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Effectiveness of Aid for Trade in Small and Vulnerable Economies

An Empirical Assessment

image of Effectiveness of Aid for Trade in Small and Vulnerable Economies
This Economic Paper presents the first analyses of the use and effectiveness of Aid for Trade (AfT), the initiative to help developing countries boost their involvement in the global economy, for small and vulnerable economies (SVEs). It examines in detail the extent to which SVEs have been able to access AfT funds and to what extent this assistance has helped them to improve their trade performance.



Well designed traderelated assistance will help SVEs face the challenges posed by their characteristics, particularly when the prospects for small states have been deteriorating further due to preference erosion and the emergence of new and large competitors.

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Background and motivation

Lack of supply response following significant unilateral liberalisation of trade regimes and market opening in developed and relatively advanced developing countries has prevented many low-income economies from taking advantage of the growth in worldwide trade and investment flows. Most of these countries lack basic infrastructures, skilled human resources and managerial capacity, and this inhibits trade-led growth and development. The absence of effective supply response in these economies has also meant their weak integration into the global economy. Trade capacity building has therefore become a major national and international concern in attempts to ensure beneficial participation by poor and vulnerable economies in world trade.

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