Aid for Trade and sectoral employment diversification in recipient-countries

Abstract

This article examines the effect of Aid for Trade (AfT) inflows on sectoral employment diversification in recipient-countries. The analysis is conducted on a sample of 112 countries over the period 2002–2015, using the two-step system Generalized Methods of Moments. It shows that AfT programmes are conducive to employment diversification across the agriculture, industry and services sectors in recipient-countries, although this effect could vary across different sub-samples. Additionally, there is a positive effect of the cumulative AfT flows on sectoral employment diversification, with the highest positive effect being on low-income countries.