The Aid‐for‐Trade (AfT) Initiative was launched by the Members of the World Trade Organization (WTO) with a view to helping developing countries and the least‐developed countries (LDCs) expand their ...trade. The current paper contributes to the literature on AfT effectiveness by examining how AfT affects recipient‐countries' export product diversification. The analysis has been carried out on a sample of 104 AfT recipient‐countries over the period 2002–2015 and uses the two‐step system generalised methods of moments (GMM) approach. Results show that AfT flows are conducive to export product diversification in recipient‐countries. In addition, the analysis has shown a positive impact of the cumulative AfT flows on the export product diversification path of these countries. These results apply as well to the subsamples of LDCs and other developing countries. One policy implication of these results is that a scale‐up of AfT would help recipient‐countries to diversify their export products baskets and hence facilitate their greater integration into the global trading system.
The few existing studies on the relationship between Aid for Trade (AfT) flows and inward foreign direct investment (FDI) tend to report a positive effect of total AfT flows, in particular of aid ...flows for building economic infrastructure, on FDI inflows. This article aims to complement these works by investigating whether the effect of AfT flows on inward FDI stock depends on recipient countries' level of export product concentration. Empirical analysis has shown that AfT flows exert a strong positive effect on inward FDI stock in countries that experience a high level of export product concentration. These findings are relevant for developing countries regarding the concentration of their export products on primary commodities and given the strong role of FDI flows for employment generation, economic growth, and development in these countries.
The present analysis has explored the effect of external shocks on the predictability of remittance outflows, by relying on an unbalanced panel of 24 developed countries over the period from 1996 to ...2020. The indicator of predictability of remittance outflows for a given country in a given year is the deviation of the remittance outflows (as a share of gross domestic product) from its trend. Results are obtained by means of the within-fixed effects estimator, and indicate that external shocks reduce the predictability of remittance outflows, with a larger negative effect on the positive predictability of these capital outflows than on the negative predictability of these capital outflows. The negative effect of external shocks on the predictability of remittance outflows operates through the economic growth channel, with the magnitude of this negative effect being higher in countries with low economic growth rates. Finally, external shocks reduce the predictability of remittance outflows in countries that experience a decline in migrant inflows. This finding has implications for the economic and development prospects of migrants’ countries of origin.
JEL Classification: F24, F43, O11
PurposeThe relationship between real exchange rate and services export diversification is at the heart of this study.Design/methodology/approachThe analysis is performed using a sample of 113 ...countries over the period 1985–2014, and the 2-step system Generalized Method of Moments (GMM) approach. The analysis uses both the Theil index and Herfindahl–Hirschman index of services export concentration.FindingsThe analysis shows that over the full sample, the real effective exchange rate appreciation induces a greater services export diversification. This outcome applies to high-income countries and developing countries. However, the positive effect of the appreciation of the real exchange rate on services export concentration is lower in least developed countries than in other countries. Finally, the effect of the appreciation of the real exchange rate on services export concentration in tax haven countries depends on the indicator of services export concentration, as this is positive for the Theil index and negative for the Herfindahl–Hirschman index of services export concentration.Research limitations/implicationsThese findings highlight the strong influence of real exchange policies on countries' path of services export diversification.Originality/valueTo the best of the authors' knowledge, this topic is being addressed in the empirical literature for the first time.
This study empirically examines the effect of Internet access on services export diversification. A panel dataset containing 131 countries is analyzed over 1995-2014 and shows that greater access to ...the Internet is positively associated with services export diversification. This outcome applies to both high-income and developing countries, and particularly to least developed countries (LDCs) among developing countries. Additionally, the effect of Internet access on services export product diversification translates to countries' level of innovation, merchandise exports, including export product concentration and size of foreign direct investment (FDI) inflows. These findings highlight the need for developing digital infrastructure and regulations that would facilitate access to the Internet, particularly in developing countries. The international community must focus on developing countries, particularly LDCs, by helping them to develop the requisite digital infrastructure and regulations to better participate in international trade, especially through greater series export diversification.
•The effect of the utilization of non-reciprocal trade preferences (NRTPs) offered by the QUAD on beneficiary countries' economic complexity is examined.•The analysis considers two blocks of NRTPs ...(GSP programs and other trade preferences) using a sample of 110 beneficiary countries over the period 2002-2018.•The NRTPs promote economic complexity when beneficiary-countries' shares of exports under the relevant NRTP in total merchandise exports is very high.•Likewise, the simultaneous utilization of NRTPs fosters economic complexity when one NRTP is highly utilized.•The utilization of NRTPs enhances economic complexity in countries that receive high amounts of development aid flows and high levels of foreign direct investment flows.
This article aims to contribute to the nascent literature on the effect of non-reciprocal trade preferences (NRTPs) on economic complexity in beneficiary countries. It investigates the effect of NRTPs (Generalized Systems of Preferences - GSP - and other trade preferences) offered by the QUAD countries (Canada, the European Union, Japan, and the United States) on the beneficiary countries' levels of economic complexity. The analysis has used a panel dataset of 110 beneficiary countries over the period of 2002-2018, and the two-step system Generalized Method of Moments estimator. Results show that the utilization of NRTPs (either GSP programs or other trade preferences) influences positively economic complexity when beneficiary-countries' shares of exports under the relevant NRTP in total merchandise exports is very high. In addition, GSP programs and other trade preferences jointly promote economic complexity, if the utilization of either NRTP reaches high levels. The utilization of NRTPs also enhances economic complexity in countries that receive high shares of foreign direct investment flows in GDP. Finally, development aid flows are strongly complementary with the utilization of NRTPs in fostering economic complexity, especially when they reach very high amounts. One message conveyed by this analysis is that preference-granting countries (including QUAD countries) should offer both generous NRTPs and high amounts of development aid if NRTPs were to be effective in expanding the manufacturing base in the beneficiary countries, and in particular, in improving their economic complexity.
•This article analyses the effect of the WTO membership on commercial services exports (CSE) for 25 article XII members over the period 2005–2019.•WTO article XII members are countries that joined ...the WTO under article XII of the marrakesh agreement establishing the WTO.•The analysis has used the two-stage probit least squares estimator and the two-step system generalized method of moments estimators.•Results have revealed that the WTO membership led to higher CSE and promoted services export diversification in article XII members.•There are heterogenous effects of the WTO membership on CSE performance among article XII members relatively to non-article XII WTO Members.
The literature on the trade effects of the membership in the World Trade Organization (WTO) has essentially focused on trade in goods, including goods exports. The present analysis has investigated the effect of the WTO membership on commercial services exports for 25 Article XII Members (i.e., countries that joined the WTO under Article XII of the Marrakesh Agreement establishing the WTO) over the period from 2005 to 2019. Results, based on the two-stage probit least squares estimator have revealed that the WTO membership increased significantly commercial services exports, including both modern and traditional services exports in Article XII members, and promoted services export diversification. Using the two-step system generalized method of moments estimator, the analysis has shown heterogenous effects of the membership in the WTO on commercial services export performance among Article XII Members relatively to Non-Article XII WTO Members.
The present article has examined the poverty volatility effect of export product concentration using a panel dataset of 120 developing countries over the period of 1980 to 2014. Results, based on the ...feasible generalized least squares estimator, suggest that export product concentration tends to induce greater poverty volatility in low-income countries but reduces poverty volatility in relatively advanced developing countries. These outcomes reflect the fact that export product concentration reduces poverty volatility in countries that improve their manufactured export performance. Finally, the greater the level of export product diversification (or economic complexity), the higher the degree of poverty volatility reduction.
The current analysis contributes to the literature on the real exchange rate effect of development aid by separating the real exchange rate effect of the development aid allocated to the trade sector ...(Aid for Trade - AfT) from the effect of other aid flows. The empirical findings show that higher AfT flows lead to a depreciation of the real exchange rate in recipient economies, while other development aid flows generate an appreciation of the real exchange rate. The real exchange rate effect of total AfT flows works through trade openness, export product diversification, and inward foreign direct investment stock.
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