Aid for Trade Facilitation

32 Pages Posted: 20 Apr 2016

See all articles by Matthias Helble

Matthias Helble

Asian Development Bank; ADBI; ADBI

Catherine L. Mann

Brandeis University

John S. Wilson

World Bank - Development Research Group (DECRG)

Date Written: September 1, 2009

Abstract

Does foreign aid spent on trade facilitation increase trade flows of developing countries? There is an on-going and high profile discussion of aid-for-trade associated with the Doha negotiations of the World Trade Organization. There continue also questions about how best to achieve the Millennium Development Goals. The analysis in this paper explicitly considers how to target aid most effectively to increase trade - a fundamental question related to the crisis and policy debate over restarting the world trading system. Using detailed data on aid flows from the OECD, the analysis here estimates the responsiveness of trade flows to specific types of foreign aid. The findings indicate that aid directed toward promoting trade enhances the trade performance of recipient countries: a 1 percent increase in aid directed toward trade policy and regulatory reform (amounting to about US$11.7 million more such aid) could generate an increase in global trade of about US$818 million. This yields a rate of return on every dollar of this type of aid of about US$697 in additional trade. As the dollar aid flow is relatively small, such targeted aid mitigates concerns about absorptive capacity and real exchange rate appreciation, which may accompany larger disbursements.

Suggested Citation

Helble, Matthias and Mann, Catherine L. and Wilson, John S., Aid for Trade Facilitation (September 1, 2009). World Bank Policy Research Working Paper No. 5064, Available at SSRN: https://ssrn.com/abstract=1484549

Matthias Helble (Contact Author)

Asian Development Bank ( email )

Philippines
006326831120 (Phone)

ADBI ( email )

Kasumigaseki Building 8F
3-2-5, Kasumigaseki, Chiyoda-ku
Tokyo, 100-6008
Japan

ADBI ( email )

Kasumigaseki Building 8F
3-2-5, Kasumigaseki, Chiyoda-ku
Tokyo, 100-6008
Japan

Catherine L. Mann

Brandeis University ( email )

Waltham, MA
United States
978-505-8861 (Phone)

John S. Wilson

World Bank - Development Research Group (DECRG) ( email )

1818 H. Street, N.W.
MSN3-311
Washington, DC 20433
United States

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