Aid for trade investments aim to enable developing countries promote economic growth and poverty reduction through greater engagement with global trade. Over the last decade, aid for trade has become an increasingly prominent form of Official Development Assistance (ODA) to developing countries, representing more than 30 per cent of global aid flows.
Despite this heavy investment, the impact of aid for trade on poverty reduction in developing countries remains poorly understood. This is increasingly problematic as global aid flows contract and donors face intensifying pressure to justify aid expenditure.
This paper seeks to do three things;
Part 1 explains the core concepts around aid for trade and how the aid is spent, both globally and in Australia.
Part 2 examines the impact of aid for trade investments on poverty reduction.
Part 3 considers what the evidence on aid for trade’s impact means for Australia’s aid for trade priorities, drawing on World Vision’s field experience where relevant.
The remainder of this section provides a brief background on the economic rationale for aid for trade and World Vision Australia’s operational experience in aid for trade programming.