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Aid for Trade and International Transactions in Goods and Services

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Abstract

The empirical literature on aid for trade (AfT) mainly considers its effects on merchandise trade and investment. In this paper we examine the relationship between AfT and trade in services as well as trade in goods over 2002-2015 in both aggregate and bilateral analysis. We observe complementarities between services AfT and merchandise trade, reflecting the fact that most AfT is aid allocated to services sectors that are important inputs into production and trade in goods. The analysis suggests that most categories of AfT are not associated with greater trade in services. Only AfT directed towards economic infrastructure, notably transport and energy, is robustly associated with higher volumes of services trade. Given the importance of services for many low-income countries and the growing potential to harness new technologies to expand services trade, the results suggest a greater focus on disaggregated analysis of different categories of AfT to better understand how AfT can do more to support trade in services. Of particular note is that AfT to bolster productive capacity is strongly associated with greater merchandise trade whereas no such relationship is observed for services trade, suggesting AfT efforts do more to target capacity weaknesses that constrain growth in services trade.

Suggested Citation

  • Shingal, Anirudh, 2017. "Aid for Trade and International Transactions in Goods and Services," CEPR Discussion Papers 12250, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:12250
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    Cited by:

    1. Anirudh Shingal, 2023. "Mode 4 restrictiveness and services trade," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 159(3), pages 757-786, August.
    2. Hongyi Xu & Zesheng Sun & Hao Chen, 2025. "Estimating the Evolving Trade Effect of Foreign Aid in the Context of Aid Competition: Evidence From European Countries," Journal of International Development, John Wiley & Sons, Ltd., vol. 37(2), pages 584-606, March.
    3. Xuefeng Wang & Ling Zhu & Haiyun Liu, 2024. "Effects of foreign direct investment in services on input imports of manufacturing firms: Evidence from China," Review of International Economics, Wiley Blackwell, vol. 32(3), pages 1434-1461, August.
    4. Shuhei Nishitateno & Hayato Umetani, 2023. "Heterogeneous effects of Aid‐for‐Trade on donor exports: Why is Japan different?," Review of International Economics, Wiley Blackwell, vol. 31(3), pages 1117-1145, August.
    5. Gnangnon, Sèna Kimm, 2022. "Effect of Aid for Trade flows on the Accession to the World Trade Organization," EconStor Preprints 261331, ZBW - Leibniz Information Centre for Economics.
    6. Shuhei Nishitateno, 2024. "Does official development assistance benefit the donor economy? New evidence from Japanese overseas infrastructure projects," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 31(4), pages 1037-1065, August.
    7. Gnangnon, Sèna Kimm, 2020. "Aid for Trade and Services Export Diversification in Recipient-Countries," EconStor Preprints 210467, ZBW - Leibniz Information Centre for Economics.
    8. 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.
    9. Hein Roelfsema & Christopher Findlay & Xianjia Ye, 2021. "Decomposing International Trade in Commercial Services," Foreign Trade Review, , vol. 56(3), pages 238-256, August.
    10. Bernard Hoekman & Anirudh Shingal, 2020. "Aid for trade and international transactions in goods and services," Review of International Economics, Wiley Blackwell, vol. 28(2), pages 320-340, May.
    11. 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.
    12. Hoekman, Bernard & Shingal, Anirudh, 2024. "Development Goals, commercial interest and EU Aid-for-Trade," World Development, Elsevier, vol. 173(C).
    13. Hoekman, Bernard & Santi, Filippo & Shingal, Anirudh, 2023. "Trade effects of non-economic provisions in trade agreements," Economics Letters, Elsevier, vol. 226(C).
    14. Anirudh Shingal, 2020. "Quantifying Barriers to Movement of Service Suppliers and Examining their Effects: Implications for COVID-19," Indian Council for Research on International Economic Relations (ICRIER) Working Paper 399, Indian Council for Research on International Economic Relations (ICRIER), New Delhi, India.
    15. Sèna Kimm Gnangnon, 2024. "The least developed countries' Services Waiver, Aid for Trade for services and services exports," The World Economy, Wiley Blackwell, vol. 47(4), pages 1495-1530, April.
    16. Francois, Joseph & Hoekman, Bernard & Manchin, Miriam, 2022. "Pursuing Environmental and Social Objectives through Trade Agreements," Papers 1377, World Trade Institute.

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    Keywords

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    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F35 - International Economics - - International Finance - - - Foreign Aid

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