The Influence of Aid for Trade on Human Development in South Asia

Abstract

Although South Asia has made some progress in human development over the last century, it still lags behind some other Asian countries. It is necessary to explore the factors that contribute to human development but have not yet been explored. Thus, the aim of this study is to explore the influence of aid for trade on human development in South Asia for the period 2005 to 2019. First, the study detected the unit root problem in the data using panel unit root tests and found that all data series (human development, aid for trade, population and remittances) are stationary at the level except foreign direct investment, which is stationary at the first difference. Second, the pooled mean group-autoregressive distributed lag (PMG-ARDL) model was employed to examine the short- and long-term influence of aid for trade on human development. The findings of the PMG-ARDL approach explored that aid for trade has a positive and significant influence on human development, both in the short and long run. Finally, this study prescribed some policy suggestions to improve human development in the region.

The Impact of Aid for Trade on Income Inequality: The Case of Upper-Middle-Income Countries

“…From their analysis of countries in South and East Asia, Africa, and the Paci c, Ashena and Dong (2022) concluded that reducing tariffs stimulates agricultural production, which in turn raises unskilled workers' incomes. Finally, focusing on six South Asian countries (Bangladesh, Bhutan, India, Nepal, Pakistan, and Sri Lanka), Sardar et al (2022) found that AfT has improved human development.…”

“…Hence, donor countries began requiring aid-receiving countries to reduce import restrictions and liberalize their trade policies. Meanwhile, to maximize the bene ts of foreign trade for these countries, donors introduced aid for trade (AfT) initiatives, which combined foreign aid and trade strategies with the aim of raising living standards (Sardar et al, 2022; Van Der Sluis and Durowah, 2018; Lee and Oh, 2022). As Gnangnon (2020b) puts it, AfT refers to foreign aid that aims to expand developing countries' participation in international trade.…”

“…">Theoretical Framework AfT, Foreign Trade, and Income InequalityAs already outlined, by addressing poverty, AfT can potentially reduce income inequality via several direct or indirect channels. For example, OECD (2010) showed that AfT can bring poor people into the market system by minimizing supply-side restrictions and trade costs while increasing exports (De Melo and Wagner, 2015;Sardar et al, 2022;Gnangnon, 2020a). That is, growth in foreign trade and the economy can decrease poverty and inequality.…”

The Effect of Institutional Quality on Economic Growth: Evidence from Tripartite Approaches in the Context of War-Torn Countries

“…First, we performed a panel autoregressive distributed lag model (ARDL) approach to assess both the long-and short-run relationship that exists between the variables. The panel ARDL model is widely used by authors to investigate long-run co-integration (see Sardar et al, 2022;Radmehr et al, 2022;Karangwa & Su, 2023). Next, we utilized Fully Modified Ordinary Least Square (FMOLS) and Dynamic Ordinary Least Square (DOLS) models to capture the co-integration between the indicators of accountable government and economic growth.…”

How Does Industrial Agglomeration Affect Exports? Evidence from Chinese Province-Industry Panel Data

“…There is a mutual reinforcement between industrial agglomeration and exports. In recent years, numerous studies have explored the various factors affecting trade exports [8] and the effects of trade on human activities [9][10][11]. Since China's reform and opening up, foreign trade has developed rapidly, greatly contributing to its economic and social development.…”