Is aid for trade effective? A quantile regression approach

Inmaculada Martínez-Zarzoso, Felicitas Nowak-Lehmann D. and Kai Rehwald
Authors registered in the RePEc Author Service: Felicitas Nowak-Lehmann D.

No 210, University of Göttingen Working Papers in Economics from University of Goettingen, Department of Economics

Abstract: This paper investigates whether Aid for Trade (AfT) improves export performance, i.e. does AfT lead to greater exports? Using panel data and panel quantile regression, our results suggest that overall AfT disbursements promote the export of goods and services mainly for the .50 and .75 quantiles. Our results also show that for some types of AfT this effect essentially vanishes at the lower tail of the conditional distribution of exports. Hence, countries that export more in volume are those benefiting most from AfT. We also investigate which types of AfT are effective. In particular, we find that aid used to build production capacity is effective. This type of aid is associated with higher exports for almost all quantiles, with the effect increasing at the upper tail of the conditional distribution. Aid used to build infrastructure is also found to affect exports at the upper tail of the distribution. In contrast, aid for trade policy and aid disbursed for general budget support (an untargeted type of aid) are not associated with greater export levels. This finding holds true irrespective of the quantile.

Keywords: development aid; North-South trade; aid for trade; panel data; aid effectiveness (search for similar items in EconPapers)
JEL-codes: F10 (search for similar items in EconPapers)
Date: 2014
New Economics Papers: this item is included in nep-dev and nep-int
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:cegedp:210

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