Assessing Aid for Trade

Effectiveness, Current Issues and Future Directions

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Assessing Aid for Trade

Publication date: 25 November 2013
Size: 240mm x 165mm
ISBN: 978-1-84929-106-4
Pages: 406

Aid for Trade (AfT) has been an integral part of official development assistance (ODA) since its inception at the World Trade Organization’s Hong Kong Ministerial in 2005. While many observers agree that the initiative has generated momentum in securing more trade support, the policy discourse on AfT continues to be vibrant and dynamic.

This volume, comprising 16 chapters prepared by 20 renowned experts from a range of international organisations, think tanks and academic institutions, including Commonwealth Secretariat, ODI, ECDPM, DIE, ICTSD, Saana Consulting, WTI Advisors, and Columbia University, provides a comprehensive review of the Aid for Trade initiative.

Part I of this volume uses quantitative and qualitative analysis to examine the effectiveness of different components of Aid for Trade and underlying factors affecting the outcomes. Part II provides analyses of current issues, including regional AfT, global value chains, infrastructure for development for agriculture, AfT adjustment and lessons from emerging economies in aiding exports. Part III looks to the future, proposing a range of possible directions including an alternative way to improve trade outcomes for developing countries from Nobel Prize-winning economist Joseph Stiglitz.

ContentsExpand or collapse me

List of tables and figures
Abbreviations and acronyms

1. Aid for Trade: Effectiveness, Current Issues and Future Directions – An Overview by Mohammad A. Razzaque and Dirk Willem te Velde
1.1 Background
1.2 Chapters in the volume
1.2.1 Part I: Effectiveness
1.2.2 Part II: Current issues
1.2.3 Part III: Future directions
1.3 Concluding remarks


2. Impact of Aid for Trade: A Survey of Empirical Evidence by Isabella Massa
2.1 Introduction
2.2 Aid for Trade variables: definition and measurement issues
2.3 Country coverage
2.4 Sector coverage
2.5 Estimation approaches
2.5.1 Gravity models
2.5.2 Control groups
2.5.3 Miscellaneous
2.6 Empirical findings on Aid for Trade effectiveness
2.6.1 Type of Aid for Trade flow
2.6.2 Recipient country’s income level
2.6.3 Recipient sector of aid
2.6.4 Geographical regions of recipient countries
2.7 Conclusions

3. Towards a Quantitative Assessment of Aid for Trade by Massimiliano Calì and Dirk Willem te Velde
3.1 Background and motivation
3.2 The effectiveness of Aid for Trade
3.2.1 Expected pathways
3.3 Empirical literature on aid effectiveness
3.4 The effects of Aid for Trade: an empirical framework
3.4.1 Aid for Trade and the costs of trading
3.4.2 Aid for Trade and exports
3.4.3 Data
3.5 Empirical results
3.5.1 Costs of importing, and time of exporting and importing
3.5.2 Aid for Trade and exports
3.6 Policy implications and future research
Appendix 3.1 Defining ‘Trading Across Borders’

4. Aid for Trade and the Integration of Small and Vulnerable Economies into the Global Economy by Massimiliano Calì, Mohammad A. Razzaque and Dirk Willem te Velde
4.1 Background
4.2 The rationale behind Aid for Trade in SVEs
4.3 SVEs accessing Aid for Trade
4.3.1 Main programmes of relevance for SVEs
4.3.2 Eligibility criteria and implementation
4.4 Aid for Trade flows to SVEs
4.4.1 Current and past flows by donor
4.4.2 AfT to SVEs
4.4.3 Types of Aid for Trade provided to SVEs
4.5 How Aid for Trade could help SVEs integrate into the global economy
4.5.1 A simple model
4.5.2 How effective have the programmes been?
4.5.3 Specific programmes
4.6 Empirical analysis on the effects of Aid for Trade on SVEs
4.6.1 The empirical models
4.6.2 Data
4.6.3 Results
4.7 Conclusions and policy implications

5. Aid for Trade: Impact on Sub-Saharan Africa by Massimiliano Calì and Mohammad Razzaque
5.1 Introduction
5.2 Trade and economic performance of sub-Saharan Africa: how AfT could help
5.3 Empirical methods
5.3.1 AfT and the costs of trading
5.3.2 AfT and exports
5.3.3 Data
5.4 Results
5.4.1 Aid for Trade and the cost of trading
5.4.2 Aid for Trade and exports
5.5 Summary and policy implications
Annex 5.1 The full working of the theoretical model
Annex 5.2 The Affinity of Nations Index

6. Aid for Trade in Practice: Addressing Political Economy Barriers to Improve Development Outcomes by Yurendra Basnett and Jakob Engel
6.1 Introduction: Aid for Trade within a changing global economy
6.2 The Aid for Trade project cycle as a series of complex collective action problems: an analytical framework
6.3 Needs identification
6.3.1 Identifying binding constraints
6.3.2 Mainstreaming Aid for Trade priorities
6.4 Selecting the most effective structure for AfT delivery
6.4.1 Loans, grants and pooled funds
6.4.2 Regional Aid for Trade
6.5 Design and implementation of AfT
6.5.1 Matching supply and demand
6.5.2 Donor–recipient co-ordination
6.5.3 Intradonor co-ordination
6.5.4 Interdonor co-ordination
6.5.5 Interministerial co-ordination
6.5.6 Government–REC co-ordination
6.6 Monitoring and evaluation
6.6.1 Responding to pressure to show results
6.6.2 Attributing impact within a coherent results chain
6.6.3 Quantifying results
6.6.4 Robustness of M&E procedures
6.7 Conclusion

7. Assessing the Effectiveness of Aid for Trade: Lessons from the Ground by Vinaye Ancharaz, Paolo Ghisu and Christophe Bellmann
7.1 Introduction
7.2 Evaluating Aid for Trade: why, how and what?
7.2.1 Why evaluate AfT?
7.2.2 Evaluation methods and difficulties
7.2.3 Evidence
7.2.4 The ICTSD–SAWTEE methodology
7.3 Aid for Trade global trends
7.3.1 Aid for Trade: is it additional?
7.3.2 AfT to LDCs
7.3.3 Other trends
7.4 Insights from country experiences in managing AfT
7.4.1 Utilisation of AfT funds
7.4.2 Ownership at country level: mainstreaming of trade and multi-stakeholder co-ordination
7.4.3 Donors’ responses to countries’ trade and development needs
7.4.4 From implementation to impact
7.5 Conclusion and the way forward


8. Regional Aid for Trade Effectiveness and Corridors by Bruce Byiers and Dan Lui
8.1 Introduction
8.2 Regional Aid for Trade in sub-Saharan Africa: an overview
8.2.1 Regional Aid for Trade flows
8.2.2 Evaluation to date of regional Aid for Trade and its effectiveness
8.3 Improving the effectiveness of regional Aid for Trade: challenges and opportunities
8.3.1 The policy context for regional AfT effectiveness: principles and policy responses
8.3.2 Key challenges to improving regional Aid for Trade
8.3.3 Implementation issues around regional AfT
8.4 The corridor approach and regional AfT effectiveness
8.4.1 Corridors overview
8.4.2 Corridors in policy
8.4.3 Corridors in practice
8.5 Conclusions
8.5.1 AfT flows
8.5.2 Institutions
8.5.3 Corridors as a tool for more effective AfT?

9. Regional Aid for Trade and Aid Effectiveness: Examples from East and West Africa by Liz Turner and Anna Fink
9.1 Introduction
9.2 Regional Aid for Trade and aid effectiveness in Africa
9.2.1 The AfT initiative
9.2.2 AfT and aid effectiveness
9.2.3 Regional AfT
9.2.4 The growing importance of regional AfT
9.2.5 Development partner engagement in regional AfT and aid effectiveness
9.3 Regional organisations and implementation of regional programmes
9.3.1 East African Community
9.3.2 Economic Community of West African States
9.3.3 Lessons learnt for aid effectiveness
9.4 Development partner support for regional Aid for Trade
9.4.1 Regional AfT and aid effectiveness in East Africa
9.4.2 Regional AfT and aid effectiveness in West Africa
9.5 Key findings and conclusions
9.5.1 Key findings
9.5.2 Conclusions
9.5.3 Areas for further investigation

10. Aid for Trade and Value Chains in Small and Vulnerable Economies and Least Developed Countries by Collin Zhuawu
10.1 Introduction
10.1.1 Value chains and supply chains: analytical perspectives
10.2 Empirical evidence on the participation of SVEs and LDCs in GVCs
10.3 Aid for Trade and the integration of LDCs and SVEs in global trade
10.4 Aid for Trade and value chains in small states and LDCs
10.5 Lessons learnt and recommendations

11. Aid for Trade and Global Value Chains (GVCs): Engaging with High-value Agriculture GVCs and Developing Trade by Jodie Keane
11.1 Introduction
11.2 Trends in global trade, global value chains and the role of Aid for Trade
11.2.1 GVC governance structures
11.2.2 The role of Aid for Trade
11.3 The use of AfT to help producers to enter and participate in high-value agricultural GVCs
11.4 Upgrading producers to meet standards in Kenya
11.4.1 Initial donor interventions
11.4.2 Successes and continued challenges
11.4.3 Structure of the cut flower GVC
11.5 Conclusions

12. Aid for Trade and Infrastructure Development for Agriculture by Marie-Agnes Jouanjean
12.1 Introduction
12.2 Hard infrastructure: on the importance of roads for development and trade in agriculture
12.2.1 Impact of infrastructure on trade: evidence at the regional and international scales
12.2.2 Bring the market to the poor or the poor to the market? Impact of roads on local market development
12.2.3 Which types of infrastructure for which impacts: market access, agricultural productivity and poverty reduction
12.2.4 Evidence of the impact of roads infrastructure on changes in agricultural technology
12.3 Soft infrastructure: key intermediate logistical infrastructures
12.3.1 Competition in transport services
12.3.2 Extension services
12.3.3 Storage capacity
12.3.4 SPS institutions and inspection infrastructures
12.4 Conclusion

13. Aid for Trade Adjustment: Implications for Small and Vulnerable Economies and Least Developed Countries by Sacha Silva
13.1 Introduction
13.2 The marginal role of trade-related adjustment
13.2.1 Adjustment in overall aid flows and strategies
13.2.2 Main TRA donors, regions and sectors
13.3 The adjustment needs of SVEs and LDCs
13.3.1 A typology of TRA
13.3.2 A multiplying SVE/LDC trade agenda
13.3.3 Adjustment as strategic priorities: on paper
13.4 Sources and solutions: (i) definitions
13.4.1 Novelty, vague definitions and misclassifications
13.4.2 Multilateral flows
13.4.3 Category or marker?
13.5 Sources and solutions: (ii) country/sector bias
13.5.1 Country bias
13.5.2 Sector bias
13.5.3 Addressing country and sector bias
13.6 Sources and solutions (iii): donor bias
13.6.1 TRA and donor reluctance
13.6.2 Making a stronger case for TRA
13.7 Conclusions: assessing trade-related adjustment costs

14. Aiding Exports: Lessons from Emerging Economies by Clara Brandi
14.1 Introduction
14.2 Successful export performance in emerging economies
14.2.1 Trade performance in China, India and Brazil
14.2.2 Introducing the framework for analysis
14.3 China
14.3.1 Trade-related infrastructure
14.3.2 Trade facilitation
14.4 India
14.4.1 Trade-related infrastructure
14.4.2 Trade facilitation
14.5 Brazil
14.5.1 Trade-related infrastructure
14.5.2 Trade facilitation
14.6 Lessons: what can we learn from past experiences?
14.6.1 Lessons for trade-related infrastructure
14.6.2 Lessons for trade facilitation
14.7 Conclusion
14.7.1 Ways forward on trade-related infrastructure
14.7.2 Ways forward on trade facilitation


15. The Right to Trade: Rethinking the Aid for Trade Agenda by Joseph E Stiglitz and Andrew Charlton
15.1 Summary
15.2 Introduction
15.3 From ‘Trade Not Aid’ to ‘Aid for Trade’
15.3.1 Questioning the benefits of liberalisation
15.3.2 Birth of Aid for Trade
15.3.3 Questioning the effectiveness of aid
15.4 Has bringing aid and trade together helped?
15.4.1 Have Aid for Trade programmes helped to promote trade and development?
15.4.2 Has the emergence of Aid for Trade increased the overall effectiveness of aid?
15.5 A proposal to support pro-development trade liberalisation
15.5.1 The ‘right to trade’
15.5.2 Global Trade Facility
15.6 Conclusion

15A. A Summary of Commonwealth Roundtable with Joseph Stiglitz, on Aid for Trade – Perspectives on Progress and a Way Forward, held at Marlborough House, Commonwealth Secretariat, London, 29th August 212 by Emily Jones
15A.1 Introduction
15A.2 Presentation by Professor Joseph Stiglitz: ‘The Right to Trade: a report for the Commonwealth Secretariat’
15A.2.1 The emergence of ‘Aid for Trade’
15A.2.2 An evaluation of AfT
15A.2.3 Proposals on the way forward
15A.3 Feedback from participants
15A.3.1 The emergence of ‘Aid for Trade’
15A.3.2 Links between trade, growth and development
15A.3.3 The evaluation of AfT
15A.3.4 The Global Trade Facility
15A.3.5 The ‘Right to Trade’
15A.4 Conclusion

16. Future Directions in Aid for Trade by Dirk Willem te Velde
16.1 Introduction
16.2 Conception of Aid for Trade: providing global public goods
16.3 Decoupled Aid for Trade: building countries’ capacity to trade
16.4 Connected, ‘third-generation’ Aid for Trade
16.4.1 Changing development finance flows
16.4.2 Changing trade patterns
16.5 Other perspectives on Aid for Trade: narrow and broad views
16.6 Conclusions

About the contributors Expand or collapse me

Dirk Willem te Velde (Editor)

Dirk Willem te Velde is Head of the International Economic Development Group at the Overseas Development Institute. He has advised donor agencies, parliaments and multilateral bodies on responses to the global financial crisis and other areas. He has written and edited several books, journal articles and book chapters related to investment, trade and growth issues. He holds a PhD from Birkbeck College, University of London.

Mohammad A Razzaque (Editor)

Mohammad A Razzaque is Adviser & Head, International Trade & Regional Co-operation in the Economic Affairs Division of the Commonwealth Secretariat. He has written extensively and edited several volumes on trade and development issues. He is the editor of Trade Hot Topics, which aims to communicate technical trade policy issues to wider readership. He holds a PhD from the University of Sussex and has previously taught at the University of Dhaka,