The Impact of Aid for Trade on Trade Costs Facing African Economies

Bedassa Tadesse, Bichaka Fayissa and Elias Shukralla

A chapter in The Palgrave Handbook of Africa’s Economic Sectors, 2022, pp 943-975 from Springer

Abstract: Abstract This chapter examines: (a) the impact of aid-for-trade (AFT) on trade costs borne by African countries and (b) the role that infrastructure plays in mediating the effects, and the differential impacts of AFT from bilateral (BLT) and multilateral (MLT) sources using comprehensive bilateral trade cost data and a new index of infrastructure over the 2004–2011 period. Our results from a multilevel mixed-effects model show that increased AFT disbursements to African economies (both at the aggregate level and across the sources) lead to significant reductions in the costs of trade in African countries. The findings of this study further demonstrate that the relative impact of AFT is typically more pronounced in recipients with improved infrastructure and the level of AFT disbursements received from bilateral, or multilateral sources, suggesting the need for targeting infrastructure investments for enhancing the effectiveness of aid for trade.

Keywords: F1; F3; C5; Aid-for-Trade; Trading costs; Mixed-effects model (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-030-75556-0_37

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DOI: 10.1007/978-3-030-75556-0_37

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