Does foreign aid promote recipient exports to donor countries?

Abstract

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Aid and Its Impact on the Donor’s Export Industry: The Dutch Case

“…This supported their interpretation that market knowledge through interpersonal relations is an important driver of exports. However, these results were obtained without controlling for unobservable heterogeneity related to each bilateral relationship, and so this could bias the estimates, as pointed out in Nowak- Lehmann et al (2013). Finally, Martínez-Zarzoso et al (2015a), also in a multi-country setting, found that, in general, donors' bilateral aid has positively affected their exports to developing countries.…”

Does German Development Aid boost German Exports and German Employment? A Sectoral Level Analysis

“…The authors analyze the effects from various foreign development assistance variables on both recipient and donor country exports and find a particularly strong relation between aid in the form of technical assistance and exports in both directions, supporting their interpretation that market knowledge through interpersonal relations is an important driver for exports. However, given that unobservable heterogeneity related to each bilateral relationship was not controlled for, this may bias the estimates, as pointed out by Nowak-Lehmann et al (2013).…”

US and China aid to Africa: Impact on the donor-recipient trade relations

“…The empirical studies of Nowak-Lehmann et al (2013) and Martí nez-Zarzoso et al (2014) reveal that the US exports to developing countries are positively associated with its bilateral aid. However, the exports of recipient countries are not promoted by the aid (Nowak-Lehmann et al, 2013).…”

“…To assure that the change in recipients' trade can be traced back to the change in foreign aid, Nowak- Lehmann et al (2013) attributed it to the role played by unobservable or unquantifiable characteristics that affect donor-recipient relations, such as reputation, mutual trust and support, goodwill and familiarity as well as customer relations, distribution channels and a better adaptation to the formal and informal market environment. However, they did not find significant effect of aid on exports of recipient countries in an empirical perspective.…”