Effectiveness of aid-for-trade: Are there strings attached? Empirical evidence and the case of Vietnam

Chanyou Kim, Joo Eun Chae, Jinhwan Oh

Research output: Contribution to journalArticlepeer-review

2 Scopus citations

Abstract

This paper tests empirically whether Aid-for-Trade has been working since its launch in the early 2000s. Using panel data consisting of 102 developing countries from 2002 to 2017, this paper finds that the Aid-for-Trade (AfT) initiative has been working conditionally. Specifically, AfT itself turns out to be effective in export promotion in developing countries, but more so only in a few countries with high growth rates. That is, AfT has greater effects in recipients with high state capacity and a sound economic environment. Additionally, the WTO-led AfT initiative, launched in 2005, has contributed to export promotion by aid recipients, indicating that more commitments from donor sides are essential for the effectiveness of AfT. These empirical findings are supported with evidence from the case of Vietnam, one of the largest recipients of both ODA and AfT, which illustrates the importance of the economic environment in which AfT initiative is implemented. Strategic economic policies implemented by the Vietnamese government have moved its centrally planned economy to a market-based economy, thus promoting integration with the global economy and creating a compatible environment for AfT.

Original languageEnglish
Pages (from-to)113-124
Number of pages12
JournalPost-Communist Economies
Volume32
Issue number1
DOIs
StatePublished - 2 Jan 2020

Bibliographical note

Publisher Copyright:
© 2019, © 2019 Informa UK Limited, trading as Taylor & Francis Group.

Keywords

  • aid effectiveness
  • aid for trade
  • aid for trade initiative
  • Official development assistance
  • pre-conditions for aid effectiveness

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