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Quantifying Aid for Trade

A Case Study of Tanzania

image of Quantifying Aid for Trade

Efforts to boost international trade as a means to foster economic growth, known as Aid for Trade, have become an important issue for both aid donors and recipients. However, significant ambiguity remains regarding what is and what is not Aid for Trade. Given the high profile of the Aid for Trade initiative, to which many donors have specified commitments, the issue is not only technical but also political. Hence, it is important that an effective method is developed to establish a clear border between Aid for Trade and other types of aid. This Economic Paper explains what Aid for Trade is, and how definitions have evolved over time. Using Tanzania as a case study it shows how different definitions lead to different estimates of the amount of Aid for Trade being delivered, and suggests an alternative simple and practical methodology for recipient countries to classify and quantify it.

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Developing a Methodology for Identifying Aid for Trade In-country

In order to define and quantify broader AfT at the country level, the Task Force recommends reporting aid as AfT when such aid supports ‘trade-related priorities’ that are ‘explicitly identified’ in a country’s NDS (section 2.2.2). However, this recommendation seems to have been ignored by many donors and agencies in favour of using the OECD CRS and associated AfT proxies to define and measure AfT, probably because of the complexities of following the Task Force’s recommendations in practice. From the perspective of the donors, the problems of data comparability among recipient countries – each with differing interpretations of what is or is not a ‘trade-related priority’ – and the preference by donors and agencies for one reporting system that has the potential to be comparable across countries and which is under their control may explain why they appear to have opted for the CRS.

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