Aid for Trade: Can it be Evaluated ?

Following the recent surge in Aid-for-trade (AFT) and the likelihood that it will decline in the future, pressure to evaluate its effectiveness is increasing. This brief summarizes some of the main lessons from a recent FERDIITC- WB workshop. While recognizing that a multiplicity of approaches are needed to learn what works and what does not, this brief argues that the emphasis on reducing trade costs is well placed in spite of the lack of firm evidence linking AFT flows to measures of trade costs because trade volumes are consistently found to be responsive to variations in trade costs. However, relying on cross-country studies to detect AFT (‘hard’ or ‘soft’) effects is inconclusive. Impact evaluation (IE) is not a panacea, but is a credible alternative.

Cadot, O. et J. de Melo. 2013. "Aid for Trade: Can it be Evaluated?". Ferdi, note brève B58, janvier 2013.