Impact of multilateral trade liberalization and aid for trade for productive capacity building on export revenue instability

This paper investigates the impact of multilateral trade liberalization (MTP) and Aid for Trade (AFT) for productive capacity building on export revenue instability in developing countries. The empirical analysis covers 119 countries over the period 2002-2013. Using the within fixed effects estimator, it shows that both MTP and AFT for productive capacity building exert a reducing impact on export revenue instability. However, these two impacts are dependent on countries' level of development. Furthermore, the higher the level of AFT for productive capacity building (in % GDP), the greater the magnitude of the negative impact of MTP on export revenue instability.