[go: up one dir, main page]
More Web Proxy on the site http://driver.im/
IDEAS home Printed from https://ideas.repec.org/p/got/gotcrc/049.html
   My bibliography  Save this paper

Foreign Aid and Recipient Countries’ Exports: Does Aid Promote Bilateral Trade?

Author

Listed:
  • Felicitas Nowak-Lehmann D.

    (Georg-August-University Göttingen)

  • Inmaculada Martínez-Zarzoso

    (Georg-August-University Göttingen)

  • Adriana Cardozo
  • Dierk Herzer
  • Stephan Klasen

    (Georg-August-University Göttingen)

Abstract
This paper uses the gravity model of trade to investigate the link between foreign aid and exports in recipient countries. Most of the theoretical work emphasizes the negative impact of aid on recipient countries’ exports primarily due to exchange rate appreciation, disregarding possible positive effects of aid in promoting bilateral trade relations. The empirical findings, in contrast, indicate that the net impact of aid on recipient countries’ exports is positive -even though the macroeconomic impact of aid is rather small- and that the average return for recipients’ exports is about 1.50 US$ for every aid dollar spent. We argue that “bilateral aid” seems to promote good bilateral trade relations, mutual trust and familiarity and that those factors reinforce bilateral trade, including recipient country exports. The paper also estimates the effect of different types of aid (bilateral aid versus multilateral aid flowing to a specific recipient) and studies aid’s contribution to an expansion of exports in different regions of the world. It is found that aid is strongly export-enhancing in Asia and Latin America, but not in Africa.

Suggested Citation

  • Felicitas Nowak-Lehmann D. & Inmaculada Martínez-Zarzoso & Adriana Cardozo & Dierk Herzer & Stephan Klasen, 2010. "Foreign Aid and Recipient Countries’ Exports: Does Aid Promote Bilateral Trade?," Courant Research Centre: Poverty, Equity and Growth - Discussion Papers 49, Courant Research Centre PEG.
  • Handle: RePEc:got:gotcrc:049
    as

    Download full text from publisher

    File URL: http://www2.vwl.wiso.uni-goettingen.de/courant-papers/CRC-PEG_DP_49.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. World Bank, 2009. "World Development Indicators 2009," World Bank Publications - Books, The World Bank Group, number 4367.
    2. Felicitas Nowak-Lehmann D. & Inmaculada Martínez-Zarzoso & Dierk Herzer & Stephan Klasen & Axel Dreher, 2009. "In Search for a Long-run Relationship between Aid and Growth: Pitfalls and Findings," Ibero America Institute for Econ. Research (IAI) Discussion Papers 196, Ibero-America Institute for Economic Research.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Dazoue Dongue Guy Paulin & Nemb Pierre Samuel & Abessolo Yves André, 2017. "Influence of Bilateral Aid on Cameroon's Bilateral Trade Performance with Respect to OECD Donor Countries," EuroEconomica, Danubius University of Galati, issue 2(36), pages 169-178, November.
    2. Wim Naudé, 2011. "Foreign Aid for Innovation: The Missing Ingredient in Private Sector Development?," Working Papers 2011/35, Maastricht School of Management.
    3. Liu, Ailan & Tang, Bo, 2018. "US and China aid to Africa: Impact on the donor-recipient trade relations," China Economic Review, Elsevier, vol. 48(C), pages 46-65.
    4. Léopold BIARDEAU & Anne BORING, 2017. "L’impact de l’aide au développement sur les flux commerciaux entre pays donateurs et pays récipiendaires," Working Paper 464d860e-562e-4ae7-98f5-1, Agence française de développement.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Nowak-Lehmann D., Felicitas & Martínez-Zarzoso, Inmaculada & Cardozo, Adriana & Herzer, Dierk & Klasen, Stephan, 2011. "Does Aid translate into Bilateral Trade? Findings for Recipient Countries," Proceedings of the German Development Economics Conference, Berlin 2011 61, Verein für Socialpolitik, Research Committee Development Economics.
    2. Li, Aijun & Du, Nan & Wei, Qian, 2014. "The cross-country implications of alternative climate policies," Energy Policy, Elsevier, vol. 72(C), pages 155-163.
    3. Erkki Karo & Rainer Kattel, 2010. "The Copying Paradox: Why Converging Policies but Diverging Capacities in Eastern European Innovation Systems?," Institutions and Economies (formerly known as International Journal of Institutions and Economies), Faculty of Economics and Administration, University of Malaya, vol. 2(2), pages 167-206, October.
    4. Okada, Keisuke, 2012. "The effects of female HIV/AIDS status on fertility and child health in Cambodia," Journal of Asian Economics, Elsevier, vol. 23(5), pages 560-570.
    5. Lise Rakner, 2012. "Foreign Aid and Democratic Consolidation in Zambia," WIDER Working Paper Series wp-2012-016, World Institute for Development Economic Research (UNU-WIDER).
    6. Augustin Kwasi Fosu, 2010. "The Global Financial Crisis and Development: Whither Africa," WIDER Working Paper Series wp-2010-124, World Institute for Development Economic Research (UNU-WIDER).
    7. Çakır, Mustafa Yavuz & Kabundi, Alain, 2013. "Trade shocks from BRIC to South Africa: A global VAR analysis," Economic Modelling, Elsevier, vol. 32(C), pages 190-202.
    8. Alireza Naghavi & Chiara Strozzi, 2011. "Intellectual Property Rights, Migration, and Diaspora," Working Papers 2011.60, Fondazione Eni Enrico Mattei.
    9. Chia-Lin Chang & Thanchanok Khamkaew & Michael McAleer, 2012. "IV Estimation of a Panel Threshold Model of Tourism Specialization and Economic Development," Tourism Economics, , vol. 18(1), pages 5-41, February.
    10. Chaudhary, Latika & Rubin, Jared, 2011. "Reading, writing, and religion: Institutions and human capital formation," Journal of Comparative Economics, Elsevier, vol. 39(1), pages 17-33, March.
    11. Nicola Banks, 2014. "What works for young people's development? A Case Study of BRAC's Empowerment and Livelihoods for Adolescent Girls programme in Uganda and Tanzania," Global Development Institute Working Paper Series 21214, GDI, The University of Manchester.
    12. Bhagowalia, Priya & Chen, Susan E. & Masters, William A., 2011. "Effects and determinants of mild underweight among preschool children across countries and over time," Economics & Human Biology, Elsevier, vol. 9(1), pages 66-77, January.
    13. Markus Brückner & Antonio Ciccone, 2011. "Rain and the Democratic Window of Opportunity," Econometrica, Econometric Society, vol. 79(3), pages 923-947, May.
    14. Llussá, Fernanda & Tavares, José, 2011. "Which terror at which cost? On the economic consequences of terrorist attacks," Economics Letters, Elsevier, vol. 110(1), pages 52-55, January.
    15. Rafaelita M. Aldaba & Gloria O. Pasadilla, 2010. "The ASEAN Services Sector and the Growth Rebalancing Model," Working Papers id:2922, eSocialSciences.
    16. repec:zbw:rwirep:0298 is not listed on IDEAS
    17. Ellyn Creasey & Ahmed S. Rahman & Katherine A. Smith, 2012. "Nation Building and Economic Growth," American Economic Review, American Economic Association, vol. 102(3), pages 278-282, May.
    18. Rosta, Miklós, 2013. "New Public Management: opportunity for the Centre, thread for the Periphery," MPRA Paper 68474, University Library of Munich, Germany.
    19. Diego Romero-Avila & DIEGO ROMERO-ÁVILA & ILASKI BARAÑANO, 2012. "Long-Term Growth and Persistence with Endogenous Depreciation: Theory and Evidence," EcoMod2012 3757, EcoMod.
    20. Salim B. Furth, 2010. "Terms of Trade Volatility and Precautionary Savings in Developing Economies," DEGIT Conference Papers c015_013, DEGIT, Dynamics, Economic Growth, and International Trade.
    21. Cohen, Joseph N & Linton, April, 2010. "The historical relationship between inflation and political rebellion, and what it might teach us about neoliberalism," MPRA Paper 22522, University Library of Munich, Germany.

    More about this item

    Keywords

    International trade; foreign aid; recipient exports; bilateral trade relations;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F35 - International Economics - - International Finance - - - Foreign Aid

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:got:gotcrc:049. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Dominik Noe (email available below). General contact details of provider: http://www.uni-goettingen.de/en/82144.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.