Do Developing-country WTO Members Receive More Aid for Trade (AfT)?

Abstract

Since the World Trade Organization (WTO) Doha Development Agenda (DDA) negotiations started in 2001, the importance of aid for trade (AfT) has been well recognised as a useful tool for facilitating trade, economic growth and social development in developing countries. At the WTO Hong Kong Ministerial Conference in December 2005, the 'AfT initiative' was launched and many high-income member countries pledged to increase their AfT contributions, particularly for the least developed member countries (LDC). This paper aims to assess whether and to what extent the WTO's developing member countries have received more AfT. For this purpose, a system generalised method of moments is applied to a sample of 118 recipient countries for the period 2001-10. We find evidence that while LDC WTO members on average receive relatively more AfT than other developing countries, the difference has not increased since launch of the AfT initiative. Among the three categories of AfT, the positive WTO membership effect for LDC members increased for building productive capacity and for trade policy and regulation, but declined for infrastructure.