Succeeding with Trade Reforms

The Role of Aid for Trade

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Succeeding with Trade Reforms: The Role of Aid for Trade highlights the potential of aid for trade to boost economic growth and reduce poverty, while discussing the various reasons why it may not be realised. In so doing, this book draws lessons for the design of aid-for-trade projects and programmes and for increasing their effectiveness. Building on this analysis, the book also quantifies the binding constraints to trade in developing countries and the importance of complementary and compatible policies (such as education, governance, business environment and macroeconomic stability) to maximise the impact of trade reforms on trade and economic growth.




Empirical literature on trade and growth supports the idea that trade can be an engine for growth and development. But needs in order to expand trade are numerous while political capital and financial resources (including aid for trade) to support reforms will be available only over time. Thus, for trade reforms to be successful and for aid for trade to be effective, it is crucial to sequence appropriately the reforms and to complement them with policies that make these reforms sustainable and increase their impact on growth and poverty reduction. Identifying the most binding constraints is not easy. This book has highlighted those identified by the empirical experience as the most common and provided a quantification of their impact on trade and growth. This exercise shows that the most binding constraints differ across countries although it appears that electricity is a major constraint shared by many countries.


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