Aid for Trade: A Springboard for Sustainable Development?

10 July 2017

The 2030 Agenda for Sustainable Development, adopted by the United Nations General Assembly on 25 September 2015, provides a comprehensive and ambitious global developmental framework. Firmly ensconced within the Agenda are the 17 Sustainable Development Goals (SDGs) which bring a clear  multidimensional focus to the economic, social, and environmental pillars of sustainable development. The SDGs contain explicit references to some 20 different trade-related targets and trade policy has an important role to play in the implementation of this global agenda. Many of the SDG targets, such as ending all forms of discrimination against women, developing affordable and clean energy, or achieving access to quality health care, can be tied back to trade and trade-related outcomes.

The Aid for Trade Initiative, launched at the Sixth WTO Ministerial Conference in Hong Kong in 2005, has achieved notable successes in supporting the ability of developing economies to integrate into the global economy. As of 2015, official aid for trade commitments reached approximately US$53.9 billion, up from the 2006-2008 average of US$29.3 billion, with roughly US$19.2 billion directed towards least developed and low income countries and US$18.2 channelled to Africa (OECD Creditor Reporting System 2017).

The initiative has undergone a number of evolutions in terms of donor and recipient priorities. Trade policy and regulatory programmes have decreased in relative importance as demonstrated by their shrinking share of total aid-for-trade commitments—down from an average 3.4 percent of total commitments between 2006-2008 to less than 2 percent in 2015. Similarly, programmes focused on building productive capacity within sectors such as tourism and banking and financial services have seen their share of total aid-for-trade commitments decrease from 43.2 to 39 percent over the same period. In contrast, efforts to improve economic infrastructure, such as transport, communications, and electricity supply and generation, increased their share from 53.4 to 59 percent.

Given the fundamental changes that have occurred in the global economy since the inception of the Aid for Trade Initiative, such as the digitalisation of the economy, the increasing servicification of manufacturing, and the rise of global and regional production and distribution networks, ensuring that aid for trade interventions remain effective tools in facilitating inclusive and sustainable economic transformation in developing countries is of critical importance.

Rather than focus exclusively on Africa, this special issue takes a more systemic approach to aid for trade and sustainable development. The contributions, authored by leading experts in the field, shed light from different angles on the potential contribution of aid for trade to inclusive and sustainable developmental outcomes.

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