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Trade as Aid: The Role of the EBA-Trade Preferences Regime in the Development Strategy

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Abstract

This study focuses primarily on trade preferences offered by the European Union (EU) and in particular on the Everything But Arms (EBA) trade preferences regime, which is targeted exclusively on least developed countries (LDCs). Using the gravity model, an estimation of the influence of the EBA preferences on exports from the ACP LDCs to the EU-15 is presented. The model is applied to the time period 1995 to 2005 for the ACP countries’ exports to the EU-15 and estimated with the help of different econometric techniques. The core questions of the investigation are two: First, to examine the influence of the EBA preferences on the ACP LDCs’ export performance and second to compare the impact of the EBA scheme with the one of official development assistance. In addition to their separate effects the combined impact of EBA and aid flows is also analysed. The main results show a very poor performance of the EBA regime. However, the combined effect of the EBA and aid on exports is positive, indicating that the development strategy of the developed countries, in this case of the EU, needs to include both sorts of assistance, aid and trade preferences.

Suggested Citation

  • Katerina Gradeva & Inmaculada Martínez-Zarzoso, 2009. "Trade as Aid: The Role of the EBA-Trade Preferences Regime in the Development Strategy," Ibero America Institute for Econ. Research (IAI) Discussion Papers 197, Ibero-America Institute for Economic Research.
  • Handle: RePEc:got:iaidps:197
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    File URL: http://www2.vwl.wiso.uni-goettingen.de/ibero/working_paper_neu/DB197.pdf
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    1. Henrik Hansen & Finn Tarp, 2000. "Aid effectiveness disputed," Journal of International Development, John Wiley & Sons, Ltd., pages 375-398.
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    9. Cernat, Lucian & Laird, Sam & Monge-Roffarello, Luca & Turrini, Alessandro, 2003. "The EU's Everything But Arms Initiative and the Least-developed Countries," WIDER Working Paper Series 047, World Institute for Development Economic Research (UNU-WIDER).
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    Cited by:

    1. Maria Cipollina & David Laborde Debucquet & Luca Salvatici, 2017. "The tide that does not raise all boats: an assessment of EU preferential trade policies," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), pages 199-231.
    2. Sami Bensassi & Laura Márquez-Ramos & Inmaculada Martínez-Zarzoso, 2012. "Economic Integration and the Two Margins of Trade: The Impact of the Barcelona Process on North African Countries' Exports," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 21(2), pages 228-265, March.
    3. Cipollina, Maria & Laborde, David & Salvatici, Luca, 2013. "Do Preferential Trade Policies (Actually) Increase Exports? An analysis of EU trade policies," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150177, Agricultural and Applied Economics Association.

    More about this item

    Keywords

    development aid; trade preferences; Everything But Arms; panel data;

    JEL classification:

    • O24 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F35 - International Economics - - International Finance - - - Foreign Aid

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