Impacts of Aid for Trade on Agricultural Development and Trade

Abstract

Aid for Trade (AfT) has emerged as a significant mechanism for development of the lesser-developed countries by helping them to participate in the global value chain. Given the importance of agriculture in many recipient countries, it is important to analyse the impacts of AfT on economic growth and trade, focusing only on the agricultural sector. This research aims to evaluate whether AfT has significant relations with agricultural development and trade. It also examined whether there is heterogeneity in a response to AfT across the recipient countries with different national characteristics. Our results show that AfT in agriculture has increased both agricultural GDP and exports of the recipient countries. This study also found the most effective form of AfT in agriculture which differs depending on the characteristics of each country.

Aid for Trade (AfT) has emerged as a significant mechanism for development of the lesser-developed countries by helping them to participate in the global value chain. Given the importance of agriculture in many recipient countries, it is important to analyse the impacts of AfT on economic growth and trade, focusing only on the agricultural sector. This research aims to evaluate whether AfT has significant relations with agricultural development and trade. It also examined whether there is heterogeneity in a response to AfT across the recipient countries with different national characteristics. Our results show that AfT in agriculture has increased both agricultural GDP and exports of the recipient countries. This study also found the most effective form of AfT in agriculture which differs depending on the characteristics of each country.