IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/55580.html
   My bibliography  Save this paper

Does Foreign Aid Promote Trade? Evidence from Some Selected African Countries

Author

Listed:
  • Ojeaga, Paul

Abstract

Will aid given to specific sector promote growth? Will bilateral aid be more effective than multilateral aid in export promotion? This paper fills a gap in the literature by studying the implications of aid channeled specifically to trade and export oriented growth. Many African Countries look towards increase in trade driven growth as a means of improving living standards and boosting growth of their economies. Aid given to trade in desperately poor countries can be of tremendous advantage to such countries. We investigate some peculiar components of temporal self limiting aid (often referred to as development assistance) to sectors that can affect trade in developing countries. Aid to four sectors was found to have significant impact on trade although the presence of natural resources tends to reduce the effectiveness of aid in promoting trade. Institutions and government economic policies were also found to be weak in the African countries in our sample reducing aid overall effect on trade.

Suggested Citation

  • Ojeaga, Paul, 2012. "Does Foreign Aid Promote Trade? Evidence from Some Selected African Countries," MPRA Paper 55580, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:55580
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/55580/2/MPRA_paper_55580.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Chang, Charles C. & Fernández-Arias, Eduardo & Servén, Luis, 1998. "Measuring Aid Flows: A New Approach," IDB Publications (Working Papers) 1297, Inter-American Development Bank.
    2. Svensson, Jakob, 2000. "When is foreign aid policy credible? Aid dependence and conditionality," Journal of Development Economics, Elsevier, vol. 61(1), pages 61-84, February.
    3. Clemens, Michael A. & Kenny, Charles J. & Moss, Todd J., 2007. "The Trouble with the MDGs: Confronting Expectations of Aid and Development Success," World Development, Elsevier, vol. 35(5), pages 735-751, May.
    4. Hristos Doucouliagos & Martin Paldam, 2007. "A meta-analysis of development aid allocation: The effects of income level and population size," Economics Working Papers 2007-15, Department of Economics and Business Economics, Aarhus University.
    5. William Easterly, 2003. "Can Foreign Aid Buy Growth?," Journal of Economic Perspectives, American Economic Association, vol. 17(3), pages 23-48, Summer.
    6. Evan Osborne, 2002. "Rethinking Foreign Aid," Cato Journal, Cato Journal, Cato Institute, vol. 22(2), pages 297-316, Fall.
    7. Baltagi, Badi H. & Wu, Ping X., 1999. "Unequally Spaced Panel Data Regressions With Ar(1) Disturbances," Econometric Theory, Cambridge University Press, vol. 15(6), pages 814-823, December.
    8. Jeffrey M Wooldridge, 2010. "Econometric Analysis of Cross Section and Panel Data," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262232588, December.
    9. Jan Pettersson, 2007. "Foreign sectoral aid fungibility, growth and poverty reduction," Journal of International Development, John Wiley & Sons, Ltd., vol. 19(8), pages 1074-1098.
    10. Paul Mosley & John Hudson & Arjan Verschoor, 2004. "Aid, Poverty Reduction and the 'New Conditionality'," Economic Journal, Royal Economic Society, vol. 114(496), pages 217-243, June.
    11. Calì, Massimiliano & te Velde, Dirk Willem, 2011. "Does Aid for Trade Really Improve Trade Performance?," World Development, Elsevier, vol. 39(5), pages 725-740, May.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ojeaga, Paul, 2012. "Foreign Aid and African Exporters: Help or Harm?," MPRA Paper 55564, University Library of Munich, Germany.
    2. Temple, Jonathan R.W., 2010. "Aid and Conditionality," Handbook of Development Economics, in: Dani Rodrik & Mark Rosenzweig (ed.), Handbook of Development Economics, edition 1, volume 5, chapter 0, pages 4415-4523, Elsevier.
    3. Clemens, Michael A. & Kenny, Charles J. & Moss, Todd J., 2007. "The Trouble with the MDGs: Confronting Expectations of Aid and Development Success," World Development, Elsevier, vol. 35(5), pages 735-751, May.
    4. Kilby, Christopher, 2005. "Aid and regulation," The Quarterly Review of Economics and Finance, Elsevier, vol. 45(2-3), pages 325-345, May.
    5. Michael Clemens & Steven Radelet & Rikhil Bhavnani, 2004. "Counting Chickens When They Hatch: The Short-term Effect of Aid on Growth," Working Papers 44, Center for Global Development.
    6. Czarnitzki, Dirk & Doherr, Thorsten & Hussinger, Katrin & Schliessler, Paula & Toole, Andrew A., 2016. "Knowledge Creates Markets: The influence of entrepreneurial support and patent rights on academic entrepreneurship," European Economic Review, Elsevier, vol. 86(C), pages 131-146.
    7. Juergen Bitzer & Erkan Goeren, 2018. "Foreign Aid and Subnational Development: A Grid Cell Analysis," Working Papers V-407-18, University of Oldenburg, Department of Economics, revised Mar 2018.
    8. Kilby, Christopher, 2005. "World Bank lending and regulation," Economic Systems, Elsevier, vol. 29(4), pages 384-407, December.
    9. Schober, Dominik, 2013. "Static vs. dynamic impacts of unbundling: Electricity markets in South America," ZEW Discussion Papers 13-033, ZEW - Leibniz Centre for European Economic Research.
    10. Oliver Morrissey, 2012. "Aid and Government Fiscal Behaviour: What Does the Evidence Say?," WIDER Working Paper Series wp-2012-001, World Institute for Development Economic Research (UNU-WIDER).
    11. Axel Dreher & Jenny Simon & Justin Valasek, 2021. "Optimal decision rules in multilateral aid funds," The Review of International Organizations, Springer, vol. 16(3), pages 689-719, July.
    12. Katarina Juselius & Niels Framroze Møller & Finn Tarp, 2014. "The Long-Run Impact of Foreign Aid in 36 African Countries: Insights from Multivariate Time Series Analysis," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 76(2), pages 153-184, April.
    13. Qayyum, Unbreen & Din, Musleh-ud & Haider, Adnan, 2014. "Foreign aid, external debt and governance," Economic Modelling, Elsevier, vol. 37(C), pages 41-52.
    14. Hicks, Robert L. & Parks, Bradley C. & Tierney, Michael J., 2005. "Explaining the Allocation of Bilateral and Multilateral Environmental Aid to Developing Countries," 2005 Annual meeting, July 24-27, Providence, RI 19346, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    15. Lessmann, Christian & Markwardt, Gunther, 2010. "Fiscal federalism and foreign transfers: does inter-jurisdictional competition increase foreign aid effectiveness?," Dresden Discussion Paper Series in Economics 10/10, Technische Universität Dresden, Faculty of Business and Economics, Department of Economics.
    16. Koppenberg, Maximilian & Mishra, Ashok K. & Hirsch, Stefan, 2023. "Food Aid and Violent Conflict: A Review of Literature," IZA Discussion Papers 16574, Institute of Labor Economics (IZA).
    17. Hristos Doucouliagos & Martin Paldam, 2009. "The Aid Effectiveness Literature: The Sad Results Of 40 Years Of Research," Journal of Economic Surveys, Wiley Blackwell, vol. 23(3), pages 433-461, July.
    18. Mark McGillivray, 2006. "Aid Allocation and Fragile States," WIDER Working Paper Series DP2006-01, World Institute for Development Economic Research (UNU-WIDER).
    19. Annen, Kurt & Knack, Stephen, 2018. "On the delegation of aid implementation to multilateral agencies," Journal of Development Economics, Elsevier, vol. 133(C), pages 295-305.
    20. SAWADA Yasuyuki & YAMADA Hiroyuki & KUROSAKI Takashi, 2008. "Is Aid Allocation Consistent with Global Poverty Reduction?: A Cross-Donor Comparison," Discussion papers 08025, Research Institute of Economy, Trade and Industry (RIETI).

    More about this item

    Keywords

    Foreign Aid; Government Economic Policy; Institutional Quality; Trade;
    All these keywords.

    JEL classification:

    • F1 - International Economics - - Trade
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:55580. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.