Aid for Trade: we can do better: turning aid recipients into consumers, and enabling them to take charge of the process, will help to make aid for trade more effective.

• Date: 01 October 2006
• Author: Browne, Stephen
• Published date: 01 October 2006
• Author: Browne, Stephen

We in the developing countries must own the development agenda, and our partners have to align their support to our agenda, our priorities and the sequencing we have set for ourselves. Development cannot be imposed, it can only be facilitated.

President Benjamin Mkapa of Tanzania, 2004

"Aid for Trade" is the new frontier of development assistance, whether it means an increment in official development assistance ("additionality") or a significant diversion. The new amounts cited at WTO's 2005 ministerial meeting in Hong Kong--up to $10 billion per year from Japan, USA and Europe--would represent a tripling of trade-related aid and be close to 10% of total ODA.

Aid for trade used to be a very straightforward concept. Most of the rich countries provided a significant portion of their ODA as trade credits, enabling developing countries to purchase goods from the donor on the never-never. It was classic tied aid, from which some unpaid debts are only now being forgiven.

Today, aid for trade has a broader definition, although it is not quite clear how broad. Aid has helped to increase domestic export supply capacity and enhance enterprise competitivity. That is clearly aid for trade. But supporting "facilitation" and "infrastructure" is arguably part of more general development assistance.

In any case, aid for trade now has the characteristics of other kinds of aid, and we should apply the familiar criteria of aid effectiveness. In a recent report on...