Effects of STABEX on ACPs Economic Growth: Further Evidence

Abstract:     
The paper deals with the economic growth of the open and small developing countries which signed the Lome Convention (henceforth ACPs). Results showing that earnings instability damages their economic performance can be used to support the EUpolicy of guaranteeing financial aid to those countries suffering reductions in export proceeds. The second section of the paper analysing the workings of STABEX, however, highlights certain weaknesses in the effectiveness of STABEX transfers when their impact on economic growth is considered. The general conclusion is that, if the current EU-ACP negotiations for Lomè V are to be successful, then some aspects of the scheme (eligibility criteria and use of funds) will have to be radically changed.

Keywords: Export Earnigns Instability, Developing Countries, Financing Facility, Exogenous Shocks

JEL Classification: O11, O40, Q47, F33

Accepted Paper Series