Description
The Aid for Trade (AfT) initiative was formally endorsed at the WTO 2005 Hong Kong Ministerial Conference, in an attempt to push forward the development agenda of the organisation. In the last 20 years, it has become one of the most successful development assistance initiatives available – at least in what concerns donor disbursements, both absolute and relative to other development aid. Yet most available assessments are narrowly concerned with assessing the trade-specific merits of the initiative, largely dismissing broader development contributions (or lack thereof). This paper questions the development merits of the AfT initiative from a broader, holistic understanding of development. In particular, the paper is concerned with assessing both the direct (output-based) and indirect (policy-based) potential impacts of AfT flows over levels of economic inequality in recipient developing countries. The paper employs panel data analysis to explore the hypothesis that AfT flows may indeed aggravate conditions of economic inequality in receiving economies, in so doing contributing to a deterioration of their long-term development prospects. The implications of this must be thoughtfully taken into consideration in the context of an aid initiative which normatively justifies the pro-development credentials of the multilateral trade system, and empirically diverts resources away from other development aid funds with a stronger social development rationale.
