【Reference Review 66-4 号の研究動向・全分野から】「The Effectiveness of Aid for Trade: What Can We Learn from EmpiricalEvidence?」

総合政策学部准教授 西立野 修平

Aid for Trade (AfT) Initiative was launched at the Ministerial Conference of the World
Trade Organization (WTO) in Hong Kong in 2005. The main objective of the AfT is tohelp low-income countries well benefit from trade liberalization by mitigating supplyside and trade-related infrastructure constraints. The AfT consists of three categories: (i)economic infrastructure, (ii) building productive capacity, and (iii) trade policy andadjustment. The annual inflows of the AfT into recipient countries are growing overtime, amounting to US$40 billion in 2018, which is about 3 times as large as the early
2000s. Despite the enormous financial efforts, little has been known about how much oreven whether the AfT really contributes to increasing recipient export performance. In
this review I summarize the literature empirically examining the effectiveness of theAfT, and present important areas to be explored by future research.
Cali and Velde (2011) examined what types of the AfT promote recipient exports. They
estimated the fixed effects model with a panel data for 2002-2007 covering 99
developing countries. The results suggest that overall, an elasticity of exports withrespect to AfT is 0.03, mainly driven by economic infrastructure. The estimates suggestthat a US$86 million increase in AfT for economic infrastructure is associated with a
US$650 million increase in recipient exports after 1 year. Vijil and Wagner (2012) also
found the significance of economic infrastructure as a key channel of aid-trade nexus.
Martinez-Zarzoso et al. (2017) investigated the heterogeneous trade-creating effects of
the AfT among recipient countries. Their method involves estimating a quantile
regression model with a panel data for 2000-2011 covering 124 developing countries.
They found that the AfT promoted the recipient exports mainly for the lower quantile ofthe conditional distribution of exports, suggesting that countries that export less involume benefit most from the AfT. While aid to improve trade policy and regulation isassociated with higher exports for all quantiles, aid used to build infrastructure andproductive capacity are effective for lower quantiles only.
Helble et al (2012) explored whether the AfT promote imports to recipient countries(i.e., exports of donor countries), analyzing bilateral trade data covering 167 importers
and 172 exporters for 1990-2005. They estimated an augmented version of gravity
model using a fixed effects estimator. The results show that the AfT is more strongly
associated with recipient exports than imports, suggesting that a 1% increase in AfT (ofabout US$ 220 million in 2008) could lead to about US$ 290 million of additional
exports from recipient countries. Analyzing a year-recipient panel data for 1990-2010,
Huhne et al. (2014) examined the effects of the AfT on recipient exports and imports,separately. The results show that the trade-creating effects of the AfT are statisticallysignificant for both exports and imports, but the effects are larger for recipient exports.
Estimating a gravity model with bilateral trade data for 2002-2010, Hoekman et al(2020) also found that the AfT promoted recipient exports, but not imports from donor
countries. On the other hand, Nowak-Lehmann et al (2013) found evidence that thebilateral AfT increased donor exports to recipient countries but not vice versa.
One important avenue for future research is to analyze what types of exports the AfT canpromote. More specifically, is the AfT effective in increasing the exports of manufacture
goods, or agriculture products? This question really matters, because an industrialization
is closely linked to economic developments. Despite its significance in examining theeffectiveness of the AfT, prior research has not fully explored this issue.
The other important area in the literature is an identification strategy to estimate thecausal effects of the AfT on recipient exports. The key empirical challenge is todisentangle the trade-creating effects of the AfT from unobserved factors. Most ofexisting studies have employed a fixed effects model that controls for time-invariant
factors, such as colonial ties between donor and recipient countries. However, thisapproach cannot rule out the possibility that the estimated effects of the AfT would bebiased by unobserved time-variant factors such as changes in aid policies in donor
countries. To address this issue, an instrumental variable approach appears to beeffective. Here, I propose to use the Bartik instrument that exploits inner sectoral
structure of the AfT, applying Goldsmith-Pinkham et al (2020) to the aid-trade
literature. The Bartik instrument is constructed by sum of AfT sectors of all recipient
countries weighted by country-sector-period specific shares. Given that the Bartik
instrument is relatively easy to construct and check the validity for exclusion

restrictions, the causal effects of the AfT could be estimated in more transparent manner.
Reference
Cali, Massimiliano, and Dirk Willem Te Velde. 2011. “Does Aid for Trade Really
Improve Trade Performance?” World Development 39 (5): pp. 725–740.
Vijil, Mariana, and Laurent Wagner. 2012. “Does Aid for Trade Enhance Export
Performance? Investigating the Infrastructure Channel.” The World Economy: pp. 838–868.
Martinez-Zarzoso, Inmaculada, Felicitas Nowak-Lehmann, and Kai Rehwald. 2017. “IsAid for Trade Effective? A Panel Quantile Regression Approach.” Review ofDevelopment Economics 21: pp. 175–203.
Helble, Matthias, Catherine L. Mann, and John S. Wilson. 2012. “Aid-for-Trade
Facilitation.” Review of World Economics 148: pp. 357–376.
Hühne, Philipp, Birgit Meyer, and Peter Nunnenkamp. 2014. “Who Benefits
from Aid for Trade? Comparing the Effects on Recipient versus Donor Exports.” The
Journal of Development Studies 50 (9): pp. 1275–1288.
Hoekman, Bernard, and Anirudh Shingal. 2020. “Aid for Trade and International
Transactions in Goods and Services.” Review of International Economics 28: pp. 320–340.
Nowak-Lehmann, Felicitas, Inmaculada Martínez-Zarzoso, Dierk Herzer, Stephan
Klasen, and Adriana Cardozo. 2013. “Does Foreign Aid Promote Recipient Exports toDonor Countries?” Review of World Economics 149: pp. 505–535.
Goldsmith-Pinkham, Paul, Isaac Sorkin, and Henry Swift. 2020. “Bartik Instruments:What, When, Why, and How.” American Economic Review 110 (8): pp. 2586–2624.