Aid and Trade from a Donor's Perspective

Felicitas Nowak-Lehmann D., Inmaculada Martínez-Zarzoso, Stephan Klasen and Dierk Herzer
Authors registered in the RePEc Author Service: Felicitas Nowak-Lehmann D.

No 27, Proceedings of the German Development Economics Conference, Zurich 2008 from Verein für Socialpolitik, Research Committee Development Economics

Abstract: Aid is given for various purposes. Its impact on donors' exports usually depends on whether it is given for altruistic reasons (to overcome human tragedies and disasters) or in an understanding to promote development (to finance infrastructure or social projects). As to humanitarian aid the impact of aid on donors' exports will be most probably lower than in the latter case where related and unrelated imports for realizing development projects have been explicitly or implicitly agreed upon. Germany is known to be a country that ranks below average in tying its aid among the EU countries. Nonetheless there have been studies that found an extremely high positive impact of German bilateral aid on German exports. This finding will be re-examined in this study. An augmented gravity model is utilized to evaluate the impact of German bilateral aid on German exports. Stochastic and deterministic trends in the series are controlled to avoid spurious regression results.

Keywords: bilateral aid; donors' exports; time series properties of panel data; ECM and DOLS estimation in a panel context (search for similar items in EconPapers)
JEL-codes: C23 F14 F35 (search for similar items in EconPapers)
Date: 2008
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Citations: View citations in EconPapers (1)

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