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Foreign Aid and Trade Capacity Development Recent Evidence from Uganda

Author

Listed:
  • Alex Ijjo
  • Isaac Shinyekwa

Abstract

Endemic supply side constraints including fluctuating output levels, deficient trade infrastructure, rampant non-tariff barriers and incapacity to ensure international quality standards continue to thwart the gainful participation of many Least Developed Countries (LDCs) in an increasingly liberal global trade environment. At its 2005 Hong Kong Ministerial Conference, the World Trade Organization launched its Aid for Trade (AFT) initiative aimed at coordinating global financial support for strengthening trade capacity in Least Developed Countries (LDCs). This paper examined the effect of foreign aid, particularly Official Development Assistance, on Uganda’s external trade and its AFT component in strengthening the country’s trade capacity. Using time series Error Correction Modelling and the World Bank’s World Development Indicators and official national statistics, the paper finds small but positive aid influence on Uganda’s exports and imports and generally close alignment between aid and national priorities. However, given general aid volatility but more especially following the anti-homosexuality legislation and gross corruption allegations in the case of Uganda, the paper advises that external aid be treated as a supplement rather than a substitute for domestic financial resource mobilization in trade capacity development.

Suggested Citation

  • Alex Ijjo & Isaac Shinyekwa, 2016. "Foreign Aid and Trade Capacity Development Recent Evidence from Uganda," Journal of Sustainable Development, Canadian Center of Science and Education, vol. 9(3), pages 1-39, April.
    • Handle: RePEc:ibn:jsd123:v:9:y:2016:i:3:p:39
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    References listed on IDEAS

    as
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    3. World Bank, 2013. "Uganda - Diagnostic Trade Integration Study Update : Prepared for the Enhanced Integrated Framework," World Bank Publications - Reports 16035, The World Bank Group.
    4. Raghuram G. Rajan & Arvind Subramanian, 2008. "Aid and Growth: What Does the Cross-Country Evidence Really Show?," The Review of Economics and Statistics, MIT Press, vol. 90(4), pages 643-665, November.
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    More about this item

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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