Does German Development Aid Promote German Exports and German Employment? A Sectoral-Level Analysis
This paper uses an augmented sectoral gravity model of trade to investigate the link between German development aid and exports from Germany to the aid recipient countries. The findings indicate that in the long run each dollar of German aid is associated with an average increase of US$ 0.83 of German exports of goods. The effect varies by sector and the sectors that gain the most are machinery, electrical equipment and transport equipment. By using German input-output tables and according to our estimates, the aid-induced gains in exports generate a total employment effect of about 164,000 jobs of which 66,000 jobs are created in machinery, 26,000 in transport equipment, 24,000 in electrical equipment, 23,500 in basic metals and 18,000 in food, beverages and tobacco. The paper distinguishes among recipient countries and finds that the return on aid measured by German exports is higher for aid to countries considered as partner countries by the German Ministry for Economic Cooperation and Development (BMZ countries).
|Date of creation:||20 Sep 2013|
|Date of revision:||18 Dec 2013|
|Contact details of provider:|| Postal: Platz des Göttinger Sieben 3, 37073 Göttingen|
Phone: 0049-551-39 81 72
Fax: 0049-551-39 81 73
Web page: http://www.iai.wiwi.uni-goettingen.de
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.:
- 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.
- Berthelemy, Jean-Claude & Tichit, Ariane, 2002.
"Bilateral Donors' Aid Allocation Decisions: A Three-dimensional Panel Analysis,"
Working Paper Series
UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
- Berthelemy, Jean-Claude & Tichit, Ariane, 2004. "Bilateral donors' aid allocation decisions--a three-dimensional panel analysis," International Review of Economics & Finance, Elsevier, vol. 13(3), pages 253-274.
- Inmaculada Martínez Zarzoso & Felictas Nowak-Lehmann D. & Stephan Klasen & Mario Larch, 2008.
"Does German Development Aid Promote German Exports?,"
Ibero America Institute for Econ. Research (IAI) Discussion Papers
170, Ibero-America Institute for Economic Research.
- Inmaculada Martínez-Zarzoso & Felicitas Nowak-Lehmann D. & Stephan Klasen & Mario Larch, 2009. "Does German Development Aid Promote German Exports?," German Economic Review, Verein für Socialpolitik, vol. 10, pages 317-338, 08.
- Martínez-Zarzoso, Inmaculada & Nowak-Lehmann D., Felicitas & Klasen, Stefan & Larch, Mario, 2008. "Does German Development Aid Promote German Exports?," Proceedings of the German Development Economics Conference, Zurich 2008 26, Verein für Socialpolitik, Research Committee Development Economics.
- Hristos Doucouliagos & Martin Paldam, 2005.
"Aid Effectiveness on Accumulation. A Meta Study,"
Economics Working Papers
2005-12, Department of Economics and Business Economics, Aarhus University.
- James E. Anderson & Eric van Wincoop, 2003.
"Gravity with Gravitas: A Solution to the Border Puzzle,"
American Economic Review,
American Economic Association, vol. 93(1), pages 170-192, March.
- James E. Anderson & Eric van Wincoop, 2000. "Gravity with Gravitas: A Solution to the Border Puzzle," Boston College Working Papers in Economics 485, Boston College Department of Economics.
- James E. Anderson & Eric van Wincoop, 2001. "Gravity with Gravitas: A Solution to the Border Puzzle," NBER Working Papers 8079, National Bureau of Economic Research, Inc.
- Heller, Peter S, 1975. "A Model of Public Fiscal Behavior in Developing Countries: Aid, Investment, and Taxation," American Economic Review, American Economic Association, vol. 65(3), pages 429-445, June.
- Hansen, Henrik & Tarp, Finn, 2001.
"Aid and growth regressions,"
Journal of Development Economics,
Elsevier, vol. 64(2), pages 547-570, April.
- Easterly, William & Williamson, Claudia R., 2011.
"Rhetoric versus Reality: The Best and Worst of Aid Agency Practices,"
Elsevier, vol. 39(11), pages 1930-1949.
- Easterly, William & Williamson, Claudia R., 2011. "Rhetoric versus reality: the best and worst of aid agency practices," MPRA Paper 39139, University Library of Munich, Germany.
- Mak Arvin & Bruce Cater & Saud Choudhry, 2000. "A causality analysis of untied foreign assistance and export performance: the case of Germany," Applied Economics Letters, Taylor & Francis Journals, vol. 7(5), pages 315319-3153.
- Anderson, James E, 1979. "A Theoretical Foundation for the Gravity Equation," American Economic Review, American Economic Association, vol. 69(1), pages 106-116, March.
- Blundell, Richard & Bond, Stephen, 1998.
"Initial conditions and moment restrictions in dynamic panel data models,"
Journal of Econometrics,
Elsevier, vol. 87(1), pages 115-143, August.
- Blundell, R. & Bond, S., 1995. "Initial Conditions and Moment Restrictions in Dynamic Panel Data Models," Economics Papers 104, Economics Group, Nuffield College, University of Oxford.
- Richard Blundell & Steve Bond, 1995. "Initial conditions and moment restrictions in dynamic panel data models," IFS Working Papers W95/17, Institute for Fiscal Studies.
- R Blundell & Steven Bond, "undated". "Initial conditions and moment restrictions in dynamic panel data model," Economics Papers W14&104., Economics Group, Nuffield College, University of Oxford.
- Stock, James H & Watson, Mark W, 1993.
"A Simple Estimator of Cointegrating Vectors in Higher Order Integrated Systems,"
Econometric Society, vol. 61(4), pages 783-820, July.
- James H. Stock & Mark W. Watson, 1991. "A simple estimator of cointegrating vectors in higher order integrated systems," Working Paper Series, Macroeconomic Issues 91-3, Federal Reserve Bank of Chicago.
- Tom Doan, "undated". "SWDOLS: RATS procedure to estimate cointegrating vectors using dynamic OLS," Statistical Software Components RTS00207, Boston College Department of Economics.
- 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.
- 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.
- Bergstrand, Jeffrey H, 1985. "The Gravity Equation in International Trade: Some Microeconomic Foundations and Empirical Evidence," The Review of Economics and Statistics, MIT Press, vol. 67(3), pages 474-81, August.
- Nelson C. Mark & Donggyu Sul, 2002.
"Cointegration Vector Estimation by Panel DOLS and Long-Run Money Demand,"
NBER Technical Working Papers
0287, National Bureau of Economic Research, Inc.
- Nelson C. Mark & Donggyu Sul, 2003. "Cointegration Vector Estimation by Panel DOLS and Long-run Money Demand," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 65(5), pages 655-680, December.
- Mosley, Paul & Hudson, John & Horrell, Sara, 1987. "Aid, the Public Sector and the Market in Less Developed Countries," Economic Journal, Royal Economic Society, vol. 97(387), pages 616-41, September.
- de Sousa, José, 2012.
"The currency union effect on trade is decreasing over time,"
Elsevier, vol. 117(3), pages 917-920.
- De Sousa, Jose, 2011. "The currency union effect on trade is decreasing over time," MPRA Paper 35448, University Library of Munich, Germany.
- A. Bhargava & L. Franzini & W. Narendranathan, 1982.
"Serial Correlation and the Fixed Effects Model,"
Review of Economic Studies,
Oxford University Press, vol. 49(4), pages 533-549.
- Wagner, Don, 2003. "Aid and trade--an empirical study," Journal of the Japanese and International Economies, Elsevier, vol. 17(2), pages 153-173, June.
- Felicitas Nowak-Lehmann & Inmaculada Martínez-Zarzoso & Dierk Herzer & Stephan Klasen & Adriana Cardozo, 2013. "Does foreign aid promote recipient exports to donor countries?," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 149(3), pages 505535-5055, September.
- Kao, Chihwa, 1999. "Spurious regression and residual-based tests for cointegration in panel data," Journal of Econometrics, Elsevier, vol. 90(1), pages 1-44, May.
- Maizels, Alfred & Nissanke, Machiko K., 1984. "Motivations for aid to developing countries," World Development, Elsevier, vol. 12(9), pages 879-900, September.
When requesting a correction, please mention this item's handle: RePEc:got:iaidps:227. 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: (Sabine Jaep)
If references are entirely missing, you can add them using this form.