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Assessing the Effectiveness of Aid for Trade: Lessons from the Ground

Assessing the Effectiveness of Aid for Trade: Lessons from the Ground

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This paper examines the conditions that make aid for trade effective by looking at country-specific factors based on the direct experience with aid for trade of eight developing countries (Bangladesh, Cambodia, Ghana, Guatemala, Malawi, Nepal, Peru, and Philippines) that have been assessed by ICTSD since mid-2010.

This paper, as well as the eight country-analyses, offers fresh insights into the dynamics of aid for trade on the ground, the institutional set-up underlying the initiative and its weaknesses. Overall, the findings are not radically different from what has emerged from the more general aid effectiveness debate. In short, aid for trade is likely to be effective when the host country has the appropriate institutions and human resources to utilise aid; when the aid program enjoys broad local ownership, including political ownership; and when donor objectives are aligned with local priorities. To these, we shall add that, specifically for Aid for trade flows, it is crucial that these are additional, and not just a diversion from existing aid resources.

The findings have important implications for taking the aid for trade initiative forward. The most important constraints to aid effectiveness are conditions specific to the host country rather than to the aid for trade initiative itself. While developing countries should step up efforts to mainstream trade and take a more active and participatory role in aid for trade project design and implementation, donors, on the other hand, should do more to build the absorptive capacity that developing countries critically lack.

Through this analysis, ICTSD aims to contribute to the ongoing discussion on the aid for trade initiative and to provide information and evidence to guide developing countries and their trade and development partners in designing and implementing more effective aid for trade programmes in the future.
This paper examines the conditions that make aid for trade effective by looking at country-specific factors based on the direct experience with aid for trade of eight developing countries (Bangladesh, Cambodia, Ghana, Guatemala, Malawi, Nepal, Peru, and Philippines) that have been assessed by ICTSD since mid-2010.

This paper, as well as the eight country-analyses, offers fresh insights into the dynamics of aid for trade on the ground, the institutional set-up underlying the initiative and its weaknesses. Overall, the findings are not radically different from what has emerged from the more general aid effectiveness debate. In short, aid for trade is likely to be effective when the host country has the appropriate institutions and human resources to utilise aid; when the aid program enjoys broad local ownership, including political ownership; and when donor objectives are aligned with local priorities. To these, we shall add that, specifically for Aid for trade flows, it is crucial that these are additional, and not just a diversion from existing aid resources.

The findings have important implications for taking the aid for trade initiative forward. The most important constraints to aid effectiveness are conditions specific to the host country rather than to the aid for trade initiative itself. While developing countries should step up efforts to mainstream trade and take a more active and participatory role in aid for trade project design and implementation, donors, on the other hand, should do more to build the absorptive capacity that developing countries critically lack.

Through this analysis, ICTSD aims to contribute to the ongoing discussion on the aid for trade initiative and to provide information and evidence to guide developing countries and their trade and development partners in designing and implementing more effective aid for trade programmes in the future.

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01/28/2014

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Issue Paper No. 29
Assessing the Effectivenessof Aid for Trade
Lessons from the Ground
ICTSD Programme on Competitiveness and Development
Aid for Trade Series
July 2013
|
By ICTSD
 
l
ICTSD Programme on Competitiveness and Development
Assessing the Eectiveness
of Aid for Trade
Lessons from the Ground
Issue Paper 29
 July 2013
By ICTSD
 
ii
ICTSD — Assessing the Effectiveness of Aid for Trade: Lessons from the Ground
Published by
International Centre for Trade and Sustainable Development (ICTSD)International Environment House 27 Chemin de Balexert, 1219 Geneva, SwitzerlandTel: +41 22 917 8492 Fax: +41 22 917 8093E-mail: ictsd@ictsd.ch Internet: www.ictsd.orgPublisher and Director: Ricardo Meléndez-OrtizProgrammes Director: Christophe Bellmann
Programme Team: Vinaye Dey Ancharaz, Paolo Ghisu and Anne-Katrin Pster
Acknowledgments
This paper has been produced under the ICTSD Programme on Competitiveness and Development.ICTSD wishes gratefully to acknowledge the support of its core and thematic donors, including: theMinistry for Foreign Affairs of Finland; the UK Department for International Development (DFID),the Swedish International Development Cooperation Agency (SIDA); the Netherlands Directorate-General of Development Cooperation (DGIS); the Ministry of Foreign Affairs of Denmark, Danida;and the Ministry of Foreign Affairs of Norway.This paper was prepared by Vinaye Dey Ancharaz, Paolo Ghisu, Christophe Bellmann and PetraWalterova from ICTSD.For more information about ICTSD Programme on Competitiveness and Development visit ourwebsite at www.ictsd.orgCover photo by Paolo GhisuICTSD welcomes feedback and comments on this document. These can be forwarded to PaoloGhisu (pghisu@ictsd.ch).Citation: ICTSD; (2013);
 Assessing the Effectiveness of Aid for Trade: Lessons from the Ground 
;ICTSD Programme on Competitiveness and Development; Issue Paper No. 29; InternationalCentre for Trade and Sustainable Development, Geneva, Switzerland, www.ictsd.org.Copyright ©ICTSD, 2013. Readers are encouraged to quote and reproduce this material foreducational and non-profit purposes provided the source is acknowledged. The work is licensedunder the Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 License. Toview a copy of this license, visit http://creativecommons.org/licenses/by-nc-nd/3.0.ISSN 1995-6932

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