Do Donors provide higher Aid for Trade flows to Recipient-Countries that Diversify Export Products or Is It the Other Way Around?

Gnangnon, Sèna Kimm

doi:10.1177/09767479211036657

Cited by 1 publication

(8 citation statements)

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“…To empirically test hypotheses 1 to 6, we follow previous works on the macroeconomic determinants of AfT flows (e.g., Lee et al 2015;Gnangnon 2017Gnangnon , 2018Gnangnon , 2019Gnangnon , 2021b, and postulate the following baseline model specification 12 .…”

Section: Model Specificationmentioning

confidence: 99%

“…Several works have investigated the factors underpinning the supply of AfT flows (e.g., Gamberoni and Newfarmer 2014;Tadasse and Fayissa 2009;Lee et al 2015;Gnangnon 2017Gnangnon , 2019Gnangnon , 2021b. Among these studies, only Lee et al (2015) have considered how membership (or not) in the WTO of AfT recipient countries affects the amounts of AfT that accrue to them.…”

Section: Introductionmentioning

confidence: 99%

“…For example, Dutt (2020) has uncovered that WTO membership exerts a strong positive effect on trade flows, and the magnitude of this effect increases almost monotonically with years of membership. In light of the potential relationship between developing countries' participation in international trade and AfT flows (e.g., Gnangnon 2017Gnangnon , 2021bLee et al 2015), one could question whether there is (or not) a relationship between the duration of WTO membership and AfT inflows. The relevance of this question lies in the rejection of the hypothesis of the Kruskal-Wallis test (Kruskal and Wallis 1952) that the amounts of AfT that accrue to recipient countries are equally distributed regardless of these countries' membership duration of WTO membership.…”

Section: Introductionmentioning

confidence: 99%

“…The WTO membership duration can be crucial for donors' supply of AfT flows to recipient countries. The rationale for this is that, on the one hand, the recipient country's level of trade policy liberalization (or trade openness) is an important determinant of donors' AfT supply (e.g., Lee et al 2015;Gnangnon 2019Gnangnon , 2021b, while on the other hand, the membership duration can affect extent of the AfT recipients' trade policy liberalization and degree of trade openness, including their level of participation in international trade (e.g., Dutt 2020).…”

Section: Introductionmentioning

confidence: 99%

“…The argument at the heart of these papers is that as the duration of their membership increases, WTO members improve their trade regimes, including by further liberalizing their trade policies and achieving higher levels of trade openness. As a result, one could expect that donors would supply higher AfT flows to countries that have made efforts to reform their trade regimes (by improving governance and trade-related domestic policies and institutions) and experience greater trade openness (e.g., Gnangnon 2017Gnangnon , 2018Gnangnon , 2021bLee et al 2015). In this scenario, the duration of WTO membership will exert a positive effect on AfT inflows (hypothesis 1), and the greater the degree of trade policy liberalization (or trade openness), the higher the magnitude of this positive effect (hypothesis 2).…”

Section: Introductionmentioning

confidence: 99%

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Duration of the Membership in the World Trade Organization and Aid for Trade Flows

Gnangnon

2023

Economies

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In examining the effect of membership in the World Trade Organization (WTO) on the amounts of Aid for Trade (AfT) that accrue to developing countries, Lee et al. (2015) (The World Economy, 38, 2015 and 1462) have found that developing country members of the World Trade Organization (WTO) received higher AfT flows than non-WTO developing members. The present paper deepens the analysis by Lee et al. (2015) by investigating the effect of the duration of WTO membership on the amounts of AfT flows that accrue to recipient countries. The duration of membership in the WTO captures both the membership in the WTO and the time spent by a country in the organization. The main argument in this analysis is that the duration of WTO membership matters more than the mere WTO membership for the degree of liberalization in AfT recipient countries’ trade regimes and their participation in international trade, the latter being a critical determinant of the AfT flows supplied by donors. This analysis has relied on a panel dataset of 136 countries over the period from 2002 to 2019, and the two-step generalized method of moments estimator. It has established that countries receive higher AfT flows as their membership duration increases, and the amounts of these resource inflows increase as recipient countries further liberalize their trade regime and further participate in international trade. Additionally, the effect of the duration of WTO membership on total AfT flows depends on donor-countries’ commercial self-interest in recipient countries, including the latter’s economic growth performance and endowment in natural resources.

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