Aid for Trade and the Liberalization of Trade

The Aid for Trade (AfT) initiative has gained much popularity since its launch at the World Trade Organization’s Ministerial Conference in 2005, and there are ongoing discussions on its effectiveness and potential to improve the integration of developing countries into the world economy. This paper contributes to the debate by analyzing AfT in a political economy context. We find that the delivery of AfT is a precondition for trade reform and trade-enhancing rule-making in developing countries, and may cushion adjustment problems to trade liberalization.. Accordingly, AfT can be a catalyst of trade reforms domestically and internationally.