Does aid for trade enhance export performance? Investigating on the infrastructure channel

Mariana Vijil and Laurent Wagner

No 210383, Working Papers from Institut National de la recherche Agronomique (INRA), Departement Sciences Sociales, Agriculture et Alimentation, Espace et Environnement (SAE2)

Abstract: Today, there are few empirical studies assessing the effectiveness of aid for trade on trade pe rformance. Furthermore, existing works do not test channels by which this impact is transiting. We address this question using an empirical analysis constructed in two steps. Following a model of export performance, we first test if institutions and infrastructure, our two potential channels of transmission, are indeed determinants of export performance. Secondly, we test the impact of aid for trade sectoral flows on the determinants that were highlighted in the first part. We show that the infrastructure channel appears to be highly significant in the first step whereas the institutional one turns out to have limited impact on developing countries’ exports. Furthermore, in our second step, aid for infrastructure seems, once instrumented, to have a strong and positive impact on the infrastructure level. Our results indicate that a 10% increase in aid to infrastructure commitments per capita leads to an average increase of the exports over GDP ratio for a developing country of 2.34%. It is also equivalent to a 2.71% reduction of the tariff and non-tariff barriers. This highlights the very high economic impact of aid for trade throughout the channel of infrastructures.

Keywords: International Development; International Relations/Trade (search for similar items in EconPapers)
Pages: 40
Date: 2010
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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https://ageconsearch.umn.edu/record/210383/files/WP%20SMART-LERECO%2010-07.pdf (application/pdf)

Related works:
Journal Article: Does Aid for Trade Enhance Export Performance? Investigating the Infrastructure Channel (2012)
Working Paper: Does Aid for Trade Enhance Export Performance? Investigating the Infrastructure Channel (2012)
Working Paper: Does aid for trade enhance export performance? Investigating on the infrastructure channel (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:inrasl:210383

DOI: 10.22004/ag.econ.210383

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