Assessing Aid for Trade

Assessing Aid for Trade

Effectiveness, Current Issues and Future Directions You do not have access to this content

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Commonwealth Secretariat
30 Oct 2013
9781848591646 (PDF)

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Aid for Trade (AfT) has been an integral part of official development assistance (ODA) since its inception at the World Trade Organization’s Hong Kong Ministerial in 2005. While many observers agree that the initiative has generated momentum in securing more trade support, the policy discourse on AfT continues to be vibrant and dynamic.

This volume, comprising 16 chapters prepared by 20 renowned experts from a range of international organisations, think tanks and academic institutions, including Commonwealth Secretariat, ODI, ECDPM, DIE, ICTSD, Saana Consulting, WTI Advisors, and Columbia University, provides a comprehensive review of the Aid for Trade initiative.

Part I of this volume uses quantitative and qualitative analysis to examine the effectiveness of different components of Aid for Trade and underlying factors affecting the outcomes. Part II provides analyses of current issues, including regional AfT, global value chains, infrastructure for development for agriculture, AfT adjustment and lessons from emerging economies in aiding exports. Part III looks to the future, proposing a range of possible directions including an alternative way to improve trade outcomes for developing countries from Nobel Prize-winning economist Joseph Stiglitz.

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  • Abbreviations and acronyms
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  • Aid for Trade: Effectiveness, Current Issues and Future Directions – An Overview

    For several decades now a large number of developing countries have striven for a development strategy that would ensure sustained economic growth, result in employment opportunities and eliminate poverty. Nearly all countries have now shifted from an inward-looking approach to an outward-oriented trade-led growth and development approach, with the export sector receiving policy support and, among other things, foreign investment being promoted. A salient feature of this tradefocused growth and development approach has been marked by developing countries’ increasingly active participation in multilateral and regional trade negotiations. Unilateral liberalisation and regional and multilateral trade agreements led to new international trade policies, although there is a long way to go to achieve the desirable development outcomes.

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  • Expand / Collapse Hide / Show all Abstracts Effectiveness of Aid for Trade

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    • Impact of Aid for Trade: A Survey of Empirical Evidence

      The amount of Aid for Trade (AfT) assistance provided over the past few years is considerable. AfT is recognised as an important development tool facilitating the integration of developing countries into the global economy through initiatives that expand trade capacity.

    • Towards a Quantitative Assessment of Aid for Trade

      Aid for Trade (AfT) has moved up both the aid and trade agendas. Several studies have described the rationale for AfT, but it is now time to move beyond the descriptive stage and analyse the needs and design its implementation. A key motivation behind the research presented in this paper is that there is a lack of good quantitative evidence on (i) actual AfT flows in countries1 and (ii) the possible effects of AfT.

    • Aid for Trade and the Integration of Small and Vulnerable Economies into the Global Economy

      This chapter extends the assessment of Aid for Trade (AfT) to a special group of countries, known as the small and vulnerable economies (SVEs). SVEs are a group of developing countries facing some unique challenges related to their integration into the global economy. This group mainly includes Caribbean and Pacific small and island states, whose exports tend to be concentrated in a few sectors and are extremely vulnerable to the volatile international markets.

    • Aid for Trade: Impact on Sub-Saharan Africa

      One of the major constraints facing the poor countries in sub-Saharan Africa (SSA) has been their disappointing trade performance. Although there are recent signs of their enhanced participation in the global trading system, largely due to the buoyant commodity prices that have now been sustained for a considerable time, the region’s relative significance in world trade in value terms still hovers around at a level which is just half the 3 per cent share it had enjoyed almost 50 years ago.

    • Aid for Trade in Practice: Addressing Political Economy Barriers to Improve Development Outcomes

      Aid for Trade in Practice: Addressing Political Economy Barriers to Improve Development Outcomes

    • Assessing the Effectiveness of Aid for Trade: Lessons from the Ground

      This chapter enquires into the conditions that make Aid for Trade (AfT) effective by drawing on evidence on the ground. This evidence is not quantitative, nor does the chapter purport to undertake a systematic evaluation of the AfT initiative. Instead, it is based on a set of country-level case studies that the International Centre for Trade and Sustainable Development (ICTSD) has undertaken since mid-2010, using a unique methodology developed jointly with SAWTEE.

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  • Expand / Collapse Hide / Show all Abstracts Selected current issues in Aid for Trade

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    • Regional Aid for Trade Effectiveness and Corridors

      After emerging at the WTO (World Trade Organization) Hong Kong Ministerial Meeting in 2005, the Aid for Trade (AfT) initiative is now a mainstreamed credo of the international trading system. There is now broad acceptance of the need to assist developing countries to build their capacity to benefit from trade. Moreover, there is evidence to suggest that the AfT initiative has succeeded in mobilising resources for trade-related activities while also improving the quality of aid in terms of the ownership and design of programmes and policies (OECD/WTO 2009).

    • Regional Aid for Trade and Aid Effectiveness: Examples from East and West Africa

      This chapter provides an introductory review of regional Aid for Trade (AfT) and the extent to which aid effectiveness principles are applied through the use of case studies. The focus is on projects and programmes supporting regional economic integration, since many of these are regional and multi-country in nature. Geographically, the area of study is East and West Africa. The main aid effectiveness principles explored are ownership, alignment and harmonisation. The chapter does not attempt to conduct a comprehensive assessment but rather lays the groundwork for future work in this area.

    • Aid for Trade and Value Chains in Small and Vulnerable Economies and Least Developed Countries

      In recent times participation in global value chains (GVCs) is considered essential by most developing countries including small and vulnerable economies (SVEs) and least developed countries (LDCs). GVCs are seen as important routes to markets for export products and services, offering new opportunities to firms, particularly in expanding their business opportunities across borders. This is important, especially given that reaching international markets can be very difficult for firms located in SVEs and LDCs. There is a need to recognise a number of challenges which SVEs and LDCs have to face in terms of policy reforms aimed at increased and meaningful participation in GVCs.

    • Aid for Trade and Global Value Chains (GVCs): Engaging with High-value Agriculture GVCs and Developing Trade

      Aid for Trade (AfT) can be used to enhance global or regional value chains by working with the private sector and focusing on alleviating the binding constraints, or market failures, that hold back the appropriate functioning of value chains. For example, AfT can improve logistics, infrastructure or services. The research and analysis presented in this chapter assesses the role of AfT in assisting the integration of agricultural producers in sub-Saharan Africa (SSA) into high-value agricultural global value chains (GVCs).

    • Aid for Trade and Infrastructure Development for Agriculture

      Agriculture constitutes an important part of most low-income countries’ economies, and is generally the primary source of income in rural areas, directly through crop production, and indirectly through on-farm and off-farm employment in agriculturerelated industries (Haggblade et al. 1989; Reardon et al. 1998).

    • Aid for Trade Adjustment: Implications for Small and Vulnerable Economies and Least Developed Countries

      This chapter analyses the role of Aid for Trade (AfT) in supporting the costs of trade-related adjustment (TRA). The inauguration of the World Trade Organization (WTO) Work Programme on AfT at the 2005 Hong Kong Ministerial was widely hailed as the creation of a permanent policy link between the aid and trade debates, which (apart from the African, Caribbean and Pacific (ACP)–European Union (EU) process) had previously been conducted largely in isolation from one another. The creation of the AfT programme was particularly welcomed by developing countries, which had been calling for aid flows to build supply-side capacity and bridge gaps in export growth with more developed economies. The link between aid and trade was particularly seen as beneficial for the small and vulnerable economies (SVEs) and least developed countries (LDCs), as a means to overcome their relative isolation and narrow engagement with the global trading economy, and their vulnerability to sudden changes in revenue and welfare resulting from trade policy shifts at home and abroad.

    • Aiding Exports: Lessons from Emerging Economies

      Emerging economies have successfully supported their trade performance. This chapter reviews the cases of China, India and Brazil to describe which major activities they have implemented to improve their export performance. The specific contribution of the chapter is to examine how China, India and Brazil have facilitated trade, focusing on the provision of infrastructure and trade facilitation. Based on a review of the current literature, the chapter also reviews which lessons might be learned from these experiences in low-income countries (LICs).

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  • Expand / Collapse Hide / Show all Abstracts Future directions

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    • The Right to Trade: Rethinking the Aid for Trade Agenda

      The link between aid and trade has been an important nexus in the global development framework since the World Trade Organization (WTO) launched its ‘Aid for Trade’ initiative at the 2005 Ministerial in Hong Kong.

    • A Summary of Commonwealth Roundtable, on Aid for Trade

      The roundtable provided an opportunity for Professor Joseph Stiglitz to present the main arguments and findings of an ongoing study that he was undertaking in collaboration with Dr Andrew Charlton entitled ‘The Right to Trade’, and to receive comments and suggestions from participants. Their study examines the emergence of Aid for Trade (AfT), evaluates its performance to date, and then outlines an alternative path for AfT as part of a pro-development multilateral liberalisation agenda. They propose two new initiatives. First, the World Trade Organization (WTO) would enshrine a ‘Right to Trade’ operational within the WTO dispute settlement system. This right would give developing countries legal recourse against advanced countries whose policies materially affect the development of poor countries by restricting their ability to trade. Second, dedicated funds committed by rich countries to a ‘Global Trade Facility’ would be administered by the United Nations Conference on Trade and Development (UNCTAD) and dispersed through a competitive and transparent process based on needs and impact.

    • Future Directions in Aid for Trade

      The Aid for Trade (AfT) initiative is at a critical juncture. It has been successful in generating momentum over the past seven years by making donors and developing countries more aware of the role of trade in development and by increasing the amount of funds available for AfT. However, with aid resources under pressure (both the total aid budget and the resources available for AfT declined in 2011), with the nature and scope of development finance flows to developing countries changing rapidly, and with trade patterns continuing to change, the question is how the AfT initiative can remain relevant. We consider this question in this concluding chapter.

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