TY - JOUR
T1 - How different aid flows affect different trade flows
T2 - Evidence from Africa and its largest donors
AU - Savin, Ivan
AU - Marson, Marta
AU - Sutormina, Marina
N1 - Funding Information:
M.M. acknowledges support from the University of Insubria Senior Post Doc Position Grant 2016 and I.S. acknowledges support from the Russian Science Foundation (RSF grant number 19-18-00262). None of the funding sources had any role in study design; in the collection, analysis and interpretation of data; in the writing of the report; and in the decision to submit the article for publication. We would also like to thank Franziska Klein for useful comments on the earlier version of the paper.
Publisher Copyright:
© 2020
PY - 2020/12
Y1 - 2020/12
N2 - In this study we compare the impacts of official finance coming from the largest donors of African countries on bilateral trade flows between the donor and the recipient. Applying a gravity model approach, we distinguish between development finance and other official flows. We find that official finance from all the donors stimulates export of goods to Africa, while trade flows in the opposite direction are fostered in the case of China and Europe, but not for the US. Despite some claims in the literature that aid from China aims at securing import of natural resources, we find evidence that countries receiving Chinese aid raise their bilateral export of manufactured goods and not of primary commodities. Finally, while for Europe and the US official flows other than development assistance play a bigger role in shaping trade flows, China primarily uses highly concessional and development oriented flows.
AB - In this study we compare the impacts of official finance coming from the largest donors of African countries on bilateral trade flows between the donor and the recipient. Applying a gravity model approach, we distinguish between development finance and other official flows. We find that official finance from all the donors stimulates export of goods to Africa, while trade flows in the opposite direction are fostered in the case of China and Europe, but not for the US. Despite some claims in the literature that aid from China aims at securing import of natural resources, we find evidence that countries receiving Chinese aid raise their bilateral export of manufactured goods and not of primary commodities. Finally, while for Europe and the US official flows other than development assistance play a bigger role in shaping trade flows, China primarily uses highly concessional and development oriented flows.
KW - Aid-trade relation
KW - China
KW - Gravity model
KW - Official development assistance
KW - Other official flows
UR - http://www.scopus.com/inward/record.url?scp=85090356159&partnerID=8YFLogxK
U2 - 10.1016/j.strueco.2020.08.004
DO - 10.1016/j.strueco.2020.08.004
M3 - Article
AN - SCOPUS:85090356159
SN - 0954-349X
VL - 55
SP - 119
EP - 136
JO - Structural Change and Economic Dynamics
JF - Structural Change and Economic Dynamics
ER -