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Aid to the services sector : does it affect manufacturing exports ?

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  • Ferro, Esteban
  • Portugal-Perez, Alberto
  • Wilson, John S.

Abstract

This paper evaluates the impact of foreign aid to five service sectors (transportation, information and communications technologies, energy, banking/financial services, and business services) on exports of downstream manufacturing sectors in developing countries. To address the reverse causality between aid and exports, the analysis relies on an original identification strategy that exploits (i) the variation of aid flows to service sectors, and (ii) the variation of service-intensities across industrial sectors and countries using input-output data. The authors find a positive effect of aid to services, in general, on downstream manufacturing exports of developing countries across regions and income-level groups.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 5728.

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Date of creation: 01 Jul 2011
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Handle: RePEc:wbk:wbrwps:5728

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Keywords: Transport Economics Policy&Planning; Development Economics&Aid Effectiveness; Economic Theory&Research; Emerging Markets; E-Business;

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References

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  1. William Easterly, 2003. "Can Foreign Aid Buy Growth?," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 17(3), pages 23-48, Summer.
  2. Raghuram G. Rajan & Luigi Zingales, 1996. "Financial Dependence and Growth," NBER Working Papers 5758, National Bureau of Economic Research, Inc.
  3. Laura Alfaro & Andrew Charlton, 2007. "Intra-Industry Foreign Direct Investment," CEP Discussion Papers dp0825, Centre for Economic Performance, LSE.
  4. Raghuram G. Rajan & Arvind Subramanian, 2005. "Aid and Growth: What Does the Cross-Country Evidence Really Show?," NBER Working Papers 11513, National Bureau of Economic Research, Inc.
  5. Markus Bruckner, 2011. "On the Simultaneity Problem in the Aid and Growth Debate," School of Economics Working Papers, University of Adelaide, School of Economics 2011-01, University of Adelaide, School of Economics.
  6. Paul Brenton & Erik von Uexkull, 2009. "Product specific technical assistance for exports - has it been effective?," The Journal of International Trade & Economic Development, Taylor & Francis Journals, Taylor & Francis Journals, vol. 18(2), pages 235-254.
  7. Mitton, Todd, 2008. "Institutions and concentration," Journal of Development Economics, Elsevier, Elsevier, vol. 86(2), pages 367-394, June.
  8. Luis Angeles & Kyriakos C. Neanidis, 2006. "Aid Effectiveness: The Role of the Local Elite," The School of Economics Discussion Paper Series, Economics, The University of Manchester 0633, Economics, The University of Manchester.
  9. Carl-Johan Dalgaard & Henrik Hansen & Finn Tarp, 2004. "On The Empirics of Foreign Aid and Growth," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 114(496), pages F191-F216, 06.
  10. Glenn Ellison & Edward L. Glaeser & William Kerr, 2007. "What Causes Industry Agglomeration? Evidence from Coagglomeration Patterns," NBER Working Papers 13068, National Bureau of Economic Research, Inc.
  11. Collier, Paul & Dollar, David, 2002. "Aid allocation and poverty reduction," European Economic Review, Elsevier, Elsevier, vol. 46(8), pages 1475-1500, September.
  12. Suwa Eisenmann, Akiko & Verdier, Thierry, 2007. "Aid and Trade," CEPR Discussion Papers, C.E.P.R. Discussion Papers 6465, C.E.P.R. Discussion Papers.
  13. Hummels, David & Ishii, Jun & Yi, Kei-Mu, 2001. "The nature and growth of vertical specialization in world trade," Journal of International Economics, Elsevier, Elsevier, vol. 54(1), pages 75-96, June.
  14. Arellano, Cristina & Bulír, Ales & Lane, Timothy & Lipschitz, Leslie, 2009. "The dynamic implications of foreign aid and its variability," Journal of Development Economics, Elsevier, Elsevier, vol. 88(1), pages 87-102, January.
  15. Helble, Matthias & Mann, Catherine & Wilson, John S., 2009. "Aid for trade facilitation," Policy Research Working Paper Series 5064, The World Bank.
  16. Rajan, Raghuram G. & Subramanian, Arvind, 2011. "Aid, Dutch disease, and manufacturing growth," Journal of Development Economics, Elsevier, Elsevier, vol. 94(1), pages 106-118, January.
  17. Daniel Trefler & Susan Chun Zhu, 2005. "The Structure of Factor Content Predictions," NBER Working Papers 11221, National Bureau of Economic Research, Inc.
  18. Daron Acemoglu & Simon Johnson & Todd Mitton, 2009. "Determinants of Vertical Integration: Financial Development and Contracting Costs," Journal of Finance, American Finance Association, American Finance Association, vol. 64(3), pages 1251-1290, 06.
  19. Younger, Stephen D., 1992. "Aid and the Dutch disease: Macroeconomic management when everybody loves you," World Development, Elsevier, Elsevier, vol. 20(11), pages 1587-1597, November.
  20. Michael Clemens & Steven Radelet & Rikhil Bhavnani, 2004. "Counting Chickens When They Hatch: The Short-term Effect of Aid on Growth," Working Papers, Center for Global Development 44, Center for Global Development.
  21. Calì, Massimiliano & te Velde, Dirk Willem, 2011. "Does Aid for Trade Really Improve Trade Performance?," World Development, Elsevier, Elsevier, vol. 39(5), pages 725-740, May.
  22. François Bourguignon & Mark Sundberg, 2007. "Aid Effectiveness – Opening the Black Box," American Economic Review, American Economic Association, American Economic Association, vol. 97(2), pages 316-321, May.
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Citations

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Cited by:
  1. Olivier CADOT & Melise JAUD, 2012. "A Second Look at the Pesticides Initiative Program: Evidence from Senegal," Working Papers P43, FERDI.
  2. Cadot, Olivier & de Melo, Jaime & Fernandes, Ana & Gourdon, Julien & Mattoo, Aaditya, 2013. "Evaluating Aid for Trade: A Survey of Recent Studies," CEPR Discussion Papers, C.E.P.R. Discussion Papers 9690, C.E.P.R. Discussion Papers.
  3. Portugal-Perez, Alberto & Wilson, John S., 2010. "Export performance and trade facilitation reform : hard and soft infrastructure," Policy Research Working Paper Series 5261, The World Bank.
  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, Springer, vol. 149(3), pages 505-535, September.

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