Effect of aid for trade on recipient-countries' participation in global value chains

The present analysis has investigated the effect of Aid for Trade (AfT) flows on recipient countries' participation in Global Value Chains (GVCs). The analysis covers 80 countries over the period from 2002 to 2018, and primarily uses the random effect Mundlak approach and the "Quantile via Moments" approach. It has shown that, on average over the full sample, AfT interventions promote backward GVC participation, but do not affect forward GVC participation. AfT interventions exert a larger sustainable positive effect on backward GVC participation by African countries than by NonAfrican countries. The cumulative AfT flows exert a greater positive effect on the backward GVC participation for countries in lower quantiles than for those in higher quantiles. AfT flows ultimately exert a sustainable greater engagement in forward GVC participation relatively to backward GVC participation by countries located in lower quantiles, but lead to a reverse outcome for countries in the upper quantiles.