Are bilateral and multilateral aid‐for‐trade complementary?

Abstract

Using the first comprehensive estimates of ad valorem tariff equivalent bilateral trade costs spanning the time period 2002–10, we examine whether the aid‐for‐trade (AFT) inflows reduce bilateral trade costs facing aid recipients. If so, we ask whether the trade costs reduction effects of AFT from bilateral and multilateral sources are complementary. By showing the extent to which the observed trade cost reduction effects of AFT from bilateral (multilateral) sources correlate with the magnitudes of AFT disbursements from multilateral (bilateral) sources, we present plausible explanation for the cross‐country variations in the extent to which AFT promotes trade flows. Our findings have, thus, important policy implications for shaping future discourses on the coordination of disbursements for enhancing the effectiveness of AFT.

Effects of aid for trade on extensive and intensive margins of greenfield FDI

“… Some researchers have shown AfT reduce the trade costs facing aid recipients (e.g. Tadesse, Shukralla, & Fayissa, ). Some other researchers have assessed how the AfT has been allocated (e.g.…”

Aid for trade initiative 16 years on: lessons learnt from the empirical literature and recommendations for future directions

“…The reviewed empirical studies have shown that the same category of AfT inflows may produce different effects according to the geographical region, to which the disbursements are directed. Tadesse et al (2017) observed the statistically significant reduction in bilateral trade cost by AFT in all regions except for the Pacific region; the finding proves that the degree of effectiveness varies from one region to another. For instance, the greatest influence was observed in Europe (−0.038), followed by the USA (−0.024) and Asia (−0.017); the poorest impact was observed in Africa (−0.007).…”

“…In addition, few studies have looked at the impacts of AfT in various geographical regions. For instance, Tadesse et al (2017) differentiated the countries into sub-categories: African countries; Pacific region countries; European countries; American countries; and Asian countries. Similarly, Ly-My et al (2020) focused on six sub-categories of recipient countries: Europe and Central Asia (14 countries); East Asia and Pacific (12 countries); Middle East and North Africa (13 countries); South Asia (5 countries); SSA (35 countries); and Latin America and the Caribbean (25 countries).…”

“…Additionally, Tadesse et al (2017) discovered that both bilateral and multilateral AfT led to a significant reduction in trade costs borne by the recipient countries at both sector and aggregate levels. The study proposed the need to further strengthen the initiative.…”

“…It has been very well-recognised that developing countries face serious internal restriction to fully integrate and profit from international trade and investment (Tadesse et al , 2017). These constraints are usually because of lacklustre public institutions (including formulation of economic policy and regulations and trade agreements negotiation); weak infrastructure (e.g.…”