IDEAS home Printed from https://ideas.repec.org/p/wbk/wbrwps/5728.html
   My bibliography  Save this paper

Aid to the services sector : does it affect manufacturing exports ?

Author

Listed:
  • Ferro, Esteban
  • Portugal-Perez, Alberto
  • Wilson, John S.

Abstract

This paper evaluates the impact of foreign aid to five service sectors (transportation, information and communications technologies, energy, banking/financial services, and business services) on exports of downstream manufacturing sectors in developing countries. To address the reverse causality between aid and exports, the analysis relies on an original identification strategy that exploits (i) the variation of aid flows to service sectors, and (ii) the variation of service-intensities across industrial sectors and countries using input-output data. The authors find a positive effect of aid to services, in general, on downstream manufacturing exports of developing countries across regions and income-level groups.

Suggested Citation

  • Ferro, Esteban & Portugal-Perez, Alberto & Wilson, John S., 2011. "Aid to the services sector : does it affect manufacturing exports ?," Policy Research Working Paper Series 5728, The World Bank.
    • Handle: RePEc:wbk:wbrwps:5728
    as

    Download full text from publisher

    File URL: http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2011/07/19/000158349_20110719152138/Rendered/PDF/WPS5728.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Markus Brückner, 2013. "On the simultaneity problem in the aid and growth debate," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 28(1), pages 126-150, January.
    2. Angeles, Luis & Neanidis, Kyriakos C., 2009. "Aid effectiveness: the role of the local elite," Journal of Development Economics, Elsevier, vol. 90(1), pages 120-134, September.
    3. Rajan, Raghuram G & Zingales, Luigi, 1998. "Financial Dependence and Growth," American Economic Review, American Economic Association, vol. 88(3), pages 559-586, June.
    4. Matthias Helble & Catherine Mann & John Wilson, 2012. "Aid-for-trade facilitation," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 148(2), pages 357-376, June.
    5. David Dollar & Craig Burnside, 2000. "Aid, Policies, and Growth," American Economic Review, American Economic Association, vol. 90(4), pages 847-868, September.
    6. Carl-Johan Dalgaard & Henrik Hansen & Finn Tarp, 2004. "On The Empirics of Foreign Aid and Growth," Economic Journal, Royal Economic Society, vol. 114(496), pages 191-216, June.
    7. Michael A. Clemens & Steven Radelet & Rikhil Bhavnani, 2004. "Counting chickens when they hatch: The short-term effect of aid on growth," International Finance 0407010, University Library of Munich, Germany.
    8. Arellano, Cristina & Bulír, Ales & Lane, Timothy & Lipschitz, Leslie, 2009. "The dynamic implications of foreign aid and its variability," Journal of Development Economics, Elsevier, vol. 88(1), pages 87-102, January.
    9. Miller,Ronald E. & Blair,Peter D., 2009. "Input-Output Analysis," Cambridge Books, Cambridge University Press, number 9780521517133.
    10. Akiko Suwa-Eisenmann & Thierry Verdier, 2007. "Aid and trade," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 23(3), pages 481-507, Autumn.
    11. Miller,Ronald E. & Blair,Peter D., 2009. "Input-Output Analysis," Cambridge Books, Cambridge University Press, number 9780521739023.
    12. Rajan, Raghuram G. & Subramanian, Arvind, 2011. "Aid, Dutch disease, and manufacturing growth," Journal of Development Economics, Elsevier, vol. 94(1), pages 106-118, January.
    13. Raghuram G. Rajan & Arvind Subramanian, 2008. "Aid and Growth: What Does the Cross-Country Evidence Really Show?," The Review of Economics and Statistics, MIT Press, vol. 90(4), pages 643-665, November.
    14. François Bourguignon & Mark Sundberg, 2007. "Aid Effectiveness – Opening the Black Box," American Economic Review, American Economic Association, vol. 97(2), pages 316-321, May.
    15. Paul Brenton & Erik von Uexkull, 2014. "Product specific technical assistance for exports – has it been effective?," World Scientific Book Chapters, in: INTERNATIONAL TRADE, DISTRIBUTION AND DEVELOPMENT Empirical Studies of Trade Policies, chapter 18, pages 373-392, World Scientific Publishing Co. Pte. Ltd..
    16. Glenn Ellison & Edward L. Glaeser & William R. Kerr, 2010. "What Causes Industry Agglomeration? Evidence from Coagglomeration Patterns," American Economic Review, American Economic Association, vol. 100(3), pages 1195-1213, June.
    17. Younger, Stephen D., 1992. "Aid and the Dutch disease: Macroeconomic management when everybody loves you," World Development, Elsevier, vol. 20(11), pages 1587-1597, November.
    18. Mitton, Todd, 2008. "Institutions and concentration," Journal of Development Economics, Elsevier, vol. 86(2), pages 367-394, June.
    19. Collier, Paul & Dollar, David, 2002. "Aid allocation and poverty reduction," European Economic Review, Elsevier, vol. 46(8), pages 1475-1500, September.
    20. Trefler, Daniel & Zhu, Susan Chun, 2010. "The structure of factor content predictions," Journal of International Economics, Elsevier, vol. 82(2), pages 195-207, November.
    21. William Easterly, 2003. "Can Foreign Aid Buy Growth?," Journal of Economic Perspectives, American Economic Association, vol. 17(3), pages 23-48, Summer.
    22. Laura Alfaro & Andrew Charlton, 2009. "Intra-industry Foreign Direct Investment," American Economic Review, American Economic Association, vol. 99(5), pages 2096-2119, December.
    23. Daron Acemoglu & Simon Johnson & Todd Mitton, 2009. "Determinants of Vertical Integration: Financial Development and Contracting Costs," Journal of Finance, American Finance Association, vol. 64(3), pages 1251-1290, June.
    24. 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.
    25. Hummels, David & Ishii, Jun & Yi, Kei-Mu, 2001. "The nature and growth of vertical specialization in world trade," Journal of International Economics, Elsevier, vol. 54(1), pages 75-96, June.
    26. Mr. Thierry Tressel & Mr. Alessandro Prati, 2006. "Aid Volatility and Dutch Disease: Is There a Role for Macroeconomic Policies?," IMF Working Papers 2006/145, International Monetary Fund.
    27. William Easterly & Ross Levine & David Roodman, 2003. "New Data, New Doubts: Revisiting "Aid, Policies, and Growth"," Working Papers 26, Center for Global Development.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Olivier Cadot & Jaime de Melo & Patrick Plane & Laurent Wagner & Martha Tesfaye Woldemichael, 2016. "Industrialisation et transformation structurelle : l’Afrique subsaharienne peut-elle se développer sans usines ?," Revue d’économie du développement, De Boeck Université, vol. 24(2), pages 19-49.
    2. Jaud, Melise & Cadot, Olivier, 2012. "A second look at the pesticides initiative program: evidence from Senegal," World Trade Review, Cambridge University Press, vol. 11(3), pages 490-506, July.
    3. Olivier Cadot & Ana Fernandes & Julien Gourdon & Aaditya Mattoo & Jaime Melo, 2014. "Evaluating Aid for Trade: A Survey of Recent Studies," The World Economy, Wiley Blackwell, vol. 37(4), pages 516-529, April.
    4. 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.
    5. Asian Development Bank Institute, 2017. "Aid for Trade in Asia and the Pacific: Thinking Forward About Trade Costs and the Digital Economy," Working Papers id:11882, eSocialSciences.
    6. Gnangnon, Sèna Kimm, 2020. "Aid for Trade and Services Export Diversification in Recipient-Countries," EconStor Preprints 210467, ZBW - Leibniz Information Centre for Economics.
    7. Portugal-Perez, Alberto & Wilson, John S., 2012. "Export Performance and Trade Facilitation Reform: Hard and Soft Infrastructure," World Development, Elsevier, vol. 40(7), pages 1295-1307.
    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. Savin, Ivan & Marson, Marta & Sutormina, Marina, 2020. "How different aid flows affect different trade flows: Evidence from Africa and its largest donors," Structural Change and Economic Dynamics, Elsevier, vol. 55(C), pages 119-136.
    10. Sessinou Erick Abel Dedehouanou & Abou Kane, 2021. "Spillover Effect of Official Development Assistance on Sectoral Economic Growth in West African Economic and Monetary Union Countries," International Journal of Economics and Financial Issues, Econjournals, vol. 11(3), pages 1-12.
    11. Chandan Kumar Roy & Huang Xiaoling, 2020. "Effects of Paperless Trade Policy and Aid for Trade on Export Performance: Evidence from SASEC And CAREC Countries," Asian Development Policy Review, Asian Economic and Social Society, vol. 8(1), pages 61-74, March.
    12. JunYun Kim & Hongshik Lee & Joonhyung Lee, 2022. "Does Aid for Trade Promote Vertical Specialization?," Asian Economic Journal, East Asian Economic Association, vol. 36(2), pages 127-158, June.
    13. Olivier CADOT & Jaime de MELO & Patrick PLANE & Laurent WAGNER & Martha TESFAYE WOLDEMICHAEL, 2017. "L’Afrique subsaharienne peut-elle se développer sans usines ?," Working Paper 084c8bee-b301-4412-8ca4-c, Agence française de développement.
    14. Cunha Nuno & Forte Rosa, 2017. "The Comparative Advantages in the Services Sector of Developing Economies," Global Economy Journal, De Gruyter, vol. 17(4), pages 1-24, December.
    15. 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 505-535, September.
    16. Björn Thor Arnarson & Joakim Gullstrand, 2022. "Linking local services to global manufactures," Scandinavian Journal of Economics, Wiley Blackwell, vol. 124(1), pages 3-34, January.
    17. Léopold BIARDEAU & Anne BORING, 2017. "L’impact de l’aide au développement sur les flux commerciaux entre pays donateurs et pays récipiendaires," Working Paper 464d860e-562e-4ae7-98f5-1, Agence française de développement.
    18. Hyun‐Hoon Lee & Donghyun Park & Meehwa Shin, 2015. "Do Developing‐country WTO Members Receive More Aid for Trade (AfT)?," The World Economy, Wiley Blackwell, vol. 38(9), pages 1462-1485, September.
    19. Nadeem Abdulmalik Abdulrahman Aljonaid & Fengming Qin & Zhaoyong Zhang, 2022. "The Heterogeneous Impact of Sectoral Foreign Aid Inflows on Sectoral Growth: SUR Evidence from Selected Sub-Saharan African and MENA Countries," JRFM, MDPI, vol. 15(3), pages 1-45, February.
    20. Takumi Naito, 2016. "Aid for Trade and Global Growth," Review of International Economics, Wiley Blackwell, vol. 24(5), pages 1178-1201, November.

    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. Olivier Cadot & Ana M. Fernandes & Julien Gourdon & Aaditya Mattoo, 2011. "Where to Spend the Next Million? Applying Impact Evaluation to Trade Assistance," World Bank Publications - Books, The World Bank Group, number 16358.
    2. Rajan, Raghuram G. & Subramanian, Arvind, 2011. "Aid, Dutch disease, and manufacturing growth," Journal of Development Economics, Elsevier, vol. 94(1), pages 106-118, January.
    3. 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.
    4. Savin, Ivan & Marson, Marta & Sutormina, Marina, 2020. "How different aid flows affect different trade flows: Evidence from Africa and its largest donors," Structural Change and Economic Dynamics, Elsevier, vol. 55(C), pages 119-136.
    5. 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.
    6. Yu Ri Kim, 2019. "Does aid for trade diversify the export structure of recipient countries?," The World Economy, Wiley Blackwell, vol. 42(9), pages 2684-2722, September.
    7. Lessmann, Christian & Markwardt, Gunther, 2012. "Aid, Growth and Devolution," World Development, Elsevier, vol. 40(9), pages 1723-1749.
    8. Tierney, Michael J. & Nielson, Daniel L. & Hawkins, Darren G. & Roberts, J. Timmons & Findley, Michael G. & Powers, Ryan M. & Parks, Bradley & Wilson, Sven E. & Hicks, Robert L., 2011. "More Dollars than Sense: Refining Our Knowledge of Development Finance Using AidData," World Development, Elsevier, vol. 39(11), pages 1891-1906.
    9. Maruta, Admasu Asfaw, 2019. "Can aid for financial sector buy financial development?," Journal of Macroeconomics, Elsevier, vol. 62(C).
    10. Ralf Hepp, 2005. "Health Expenditures Under the HIPC Debt Initiative," International Finance 0510005, University Library of Munich, Germany.
    11. Ralf Hepp, 2005. "Can Debt Relief Buy Growth?," International Finance 0510003, University Library of Munich, Germany.
    12. Strand, Jon, 2009. ""Revenue management"effects related to financial flows generated by climate policy," Policy Research Working Paper Series 5053, The World Bank.
    13. Joong Shik Kang & Alessandro Prati & Alessandro Rebucci, 2012. "Aid, Exports, and Growth: a Time-Series Perspective on the Dutch Disease Hypothesis," Review of Economics and Institutions, Università di Perugia, vol. 3(2).
    14. Kyriakos C. Neanidis & Dimitrios Varvarigos, 2007. "The Allocation of volatile aid and economic growth: Evidence and a suggestive theory," Discussion Paper Series 2007_07, Department of Economics, Loughborough University, revised Mar 2007.
    15. Almuth Scholl, 2009. "Aid Effectiveness and Limited Enforceable Conditionality," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 12(2), pages 377-391, April.
    16. Evelyn Wamboye & Abel Adekola & Bruno S. Sergi, 2014. "Foreign aid, legal origin, economic growth and Africa’s least developed countries," Progress in Development Studies, , vol. 14(4), pages 335-357, October.
    17. Dimitris K Christopoulos & Gregorios Siourounis & Irene Vlachaki, 2016. "Democratic Reforms, Foreign Aid and Production Inefficiency," Manchester School, University of Manchester, vol. 84(3), pages 363-389, June.
    18. Museru, Malimu & Toerien, Francois & Gossel, Sean, 2014. "The Impact of Aid and Public Investment Volatility on Economic Growth in Sub-Saharan Africa," World Development, Elsevier, vol. 57(C), pages 138-147.
    19. Chauvet, Lisa & Ehrhart, Hélène, 2018. "Aid and growth: evidence from firm-level data," Journal of Development Economics, Elsevier, vol. 135(C), pages 461-477.
    20. Minoiu, Camelia & Reddy, Sanjay G., 2010. "Development aid and economic growth: A positive long-run relation," The Quarterly Review of Economics and Finance, Elsevier, vol. 50(1), pages 27-39, February.

    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:wbk:wbrwps:5728. 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: Roula I. Yazigi (email available below). General contact details of provider: https://edirc.repec.org/data/dvewbus.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.