2014 European Trade Study Group Conference, Münih, Germany, 11 - 13 September 2014, pp.1-17
Using bilateral data of aid flows in the gravity model of trade framework, this paper empirically investigate whether Aid for Trade (AfT) increases recipient exports to donors as well as donor exports to recipients. We find that total AfT does not affect recipient exports to donors as well as recipient imports from donors. At disaggregated AfT categories, however, we find that ‘aid for economic infrastructure’ promotes both recipient and donor exports. Also the effect of "aid for building productive capacity" on recipient exports is insignificant and somewhat surprisingly a negative impact on donor exports.