Evaluating Aid for Trade: A Survey of Recent Studies

20 Pages Posted: 22 Oct 2013

See all articles by Olivier Cadot

Olivier Cadot

University of Lausanne - School of Economics and Business Administration (HEC-Lausanne); Centre for Economic Policy Research (CEPR); World Bank

Jaime de Melo

University of Geneva - Department of Political Economics; Centre for Economic Policy Research (CEPR); World Bank

Julien Gourdon

OECD

Aaditya Mattoo

World Bank - Development Research Group (DECRG)

Multiple version iconThere are 3 versions of this paper

Date Written: October 2013

Abstract

The demand for accountability in “Aid-for-Trade” (AFT) is increasing but monitoring has focused on case-studies and impressionistic narratives. The paper reviews recent evidence from a wide range of studies, recognizing that a multiplicity of approaches is needed to learn what works and what does not. The review concludes that there is some support for the emphasis on reducing trade costs through investments in hard infrastructure (like ports and roads) and soft infrastructure (like customs). But failure to implement complementary reform – especially the introduction of competition in transport services – may erode the benefits of these investments. Direct support to exporters does seem to lead to diversification across products and destinations, but it is not yet clear that these benefits are durable. In general, it is difficult to rely on cross-country studies to direct AFT. More rigorous impact evaluation (IE) is an under-utilized alternative, but situations of “clinical interventions” in trade are rare and adverse incentives (due to agency problems) and costs (due to the small size of project) are a hurdle in implementation.

Keywords: Aid for Trade (AFT), gravity, impact evaluation, trade performance

JEL Classification: F15, F35

Suggested Citation

Cadot, Olivier and de Melo, Jaime and Gourdon, Julien and Mattoo, Aaditya, Evaluating Aid for Trade: A Survey of Recent Studies (October 2013). CEPR Discussion Paper No. DP9690. Available at SSRN: https://ssrn.com/abstract=2343700

Olivier Cadot (Contact Author)

University of Lausanne - School of Economics and Business Administration (HEC-Lausanne) ( email )

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Jaime De Melo

University of Geneva - Department of Political Economics ( email )

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Centre for Economic Policy Research (CEPR) ( email )

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World Bank ( email )

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Julien Gourdon

OECD ( email )

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Aaditya Mattoo

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

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