Is aid-for-trade working? Evidence from Southeast Asian countries

The effectiveness of Aid for Trade has been widely discussed since the WTO launched the aid for trade initiative in 2005. Using a comprehensive panel data from 143 developing countries provided by the OECD, this research assesses the effect of Aid for Trade policy and regulation on exports. To observe regional implications, the independent variables were interacted with regional dummies. Empirical findings show that Aid for Trade in trade policy and regulation has a significant positive effect on the exports of Asian countries. After looking at transition economies in Asia, this paper suggests that aid for trade policy and regulation such as government led initiatives can have a positive effect on the trade performance and regional integration of transition economies in the Greater Mekong Subregion or the CLMV Countries (Cambodia, Laos, Myanmar and Viet Nam).