Effects of aid for trade on extensive and intensive margins of greenfield <scp>FDI</scp>

Ly‐My, Dung; Lee, Hyun‐Hoon

doi:10.1111/twec.12787

Cited by 26 publications

(32 citation statements)

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“…OECD and WTO (2013) also argues that this effect is not large and can be neutralised. Similar negative effect of Non-AfT is also found by Ly-My and Lee (2019) who analyse the effect of AfT on greenfield investment.…”

Section: Effects Of Aggregate Aft On Recipient Importssupporting

confidence: 79%

Does aid for trade promote import diversification?

2020

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aid for trade, developing countries, import diversification | INTRODUCTIONThe Aid for Trade Initiative, which was launched at the 2005 World Trade Organization (WTO) Ministerial Conference held in Hong Kong, aims to expand developing countries' access to global markets by addressing their supply-side capacity and trade-related infrastructure constraints. Aid for Trade (AfT) is part of overall Official Development Assistance (ODA) and has three components: Aid for trade-related infrastructure, Aid for building productive capacity and Aid for trade policy regulations and trade-related adjustment.Previous studies find that AfT is effective in promoting trade in recipient countries. For example, Cali and Te Velde ( 2011), Vijil and Wagner (2012), and Hühne et al. (2015) uncover a positive effect of AfT on the value of exports of recipient countries. Furthermore, Helble et al. (2012), Pettersson and Johansson (2013), and Hühne et al. ( 2014) find that AfT increases recipients' imports from donor countries. All these studies defined the outcome of AfT as trade value. However, AfT can not only expand trade but also diversify trade. For example, Kim (2019) and Gnangnon (2019) conclude that AfT plays an important role in the export diversification of recipient countries. Still, most existing studies look at exports rather than the other side of the story-import. Yet import diversification is essential for improving productivity and expanding access to superior technology (Cadot et al., 2013).We fill this gap in the literature by delving into the effect of AfT on import diversification. Using a panel dataset of 104 countries from 2003 to 2016, we find that AfT helps recipient countries diversify their imports. Specifically, AfT promotes import diversification by increasing the number of both import commodities and import partner countries. Our evidence also reveals that AfT promotes imports from both Development Assistance Committee (DAC) member countries (i.e., donor countries) and Non-DAC countries (i.e., non-donor countries). Lastly, we find that all three components of AfT contribute significantly to the import diversification of recipient countries.The rest of the paper is organised as follows. Section 2 presents the literature review and Section 3 offers descriptive statistics of AfT and import diversification. Section 4 provides the empirical framework. Section 5 reports and discusses the empirical results, and Section 6 concludes the paper.

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Section: Effects Of Aggregate Aft On Recipient Importssupporting

confidence: 79%

Does aid for trade promote import diversification?

2020

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“…Existing studies (e.g., Donaubauer et al, 2016;Lee & Ries, 2016;Ly-My & Lee, 2019) show a positive effect of AfT flows and FDI inflows. Lee and Ries (2016) showed that total Accordingly, it is assumed that as AfT interventions could be associated with higher FDI inflows in the recipient-countries, these interventions could result in higher wage inequality in the manufacturing sector through relatively higher demand for highly skilled workers.…”

Section: Effect Of Aft Flows On Wage Inequality Through Inward Fdimentioning

confidence: 93%

Aid for Trade Flows and Wage Inequality in the Manufacturing Sector of Recipient-Countries

Gnangnon

2020

Journal of Economic Integration

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“…Above the afore-mentioned theoretical effects of AfT ows on economic complexity, AfT ows can also in uence countries' level of economic complexity through their effects on foreign direct investment (FDI) in ows as well as through the real exchange rate channel. As for the FDI in ows channel, some studies have reported a positive effect of AfT ows on FDI that ow to AfT recipients (e.g., Donaubauer et al, 2016;Lee and Ries, 2016;Ly-My and Lee, 2019). On the other hand, as FDI in ows can be an important vehicle of acquisition and transfer of knowledge, they can in uence positively economic complexity.…”

Section: Effect Of Aft Ows On Economic Complexitymentioning

confidence: 99%

Effect of Productive Capacities on Economic Complexity: Do Aid for Trade flows Matter?

Gnangnon

2021

Preprint

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The COVID-19 health pandemic has exposed the strong vulnerabilities of countries, including developing ones to shocks, and underlined the need for exploring ways to strengthen countries' resilience to future shocks. The current paper uses the dataset made recently available by the United Nations Conference on Trade and Development (UNCTAD) to examine (for the first time) the effect of productive capacities on economic complexity. The analysis further investigates whether Aid for Trade (AfT) flows matter for the influence of productive capacities on economic complexity in recipient-countries. The analysis uses a sample of 126 countries (including both developed and developing countries) over the period 2002-2018, and adopts the two-step system Generalized Methods of Moments (GMM) approach. Results have shown that productive capacities exert a positive effect on economic complexity over the full sample. However, the magnitude of this positive effect varies across different sub-samples, with Least developed countries (LDCs) enjoying the lowest magnitude of this positive effect. Furthermore, total AfT flows are positively associated with economic complexity, with LDCs enjoying a higher positive effect than other countries. Interestingly, total AfT flows exert a higher positive effect on economic complexity in countries that experience low levels of overall productive capacities. The latter finding highlights the need for donor-countries to scale-up AfT flows in favour of countries (such as LDCs) that are characterized by low levels of productive capacities. Finally, the empirical outcomes indicate that productive capacities enhance economic complexity in countries that receive higher amounts of total NonAfT flows.

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

Cited by 26 publications

References 27 publications

Does aid for trade promote import diversification?

Does aid for trade promote import diversification?

Aid for Trade Flows and Wage Inequality in the Manufacturing Sector of Recipient-Countries

Effect of Productive Capacities on Economic Complexity: Do Aid for Trade flows Matter?

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