Aid and trade policies – in OECD countries and in developing countries – might reinforce each other to promote development, or they might be substitutes: the sign of the correlation between trade and aid flows depends on the context.
East Asia’s rapid growth demonstrates the important development impact of the trade-aid link.
While aid has played a strong complementary role for trade development in Viet Nam, for example, the current impasse of African cotton producers is emblematic of trade and aid policies working at cross purposes.
The experience of six African countries reviewed in this brief highlights the case for development assistance that aims to eliminate bottlenecks preventing a greater and deeper African participation in the global trading system.
The scaling-up of aid, macroeconomic stability and trade expansion are compatible and the ongoing international “aid for trade” initiative will remain critically relevant for African development in the coming decades.
