Aid for trade: A misdirected initiative?
Given that the motivation for aid is poverty reduction, I argue that Aid for Trade (AfT) measures need to demonstrate that they are effective and have a potential impact on poverty. The debate about aid for trade measures lacks a focus on the poverty dimension of trade. Trade is an indirect instrument for poverty reduction and in SADC, increasing trade has a low impact on poverty. From a donor perspective, support to sectors such as agriculture, where the poor are located, is therefore more effective than to sectors or activities in which the poor are hardly involved. While the overall motivation for providing aid for trade is poverty reduction, I argue that such aid should only be given if there are market failures, for example in coordination and public goods. Aid for trade is particularly important for countries that already have market access but face supply constraints that restrict their utilisation of this market access (as is mainly the case for SADC countries). In this case, aid and trade might serve as complementary activities. I present new data of AfT to SADC countries. The main finding is that so far AfT has played only a minor role for SADC countries, and its role has not changed significantly during recent years – at least not in terms of disbursement. The disbursement ratio of AfT is low (around 50 %). We do not find any robust relationship between disbursement of AfT among individual SADC countries and documented needs. There is accordingly scope for major improvement in the effectiveness of AfT.
|Date of creation:||2009|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: +47 55 57 40 00
Fax: +47 55 57 41 66
Web page: http://www.cmi.no
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- David Dollar & Aart Kraay, 2004.
"Trade, Growth, and Poverty,"
Royal Economic Society, vol. 114(493), pages F22-F49, 02.
- Kym Anderson & Will Martin & Dominique van der Mensbrugghe, 2006.
"Would Multilateral Trade Reform Benefit Sub-Saharan Africans?,"
Journal of African Economies,
Centre for the Study of African Economies (CSAE), vol. 15(4), pages 626-670, December.
- Anderson, Kym & Martin, Will & van der Mensbrugghe, Dominique, 2005. "Would Multilateral Trade Reform Benefit Sub-Saharan Africans?," CEPR Discussion Papers 5049, C.E.P.R. Discussion Papers.
- Anderson, Kym & Martin, Will & van der Mensbrugghe, Dominique, 2005. "Would multilateral trade reform benefit Sub-Saharan Africans?," Policy Research Working Paper Series 3616, The World Bank.
- Kym Anderson & Will Martin & Dominique van der Mensbrugghe, 2005. "Would Multilateral Trade Reform Benefit Sub-Saharan Africans?," Centre for International Economic Studies Working Papers 2005-18, University of Adelaide, Centre for International Economic Studies.
- Dollar, David & Kraay, Aart, 2002.
" Growth Is Good for the Poor,"
Journal of Economic Growth,
Springer, vol. 7(3), pages 195-225, September.
- Akiko Suwa-Eisenmann & Thierry Verdier, 2007.
"Aid and trade,"
Oxford Review of Economic Policy,
Oxford University Press, vol. 23(3), pages 481-507, Autumn.
- L. Alan Winters & Neil McCulloch & Andrew McKay, 2004. "Trade Liberalization and Poverty: The Evidence So Far," Journal of Economic Literature, American Economic Association, vol. 42(1), pages 72-115, March.
- Ann Harrison, 2006.
"Globalization and Poverty,"
NBER Working Papers
12347, National Bureau of Economic Research, Inc.
- Ravallion, Martin, 2005.
"Looking Beyond Averages in the Trade and Poverty Debate,"
Working Paper Series
RP2005/29, World Institute for Development Economic Research (UNU-WIDER).
- Ravallion, Martin, 2006. "Looking beyond averages in the trade and poverty debate," World Development, Elsevier, vol. 34(8), pages 1374-1392, August.
- Martin Ravallion, 2010. "Looking Beyond Averages in the Trade and Poverty Debate," Working Papers id:3258, eSocialSciences.
- Ravallion, Martin, 2004. "Looking beyond averages in the trade and poverty debate," Policy Research Working Paper Series 3461, The World Bank.
- Aisbett, Emma & Harrison, Ann & Zwane, Alix, 2006. "Globalization and poverty: what is the evidence?," MPRA Paper 36595, University Library of Munich, Germany.
- Dollar, David & Alesina, Alberto, 2000.
"Who Gives Foreign Aid to Whom and Why?,"
4553020, Harvard University Department of Economics.
- Oliver Morrissey, 2006. "Aid or Trade, or Aid and Trade?," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 39(1), pages 78-88, 03.
When requesting a correction, please mention this item's handle: RePEc:chm:wpaper:wp2009-4. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Robert Sjursen)
If references are entirely missing, you can add them using this form.