Aid for trade, infrastructure, and growth

Research output: Contribution to journalArticle

3 Citations (Scopus)

Abstract

Aid for trade is a new foreign aid initiative to assist recipient countries to build trade-related infrastructure. We formulate a small-country, two-good (i.e., investment and consumption goods), two-factor (i.e., capital and labor) endogenous growth model with learning by doing and intersectoral knowledge spillovers, where the import transport cost depends inversely on public infrastructure. Focusing on the case where the country is incompletely specialized and imports the investment good, we show that a permanent increase in the recipient's aid/GDP ratio raises the steady-state growth rate if and only if the investment good is more labor-intensive.

Original languageEnglish
Pages (from-to)886-909
Number of pages24
JournalInternational Tax and Public Finance
Volume20
Issue number6
DOIs
Publication statusPublished - 2013 Jan 1

Keywords

  • Aid for trade
  • Endogenous growth
  • Public infrastructure
  • Stolper-Samuelson theorem
  • Transfer paradox

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics

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