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The Coherence of Trade Flows and Trade Policies with Aid and Investment Flows

Akiko Suwa-Eisenmann and Thierry Verdier

No 254, OECD Development Centre Working Papers from OECD Publishing

Abstract: This paper provides a theoretical and empirical overview of the relationships among trade, aid and FDI, both in terms of policy interactions and interactions among resource flows. Aid flows from one country to another can have positive or negative effects on trade flows between those countries. These effects, in turn, may act at two different levels. There are macro-level links between aid and trade: aid enhances saving, permitting more imports, or aid raises the real exchange rate, depressing exports. There are also micro-level mechanisms: tied aid may increase exports if it is spent on enhancing trade capacity, but other forms of tied aid merely lead to allocative inefficiency. Aid flows can affect trade policy in the developing country that... Cet article fournit une vue d’ensemble à la fois théorique et pratique des relations existant entre les échanges, l’aide et les IDE, à la fois en termes d’interactions politiques et d’interactions entre les flux de ressources. Les flux d’aides d’un pays à un autre peuvent avoir des effets positifs ou négatifs sur les flux commerciaux des pays concernés. Ces effets peuvent agir à deux différents niveaux. Il existe ainsi des liens macroéconomiques entre l’aide et le commerce : l’aide fait augmenter l’épargne, ce qui permet plus d’importations, ou alors l’aide fait monter le taux de change réel, ce qui diminue les exportations. Il existe également des mécanismes microéconomiques : une aide liée peut augmenter les exportations si elle est utilisée pour le...

Date: 2006-08-01
New Economics Papers: this item is included in nep-afr and nep-int
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