Aid for Trade and International Transactions in Goods and Services

47 Pages Posted: 7 Sep 2017

See all articles by Bernard Hoekman

Bernard Hoekman

European University Institute - Robert Schuman Centre for Advanced Studies (RSCAS); Robert Schuman Centre for Advanced Studies; Centre for Economic Policy Research (CEPR)

Anirudh Shingal

S.P. Jain Institute of Management & Research; European University Institute - Robert Schuman Centre for Advanced Studies (RSCAS); University of Bern - World Trade Institute

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Date Written: September 2017

Abstract

The empirical literature on aid for trade (AfT) mainly considers its effects on merchandise trade and investment. In this paper we examine the relationship between AfT and trade in services as well as trade in goods over 2002-2015 in both aggregate and bilateral analysis. We observe complementarities between services AfT and merchandise trade, reflecting the fact that most AfT is aid allocated to services sectors that are important inputs into production and trade in goods. The analysis suggests that most categories of AfT are not associated with greater trade in services. Only AfT directed towards economic infrastructure, notably transport and energy, is robustly associated with higher volumes of services trade. Given the importance of services for many low-income countries and the growing potential to harness new technologies to expand services trade, the results suggest a greater focus on disaggregated analysis of different categories of AfT to better understand how AfT can do more to support trade in services. Of particular note is that AfT to bolster productive capacity is strongly associated with greater merchandise trade whereas no such relationship is observed for services trade, suggesting AfT efforts do more to target capacity weaknesses that constrain growth in services trade.

Keywords: Aid for Trade, Services Trade, Goods Trade, Complementarities, Infrastructure

JEL Classification: F10, F14, F35

Suggested Citation

Hoekman, Bernard and Hoekman, Bernard and Shingal, Anirudh, Aid for Trade and International Transactions in Goods and Services (September 2017). Robert Schuman Centre for Advanced Studies Research Paper No. RSCAS 2017/44, Available at SSRN: https://ssrn.com/abstract=3032470 or http://dx.doi.org/10.2139/ssrn.3032470

Bernard Hoekman (Contact Author)

Robert Schuman Centre for Advanced Studies ( email )

Fiesole, Tuscany
Italy

European University Institute - Robert Schuman Centre for Advanced Studies (RSCAS) ( email )

Villa La Fonte, via delle Fontanelle 18
50016 San Domenico di Fiesole
Florence, Florence 50014
Italy

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Anirudh Shingal

S.P. Jain Institute of Management & Research ( email )

Munshi Nagar, Dadabhai Road
Andheri West
Mumbai, Maharashtra 119579
India

European University Institute - Robert Schuman Centre for Advanced Studies (RSCAS) ( email )

Villa La Fonte, via delle Fontanelle 18
50016 San Domenico di Fiesole
Florence, Florence 50014
Italy

University of Bern - World Trade Institute ( email )

Hallerstrasse 6/8
Bern, 3012
Switzerland

HOME PAGE: http://www.nccr-trade.org

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