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Jaime de Melo FERDI

Aid for Trade and Regional Integration as Means for Accelerating Development of LLDCs 2nd UN CONFERENCE ON LLDCs Vienna, Austria – 4 November 2014 ( 8.15 - 9.45 ). Jaime de Melo FERDI. AID FOR TRADE What have we learnt ? Which way ahead ?

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Jaime de Melo FERDI

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  1. Aid for Trade and Regional Integrationas Means for Accelerating Development of LLDCs2nd UN CONFERENCE ON LLDCsVienna, Austria – 4 November 2014 (8.15 - 9.45) Jaime de Melo FERDI

  2. AID FOR TRADE What have welearnt? Whichwayahead? (e-book at http://www.ferdi.fr/en/publication/ouv-aid-trade-what-have-we-learnt-which-way-ahead ) What do we know about LLDC needs? AnyLessons? I - Aid for Trade: Looking Ahead Olivier Cadot and Jaime de Melo II - Evaluation in Aid for Trade: From Case Study Counting to Measuring Olivier Cadot and Jaime de Melo III - Aid for Trade: What can we Learn from the Case Studies? Richard Newfarmer IV - Diagnostic Trade Integration Studies and their Updates under the Enhanced Integrated Framework – A Retrospective Paul Brenton and Ian Gillson 2

  3. What Have weLearnt about Trade Costs? Reduction in tradecostsaccount for about 1/3 of growth in trade Evolution of simulated trade costs from a gravity equation (sample of 118 countries) Trade Costs have fallenlessrapidly for lowincome countries…. Lowincome High Income

  4. What Have weLearnt about Trade Costs? Trade Costshave onlyfallenby about 2% for a sample of 14 LLDCs

  5. The Viciouscircle of LLDCs infrastructure Networks 5

  6. …sonon-oilLLDCstradeshares have stagnated

  7. AFT per capita trends have remainedfairly constant through time

  8. …Per capita AFT shares of LLDCsremainedlow

  9. For most countries, the share of AFT islessthan the share of other types of aid

  10. Most AFT isallocated to infrastructure

  11. AFT shares to LL countries have remainedfairly constant …so have components of AFT

  12. AFT: WhatHave weLearnt? Some apparent success in mobilizingfunding… Following the Paris declaration of 2005, the declineof the share of AFT in ODA has been arrested.

  13. What Have weLearnt? … and somesuccessin mainstreamingtrade in national developmentstrategies (…sometimes) Applying OECD word-count approach to Uganda’s budget speeches

  14. What Have weLearnt? … but no faster export growth for large recipients of AFT flows • Split countries by the median in terms of 2000-2005 AFT receipts (per dollar of export) • Check if high-receivers’ exports grew more over subsequent 5-year period (2005-10) Strongest exporters Weakest exporters Quintiles of the export/capita distribution

  15. What have weLearnt? Macro and Micro face differenttrade-offssoweneedboth Micro studies face trade-off 1: theyidentify causal chainsfairlyextensively at the cost of less relevant (i.e. lesseasily transposable) outcomes Internalvalidity (ability to identify a causal relation) Impact Evaluation Trade-off 1 Cross-country econometrics Externalvalidity (ability to derivegeneralizableresults) Cross-country studies have greaterexternalvalidity but have lessinternalvalidity (omission of important factors) Identification of causal chain Trade-off 2 Relevance of outcomes 15

  16. Whichwayahead? Randomista or not, evaluate • RCT is not the alpha and omega of impact evaluation • Whatmattersisbaseline data collection + control group • Wealth of quasi-experimentalmethodsavailable, even ex post • «RCT controversy» should not be an excuse to not evaluate • Every intervention leftun-evaluatedis a missedlearningopportunity • Evaluation raisesincentive issues; incentive-compatible setups canbedesigned (e.g. making IE the «default» in all cases; decoupling IE resultsfromprojectmanager’s performance evaluation, …) • Toward an «evaluation-friendly» AFT • Cutcosts; e.g. use existingstats as much as possible; put pressure on governments to sharestatistics, in particularfirm-level data • Encourage a culture of project design for evaluation (all projectsdesignedlikeProgresa?)

  17. Whichwayahead? Streamline the initiative • Exploit the opportunityoffered by the Trade Facilitation Agreement • Help maketradeportalsusefulrepositories of NTMs • Providetechnical assistance to Trade Facilitation Committees (Art. 13) to developtrade-relatedregulatory-oversightcapabilities (not justcounting documents to export) • Better use Diagnostic Trade Integration Studies • DTIS updates already a crudeform of progress monitoring; clearlearningcurvefrom first generation • Stilllack of ownership (governmentside) and visibility (donorside) • Need for leaner, more focused action matrices (alreadylargely the case) • Mainstreamregionalintegration in tradepolicy; region-levelDTISs

  18. Whichwayahead? In sum… • AFT’sbroadachievements… • Mainstreaming of trade in national developmentstrategies • Creating a crudeform of donor coordination around «competitivenessstrategies» • Mobilizingfunding • … are at riskunless a «culture of evaluation» builds up • Donor budget pressures requirecredible identification of outcomeimprovements + causation; the instruments are there to use • Successfulglobalizers have all experimentedwithpolicy, but no learningfromexperimentationwithoutevaluation • … and the initiative gets a second windfrom the TFA • A tool for the TFA’s application, focused on NTMs • A vehicle to fosterdeepregionalintegration

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