aid to productive capacity is insignificant. When considering sectorally targeted aid, the authors again find that aid to infrastructure has a significant impact on export values, but aid to productive capacity does not, controlling for country-sector fixed effects that account for comparative advantage differences.

Brenton and von Uexkull (2009) examine the response of product-level exports from developing countries to product-level export-development aid, combining mirrored product-level (HS4) export data with export-development aid data from the German cooperation agency GTZ and from the OECD/WTO Trade Capacity Building Database for 48 developing countries. Using a matching difference-in-differences (DID) approach (discussed in section 4) they show insignificant effects of contemporaneous and lagged aid on product-level exports after controlling for lagged exports, and country and year-product fixed effects, and eliminating outliers.<sup>10</sup> However, the authors do show strong positive effects in a simple comparison of product-level exports before and after receiving export development aid. This finding suggests an important attribution problem — namely, export growth may not be due to the aid received but instead may reflect the fact that aid targets sectors with promising prospects. The authors go on to argue that, in evaluating the impact of technical assistance for exports, it is essential to identify what would have happened in the absence of the policy intervention. This is a primary concern in this paper.

As the literature stands, it is fair to say that the effect of AfT on the export performance of beneficiary countries has not been established on the basis of aggregate numbers. Ferro, Portugal-Perez, and Wilson (2011) advance the analysis of the effectiveness of AfT revisiting the data from OECD’s Creditor Reporting System. The authors exploit the differential intensities of service use across manufacturing sectors (based on input-output tables from the U.S. and Argentina) to evaluate the impact of aid for trade flows directed at five services sectors — transport, communications, energy, banking/financial services, and business services — on the exports of downstream manufacturing sectors in 106 aid-recipient countries over the period 1990–2008. Their identification strategy aims at circumventing reverse causality problems common in the AfT literature; and their results show that aid flows directed at the energy and banking sectors have a significant positive impact on downstream manufacturing exports.

# **3.2 Evaluating national trade interventions**

A few recent cross-country studies suggest a positive impact of certain types of trade interventions, regardless of whether they are financed by donors or domestic government budgets. On export promotion, Lederman, Olarreaga, and Payton (2010) examine the

> 10 Their matching approach pairs each treatment country that receives export development aid for a given product _i_ to the country that is more similar to it in terms of its likelihood to export product _i_ , where this likelihood is estimated based on observable country characteristics such as the level of development, factor endowments, and climate conditions.

10