# **IV.2. Narrow vs. Broad and Soft vs. Hard Aid for Trade Facilitation**

Twenty-three different types of aid for trade facilitation are incorporated into the OECDCRS category _Trade Policy and Regulations,_ which is our **_narrow_** category of aid for trade facilitation, totaling a bit less than US$ 300 million in 2005. In the other two traderelated aid categories ( _Trade Development_ and _Economic Infrastructure_ ), which correspond to our **_broad_** definition, there are eighty-three categories of aid, totaling just under US$8.5 billion. Why bother to investigate this distinction between broad and narrow?

The Trade Policy and Regulations/narrow type of aid assistance is targeted explicitly towards enhancing the trade policy system in countries—their ability to navigate TBT, SPS, and TRIPS. These types of aid flows are focused on customs, transparency, and government procurement. Aid is directed toward learning to negotiate market access, implement RTAs, address dispute settlement, and accession issues. Thus, this type of aid for trade facilitation is narrowly focused on the country as it directly interacts with the trading system itself. Therefore, this aid might have a relatively bigger effect on trade flows because it is targeted directly to trading system issues. Table 2 compares the key coefficients for the **_narrow_** definition of aid-for-trade-facilitation and for the **_broad_** definition of aid-for-trade-facilitation flows.

Using the same country groupings and specifications as in Table 1, Table 2 shows that A4TF, of both types, generally is positively related to trade flows. In the top panel ( **_narrow_** definition) in columns (1) and (2) the estimated coefficients are again highly statistically significant and positive. The magnitude of the coefficients is somewhat higher than those in Table 1. In addition, the coefficients relating **_narrow_** aid flows to exports are generally larger than those for imports, when both are significant. The bottom panel considers the much larger **_broad_** A4TF category yields results that suggest that A4TF focused on these **_broad_** categories are more strongly related to imports and generally not related to exports.

> The observation that aid targeted to _Trade Policy and Regulations_ —the **_narrow_** definition of A4TF—is positively associated with exports whereas **_broad_** A4TF is positively associated with imports is notable. It seems to be intuitive that it is difficult to apply policies for trade development and economic infrastructure in a way that favors one type of trade flows. However, trade policy and regulations—the narrow targeted aid— may more directly attempt to expand exports without offering the same treatment to incoming trade flows.  For example, the narrow definition of aid flows focuses on implementing RTAs, which can present a challenge for market access for exporters.

Another difference between the two types of aid is the implied economic magnitude. Given the much smaller dollar value of the aid included in regressions with the narrow definition, it is apparent that the ‘bang for the buck’ of these types of aid-for-trade facilitation programs could be more economically significant. <mark>Taking the coefficients in column (4) (sum to 0.018), suggests that a 1 % increase in extensions of narrowly targeted aid (just US$ 3 million) could be associated with an increase in trade of some</mark> 13