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.



The rationale behind aid for trade in SVEs

Until the recent economic slowdown, the global process of economic integration among countries intensified, underpinned by an unprecedented rise in the volume of trade and capital flows and a reduction in barriers to worldwide trade and investment activities. This drive to globalisation received substantial impetus from the birth of the WTO, providing specific trade rules and procedures and promising further liberalisation in the world trade regime. Despite these developments, there remain serious concerns that small states have failed to derive significant benefits from the process of trade liberalisation and globalisation.


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