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Foreign Aid, Exports And Development In Euromed

  • INMACULADA MARTÍNEZ-ZARZOSO

    ()

    (Department of Economics, University of Göttingen and Institute of International Economics, Universidad Jaume I, Spain)

  • FELICITAS NOWAK-LEHMANN D.

    (Ibero-America Institute for Economic Research and Center for European, Governance and Economic Development Research, University of Göttingen, Germany)

  • FLORIAN JOHANNSEN

    (Department of Economics, University of Göttingen, Germany)

This paper investigates the link between foreign aid and exports between the two shores of the Mediterranean. The main hypothesis is that the Euro-Mediterranean Process should promote not only trade but also stronger links between the European Union (EU) and the Middle East and North Africa (MENA). Hence, we expect development aid to have a positive impact on exports, which could also intensify the aid-trade relationship. In particular, we expect to find higher trade volumes in both directions after the process started in 1995 and intensified in the late 1990s and early 2000s, when several bilateral free trade agreements were signed. A gravity model augmented with bilateral and multilateral aid and trade regime variables is estimated for exports and imports from recipient countries to donor countries for the period 1988 to 2007 using advanced panel data techniques. Our method addresses the endogeneity bias of the trade regime/economic integration agreement (EIA) variable, assuming that decisions to form or enlarge EIAs are slow-moving relative to trade flows.

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Article provided by World Scientific Publishing Co. Pte. Ltd. in its journal Middle East Development Journal.

Volume (Year): 04 (2012)
Issue (Month): 02 ()
Pages: 1250007-1-1250007-24

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Handle: RePEc:wsi:medjxx:v:04:y:2012:i:02:p:1250007-1-1250007-24
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  1. repec:dgr:uvatin:20060072 is not listed on IDEAS
  2. Hristos Doucouliagos & Martin Paldam, 2005. "Aid Effectiveness on Accumulation. A Meta Study," Economics Working Papers 2005-12, School of Economics and Management, University of Aarhus.
  3. Raghuram G. Rajan & Arvind Subramanian, 2005. "What Undermines Aid's Impact on Growth?," NBER Working Papers 11657, National Bureau of Economic Research, Inc.
  4. Joong Shik Kang & Alessandro Prati & Alessandro Rebucci, 2012. "Aid, Exports, and Growth: a Time-Series Perspective on the Dutch Disease Hypothesis," Review of Economics and Institutions, Università di Perugia, vol. 3(2).
  5. Kemp, Murray C. & Wong, Kar-yiu, 1993. "Paradoxes associated with the administration of foreign aid," Journal of Development Economics, Elsevier, vol. 42(1), pages 197-204, October.
  6. Cecília Hornok, 2010. "Trade-Enhancing EU Enlargement and the Resurgence of East-East Trade," Focus on European Economic Integration, Oesterreichische Nationalbank (Austrian Central Bank), issue 3, pages 79-94.
  7. John C. Driscoll & Aart C. Kraay, 1998. "Consistent Covariance Matrix Estimation With Spatially Dependent Panel Data," The Review of Economics and Statistics, MIT Press, vol. 80(4), pages 549-560, November.
  8. Jan Pettersson & Lars Johansson, 2013. "Aid, Aid for Trade, and bilateral trade: An empirical study," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 22(6), pages 866-894, September.
  9. Rajan, Raghuram G. & Subramanian, Arvind, 2011. "Aid, Dutch disease, and manufacturing growth," Journal of Development Economics, Elsevier, vol. 94(1), pages 106-118, January.
  10. Felicitas Nowak-Lehmann & Axel Dreher & Dierk Herzer & Stephan Klasen & Inmaculada Martínez-Zarzoso, 2012. "Does foreign aid really raise per capita income? A time series perspective," Canadian Journal of Economics, Canadian Economics Association, vol. 45(1), pages 288-313, February.
  11. José Vicente Blanes Cristóbal & Juliette Milgram Baleix, 2010. "Impacto de la liberalización comercial de Marruecos sobre las exportaciones por regiones," Revista de Economia Aplicada, Universidad de Zaragoza, Departamento de Estructura Economica y Economia Publica, vol. 18(1), pages 63-90, Spring.
  12. Hristos Doucouliagos & Martin Paldam, 2005. "Aid Effectiveness on Growth. A Meta Study," Economics Working Papers 2005-13, School of Economics and Management, University of Aarhus.
  13. Persson, Maria & Wilhelmsson, Fredrik, 2006. "Assessing the Effects of EU Trade Preferences for Developing Countries," Working Papers 2006:4, Lund University, Department of Economics, revised 26 Jun 2006.
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