CDP Policy Review No. 1

By José Antonio Alonso

The paper looks into the origins of Aid for Trade (AfT) and its objective of assisting developing countries to increase exports of goods and services and integrate into the multilateral trading system. Pointing out that AfT is not a new development fund nor a new aid category, the paper looks into the flows and impact of ODA resources allocated to AfT while focusing on LDCs as well as the effectiveness of AfT. Among the recommendations, the paper argues that most Aid for Trade is allocated to middle income countries and that a shift in this allocation pattern is needed to give more attention to LDCs, particular those that are not well integrated into the global market.