Aid for trade and Africa's trade performance: Evidence from bilateral trade flows with China and OECD countries

The optimism surrounding aid for trade (AfT) led scholars and practitioners to probe its link with trade performance of aid-recipient countries in Africa. In the absence of formal evaluation guidelines, most previous studies, using aggregate data, have looked into the impacts of AfT on exports and imports and found results consistent with the stated objectives of AfT. The present study investigates the nature of the link for the case of African countries using disaggregated AfT data from China and OECD member countries. The results show that flows of OECD aid to all sectors and to economic infrastructure have increased both Africa's imports from and exports to OECD countries. This finding also holds the various commodity group. The results for the components of AfT from OECD countries are mixed, with AfT for 'trade education and training' the only component found to improve net-exports. In the case of China, the results are weak, but suggest that Chinese AfT flows to Africa have played little role in Africa's trade with China, with infrastructure and economic size of African countries being more important.