007.
"The Trade Reducing Effects of Market Power in International Shipping,"
NBER Working Papers
12914, National Bureau of Economic Research, Inc.
- Hummels, David & Lugovskyy, Volodymyr & Skiba, Alexandre, 2009. "The trade reducing effects of market power in international shipping," Journal of Development Economics, Elsevier, vol. 89(1), pages 84-97, May.
- L. Alan Winters & Neil McCulloch & Andrew McKay, 2004. "Trade Liberalization and Poverty: The Evidence So Far," Journal of Economic Literature, American Economic Association, vol. 42(1), pages 72-115, March.
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