Multilateral Trade Liberalization, Export Share in the International Trade Market and Aid for Trade

Abstract

This paper adds to the existing literature on the macroeconomic determinants of Aid for Trade (AfT). It investigates the impact of both multilateral trade policy liberalization and the export share of AfT-recipient countries in global trade market on the AfT amounts that accrue to these countries. Using a panel dataset comprising 133 AfT-recipient-countries, over the period 1995–2015, the empirical analysis shows that both the impact of multilateral trade policy liberalization and of the recipient countries’ export share in the world trade market on AfT depend on recipient-countries’ level of development as well as on their domestic trade policy. Additionally, in the context of multilateral trade liberalization, donors tend to reward recipient-countries’ effort to secure a higher export share in the international trade market.