Lui, D., B. Byiers, and Jeske van Seters. 2012. Rethinking Aid for Trade in the context of innovative financing. (ECDPM Discussion Paper 127).
Aid for Trade (AfT) emerged as an aid agenda six years ago at the World Trade Organisation (WTO) Hong Kong Ministerial Meeting of December 2005.
While the ideas behind AfT were not necessarily new, the significance of the initiative was that it represented a general recognition and agreement from WTO members that in order to take advantage of improved market access, developing countries needed increased aid resources for investments in infrastructure, improved trade policy, and boosting productivity in key export sectors.
The AfT agenda emerged not long after the Paris Declaration on Aid Effectiveness, which defined a set of principles for improving aid and better coordination amongst donors. As such, AfT could be seen as an important ‘test case’ for donors – including the EU and its member states to demonstrate the credibility of their commitments to the Paris Declaration and subsequent Accra Agenda for Action.
Key Purpose of ECDPM Study
In reality, the very nature of AfT has always raised questions around how aid resources can best be used to support investments that contribute to greater private sector activity, growth and employment, all with the ultimate aim of contributing to poverty reduction.
This study seeks to examine the policy implications of the increasing shift towards ‘innovative’ forms of development finance in comparison with more ‘traditional’ forms of aid, encapsulated by the Aid for Trade (AfT) initiative.
Key Findings of ECDPM