How Does Aid For Trade Contribute To ASEAN`s Trading?

The aid for trade program is about helping developing countries to improve their trade abilities. With many developing countries, Asia is one of the largest aids for trade recipients and plays an essential role in world trade. In Asia, ASEAN countries are active aid participant countries and also participate in world trade. This study uses an aid-augmented gravity model to find the relationship between bilateral aid for trade and bilateral trade between recipient ASEAN countries and OECD DAC donors. We consecutively calculate and compare the effects of the overall aid for trade program on trade of ASEAN aid for trade recipients (altogether and recipients grouped by income level) by using data on 8 ASEAN aid recipient countries and 23 OECD DAC donor countries in 1991-2009. We also calculate the effect of disaggregated aid on recipient exports or imports in 2002-2009. We find that, overall, aid for trade has a positive and significant effect on either exports or imports of recipient countries. However, when differentiating recipients by income level, aid for trade is working well only for lower-middle-incomegroups. Aid for economic infrastructure and technical assistance on trade policy and regulation has a positive and significant effect on recipient exports or imports