OECD Workshop Looks At Aid for Trade Implementation

6 April 2011

A recent OECD workshop on aid for trade focused on how correctly sequencing policy reform and implementing policies complementary to trade reforms can help developing countries tap trade opportunities and turn them into economic growth. Aid for trade efforts have in general been successful, participants agreed, although concerns were raised about the process for evaluating aid for trade efforts.

As part of its initiative on coordinating aid for trade efforts, the WTO is hosting a third ‘Global Review' in mid-July. In the run-up to that meeting, the WTO and OECD have stepped up monitoring work.

The 28-29 March workshop, which brought together important donors such as the US, the UK, Germany, Finland, France, the European Commission, and the World Bank, along with experts from international organizations and consulting firms, dealt mainly with the evaluation and assessment of how aid for trade spending had impacted trade.

One study of projects in the transport and storage sectors in Ghana and Vietnam was highly critical of the evaluation process. In the study, Patrick Messerlin of Sciences Po and William Hynes of the OECD examined how often key words occurred in a set of 162 evaluations in an attempt to reveal the implicit interests of evaluators and to determine how issues were being considered.  This "evaluation of the evaluation" suggested that aid for trade evaluations tended to say rather little about trade itself:  "trade" and "exports" were not among the most frequently mentioned by evaluators; development-related concepts received more emphasis.  Other common shortcomings of aid for trade evaluations included a failure to assess policy linkages and behind the border policies, a tendency to lack realistic timeframes, and a shortage of ex-ante economic analysis of projects that were later evaluated.  Finally, it was said that the evaluations provided little insight as to whether AfT works and why.

The OECD, which houses the Development Assistance Committee, the main coordinating body for aid effectiveness, offered some  recommendations for how aid for trade evaluations could be improved: defining objectives in a quantifiable manner, requiring recipients to provide disaggregated data to measure completion of those objectives ex-post, and a framework to assess operations impact in a more systematic and thorough way.

The World Bank's Richard Newfarmer suggested that countries consider paying more attention to trade when designing national development strategies, and seek more aid for trade from donors. He noted that several countries with high potential demand for aid for trade were in fact receiving less than average levels of such assistance.

Sheila Page from the Overseas Development Institute emphasized the importance of having better regulations and negotiations to fill gaps in the areas of market information, trade promotion and capacity building in activities such as agriculture.

Stephen Karingi of the UN Economic Commission for Africa said that aid for trade has a significant amd measurable effect on the improvement of export diversity and competitiveness. A one percent increase in aid for trade, he demonstrated, reduces the cost of exporting by 0.11 percent.

Participants agreed that despite the successes of aid for trade efforts, further policy coordination is needed not only among donors but also at the national level. They also agreed that evaluation needs to follow a more case-by case approach.

ICTSD reporting.

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