Trade promotes economic growth, alleviates poverty and helps countries reach their
development goals. However, developing countries – in particular the least developed
– face difficulties in making trade happen and turning trade into economic growth.
The Aid for Trade Initiative – launched at the 2005 World Trade Organisation conference
in Hong Kong – aims at helping these countries to take advantage of trade opportunities
and to reap the benefits of their integration into the world economy. The Initiative
has been a success: it has not only raised awareness among both donors and developing
countries about the role of trade in development, but also helped secure increased
resources.Trade for Growth and Poverty Reduction: How Aid for Trade Can Help explains
how Aid for Trade can foster economic growth and reduce poverty, and why it is an
important instrument for a development strategy that actively supports poverty alleviation.
Unlocking this potential requires carefully designed and sequenced trade reforms.
While developing countries have many trade-related needs, but financial resources
and political capital for reforms are limited, it is an important priority to tackle
the most binding constraints to trade expansion. This report describes the diagnostic
tools available, evaluates their strengths and weaknesses, and suggests a dynamic
framework to guide the sequencing of reform and donor support.