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“Aid for Trade” gets good marks

by Claudia Isabel Rittel
According to the World Trade Organisation (WTO) there has been "remarkable progress in a short period of time". Launched in 2005, the Aid for Trade programme's success consists mainly in having mobilised more money to strengthen developing countries’ trade. Scholars, however, argue for more capacity building in the field of international trade.

The WTO and the Organisation for Economic Cooperation and Development (OECD) jointly appreciate the efforts made in the Aid-for-Trade context. Taking account of data up to 2007, their evaluators consider it a success, among other things, that the participating countries have prioritised trade in their national development strategies.

By the end of 2007, donor countries had pledged a total of $ 25.4 billion, more than 60 % of it in bilateral agreements, according to the study “Aid for Trade at a glance”, which was the second WTO/OECD evaluation of the respective initiative. The authors write that the biggest beneficiary in 2007 was Asia with $ 10.7 billion, followed by Africa with $ 9.5 billion. More than half the money was earmarked for infrastructure projects, and another substantial share for manufacturing capacity. Only four per cent served to fund technical assistance, which includes capacity building in the area of trade policy and regulations.

The WTO and OECD stress that funding was not delivered at the expense of
other programmes. Moreover, low-income countries are said to have been particular beneficieries, though it is admitted that least-developed countries did not gain much.

In recent publications, other experts have, however, pointed out that capacity building is essential for making the most of the advantages of world trade. Authors at the Hamburg Institute of International Economics (HWWI) and PricewaterhouseCoopers stressed that the level of education as well as that of governance in general are highly relevant in this respect. Another crucial issues is said to lie in infrastructure development. Nonetheless, the scholars appreciate the value of Aid for Trade, arguing that the programme helps to bridge divides between the rich and the poor world.

Both HWWI and Pricewaterhouse­Coopers blame donors of not acting in a coherent manner. In too many cases, they even seem unable to agree on basic definitions, which, for obvious reasons, makes it difficult to coordinate tangible action. (cir)