Aid-for-Trade and Export Performance of Developing Countries

Shankar Ghimire, Debasri Mukherjee () and Eskander Alvi

Applied Econometrics and International Development, 2016, vol. 16, issue 1, 23-34

Abstract: This paper employs system-GMM technique to examine whether foreign-aid specifically targeted for trade promotion (Aid-for-Trade or AFT) helps aid-receiving countries improve their export performance, as measured by export level, export growth, and the change in export-GDP ratio. System-GMM is used to control for the underlying endogeneity problem as well as to capture dynamic behavior of the relation over time. We find positive and significant effect of AFT on multiple measures of export performance. However, the targeted aid is found to exhibit diminishing returns, thus reinforcing the idea of AFT’s important but limited role in the export promotion of aid recipients.

Keywords: Aid-for-Trade; Exports; Dynamic Panel; System-GMM. (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (13)

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