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Exploring the Role of Aid for Trade in Promoting Digital Services Trade

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  • Hyun‐Jung Choi
  • Kazunobu Hayakawa
  • Hyun‐Hoon Lee
  • Donghyun Park

Abstract

Digitally deliverable services (DDS) are playing a growing role in global trade, yet empirical evidence on how Aid for Trade (AfT) relates to DDS remains limited. This study examines the bilateral association between AfT and DDS using data for 29 donors and 134 recipients from 2005 to 2019 within a PPML‐based structural gravity framework. AfT is positively associated with DDS exports from donors to recipients, whereas AfT from EU institutions is significantly associated only with DDS imports from EU member states to recipients. Digital trade agreement (DTA) shows positive but limited associations, largely concentrated on donor‐to‐recipient DDS exports. Among AfT components, support for trade‐related infrastructure (INF) and building productive capacity (BPC) are most consistently associated with higher DDS exports, while assistance with trade policy regulation and trade‐related adjustments (TPR) shows weaker links with DDS exports but more frequent associations with higher DDS imports. Sector‐level estimates indicate heterogeneous responses across DDS categories, with stronger associations for non‐LDC and high‐governance recipients. Finally, the results suggest that AfT can help expand digital trade, but its impact would be strong if more support were directed at improving recipients' export capabilities and regulatory frameworks.

Suggested Citation

  • Hyun‐Jung Choi & Kazunobu Hayakawa & Hyun‐Hoon Lee & Donghyun Park, 2026. "Exploring the Role of Aid for Trade in Promoting Digital Services Trade," The World Economy, Wiley Blackwell, vol. 49(7), pages 1410-1429, July.
    • Handle: RePEc:bla:worlde:v:49:y:2026:i:7:p:1410-1429
    DOI: 10.1111/twec.70099
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