TY - JOUR
T1 - Does aid create trade? An investigation for european donors and african recipients
AU - Lloyd, Tim
AU - McGillivray, Mark
AU - Morrissey, Oliver
AU - Osei, Robert
PY - 2000/6
Y1 - 2000/6
N2 - 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.
AB - 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.
UR - http://www.scopus.com/inward/record.url?scp=0033812547&partnerID=8YFLogxK
U2 - 10.1080/09578810008426754
DO - 10.1080/09578810008426754
M3 - Article
AN - SCOPUS:0033812547
SN - 0957-8811
VL - 12
SP - 107
EP - 123
JO - European Journal of Development Research
JF - European Journal of Development Research
IS - 1
ER -