Impacts of tangible and intangible elements of Aid for Trade on the globalisation of developing countries

Hyo Won Lee and Youngwan Kim

The World Economy, 2020, vol. 43, issue 8, 2153-2171

Abstract: The Aid for Trade initiative was launched by the WTO in 2005 to help developing countries build their supply‐side capacity and trade‐related infrastructure to improve their capacity in the global market. This study investigates the impacts of both the tangible and intangible elements of this initiative on the economic, social and political globalisation of recipient countries. Intangible elements of Aid for Trade (aid for trade policy and regulation) may be considered as the software of Aid for Trade, while tangible elements (aid for economic infrastructure and building productive capacity) are the hardware. Countries that receive Aid for Trade can use both types of elements to succeed in globalisation. This research hypothesises that the tangible elements of Aid for Trade have a singular effect on the overall level of globalisation since they are expected to only increase the level of economic globalisation. Moreover, we expect that the intangible elements of Aid for Trade will have multiple effects on the overall level of globalisation as they have an impact on not only economic aspects but also social and political aspects of it. Using the dataset of Aid for Trade from 2002 to 2015, we find that the intangible elements of Aid for Trade have increased the recipients' level of overall globalisation.

Date: 2020
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