Do Aid for Trade Flows Help Reduce the Shadow Economy in Recipient Countries?

Sèna Kimm Gnangnon ()
Additional contact information
Sèna Kimm Gnangnon: World Trade Organization—Rue de Lausanne 154, CH-1211 Geneva 21, Switzerland

Economies, 2022, vol. 10, issue 12, 1-33

Abstract: The present analysis assessed the effect of Aid-for-Trade (AfT) flows on the shadow economy using an unbalanced panel dataset of 106 countries over the period of 2002 to 2015. The empirical results obtained by means of the two-step system generalized method of moments showed that higher AfT flows were associated with a decrease in the size of the shadow economy, with less developed countries experiencing a greater negative effect of AfT flows on the shadow economy than relatively advanced countries among recipient countries of AfT flows. AfT interventions reduced the size of the shadow economy in countries that faced high trade costs as well as in those that experienced a depreciation in the real exchange rate. Finally, AfT interventions reduced the size of the shadow economy in countries that improved economic sophistication.

Keywords: Aid for Trade; trade costs; real exchange rate; shadow economy (search for similar items in EconPapers)
JEL-codes: E F I J O Q (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.mdpi.com/2227-7099/10/12/310/pdf (application/pdf)
https://www.mdpi.com/2227-7099/10/12/310/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jecomi:v:10:y:2022:i:12:p:310-:d:994775

Access Statistics for this article

Economies is currently edited by Ms. Hongyan Zhang

More articles in Economies from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().