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Aid-for-Trade and Export Performance of Developing Countries

Author

Listed:
  • Shankar GHIMIRE
  • Debasri MUKHERJEE
  • Eskander ALVI

Abstract

This paper employs system-GMM technique to examine whether foreign-aid specifically targeted for trade promotion (Aid-for-Trade or AFT) helps aid-receiving countries improve their export performance, as measured by export level, export growth, and the change in export-GDP ratio. System-GMM is used to control for the underlying endogeneity problem as well as to capture dynamic behavior of the relation over time. We find positive and significant effect of AFT on multiple measures of export performance. However, the targeted aid is found to exhibit diminishing returns, thus reinforcing the idea of AFT’s important but limited role in the export promotion of aid recipients.

Suggested Citation

  • Shankar GHIMIRE & Debasri MUKHERJEE & Eskander ALVI, 2016. "Aid-for-Trade and Export Performance of Developing Countries," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 16(1), pages 23-34.
    • Handle: RePEc:eaa:aeinde:v:16:y:2016:i:1_3
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    References listed on IDEAS

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    Cited by:

    1. Stein Masunda, 2020. "Export Diversification Effects of Aid for Trade in sub-Saharan Africa," Journal of African Trade, Springer, vol. 7(1), pages 29-36, December.
    2. Yawa AWA & Nicolas PÉRIDY, 2025. "A comprehensive assessment of the impact of the EU new trade policy: A disaggregated product’s approach," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 62, pages 99-122.
    3. Gnangnon, Sèna Kimm, 2020. "Aid for Trade and Services Export Diversification in Recipient-Countries," EconStor Preprints 210467, ZBW - Leibniz Information Centre for Economics.
    4. Sèna K. Gnangnon, 2021. "Aid for Trade and services export diversification in recipient countries," Australian Economic Papers, Wiley Blackwell, vol. 60(2), pages 189-225, June.
    5. Asongu, Simplice & Ezeaku, Hillary, 2020. "Aid Grants vs. Technical Cooperation Grants: Implications for Inclusive Growth in Sub-Saharan Africa, 1984-2018," MPRA Paper 107528, University Library of Munich, Germany.
    6. Shankar Ghimire & Nawaraj Sharma Paudel, 2019. "R&D, FDI, and Innovation: Examination of the Patent Applications in the OECD Countries," Journal of Development Innovations, KarmaQuest International, vol. 3(2), pages 1-11, December.
    7. Chandan Kumar Roy & Huang Xiaoling, 2020. "Effects of Paperless Trade Policy and Aid for Trade on Export Performance: Evidence from SASEC And CAREC Countries," Asian Development Policy Review, Asian Economic and Social Society, vol. 8(1), pages 61-74, March.
    8. Dung Ly‐My & Hyun‐Hoon Lee & Donghyun Park, 2021. "Does aid for trade promote import diversification?," The World Economy, Wiley Blackwell, vol. 44(6), pages 1740-1769, June.
    9. Hillary Chijindu Ezeaku & Ifeoma C. Nwakoby & Obiamaka P. Egbo & Josaphat U. J. Onwumere, 2019. "On the Dynamic Effect of Bilateral Concessional Debts on Living Standards in Sub-Saharan Africa," SAGE Open, , vol. 9(3), pages 21582440198, September.
    10. 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.
    11. Jinqiang Xu & Xuemei Liu & Churen Sun, 2025. "Foreign Aid and Recipient Countries’ Participation in Global Value Chains: A Comparative Study Based on Chinese and U.S. Aid," Open Economies Review, Springer, vol. 36(3), pages 947-979, July.
    12. Nora Aboushady & Georges Harb & Chahir Zaki, 2025. "Aid for Trade, Political Ties, and Global Value Chains: A Regime-Dependent Effect?," Working Papers 1806, Economic Research Forum, revised 20 Dec 2025.
    13. Sèna Kimm Gnangnon, 2019. "Aid for Trade and Recipient Countries’ Export Structure: Does Trade Policy Liberalisation Matter?," Arthaniti: Journal of Economic Theory and Practice, , vol. 18(1), pages 56-85, June.
    14. Sèna Kimm Gnangnon, 2020. "Comparative Advantage Following (CAF) development strategy, Aid for Trade flows and structural change in production," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 9(1), pages 1-29, December.

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