Aid for Trade: Boosting exports in emerging economies

Kheyirkhabarli, Mahammad (2024) Aid for Trade: Boosting exports in emerging economies. HUNGARIAN STATISTICAL REVIEW, 7 (1). pp. 89-116. ISSN 2630-9130

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Abstract

This study delves into the impact of Aid for Trade (AfT) disbursements, examining their aggregate influence and effects, when considered as distinct subcategories, on the export activities of emerging economies (EEs). Additionally, the study determines whether this impact differs based on whether these exports are directed towards countries that provide aid (29 donor countries) or those that do not (157 non-donor countries). The study focuses on a specific cohort of 24 EEs, examining data from 2002 to 2019. This timeframe was selected due to the widespread availability of variables used in the analysis, ensuring consistency across the selected period. The analysis employs gravity models with ordinary least squares (OLS) fixed-effects and Poisson pseudo-maximum likelihood (PPML) fixed-effects methods. The findings reveal that not only does AfT have an overall positive and significant impact on the exports of EEs to donor and non-donor countries, but its subcategories, Aid for Economic Infrastructure (AfEI) and Aid for Building Productive Capacity (AfBPC), exhibit similarly positive effects. Furthermore, it becomes evident that AfT and AfEI exert a more pronounced influence on exports to donor countries than to non-donor countries. In the case of AfBPC, differences in the results between OLS and PPML estimations suggest potential variations in its impact depending on the importing country. While the influence of Aid for Trade Policies and Regulations (AfTPR) subcategory was generally deemed insignificant, the PPML model revealed a negative and significant impact on exports to donor countries.

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