Aid for Trade and International Transactions in Goods and Services

Bernard Hoekman and Anirudh Shingal

No 2017/44, RSCAS Working Papers from European University Institute

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.

Keywords: Aid for trade; services trade; goods trade; complementarities; infrastructure (search for similar items in EconPapers)
JEL-codes: F10 F14 F35 (search for similar items in EconPapers)
Date: 2017-09
New Economics Papers: this item is included in nep-int
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Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Aid for trade and international transactions in goods and services (2020)
Working Paper: Aid for Trade and International Transactions in Goods and Services (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:rsc:rsceui:2017/44

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