OECD Development Centre Working Papers
The OECD Development Centre links OECD members with developing and emerging economies and fosters debate and discussion to seek creative policy solutions to emerging global issues and development challenges. This series of working papers is intended to disseminate the OECD Development Centre’s research findings rapidly among specialists in the field concerned. These papers are generally available in the original English or French, with a summary in the other language.
- ISSN: 18151949 (online)
- https://doi.org/10.1787/18151949
The Coherence of Trade Flows and Trade Policies with Aid and Investment Flows
This paper provides a theoretical and empirical overview of the relationships among
trade, aid and FDI, both in terms of policy interactions and interactions among resource flows.
Aid flows from one country to another can have positive or negative effects on trade flows
between those countries. These effects, in turn, may act at two different levels. There are
macro-level links between aid and trade: aid enhances saving, permitting more imports, or aid
raises the real exchange rate, depressing exports. There are also micro-level mechanisms: tied aid
may increase exports if it is spent on enhancing trade capacity, but other forms of tied aid merely
lead to allocative inefficiency. Aid flows can affect trade policy in the developing country that...
- Click to access:
-
Click to download PDF - 808.23KBPDF