Does aid create trade? An investigation for european donors and african recipients

Tim Lloyd, Mark McGillivray, Oliver Morrissey, Robert Osei

Research output: Contribution to journalArticlepeer-review

39 Citations (Scopus)

Abstract

This article has a simple aim - to demonstrate that an empirical link between aid and trade may exist (for some donor-recipient pairs), but that the nature of this linkage is complex and can take a variety of forms. We challenge the commonly made assertion that aid creates trade. Theoretical considerations can be used to justify a link from aid to trade, from trade to aid, or in both directions together. Indeed, there may be no empirical linkage at all. We examine data on aid and trade flows for a sample of four European donors and 26 African recipients over 1969-95. Three broad findings emerge. First, a statistical link between aid and trade, of whatever form, is the exception rather than the norm. Second, there is very little evidence that aid creates trade; this argument for tied aid is unproven on our analysis of aggregate bilateral flows. Third, France, unlike the other donors examined, does appear more likely to use trade links as a criterion in determining aid allocations.

Original languageEnglish
Pages (from-to)107-123
Number of pages17
JournalEuropean Journal of Development Research
Volume12
Issue number1
DOIs
Publication statusPublished - Jun 2000
Externally publishedYes

Fingerprint

Dive into the research topics of 'Does aid create trade? An investigation for european donors and african recipients'. Together they form a unique fingerprint.

Cite this