Leveraging Aid for Trade Capacity in Uganda (original) (raw)
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Foreign Aid and Trade Capacity Development Recent Evidence from Uganda
Journal of Sustainable Development, 2016
Endemic supply side constraints including fluctuating output levels, deficient trade infrastructure, rampant non-tariff barriers and incapacity to ensure international quality standards continue to thwart the gainful participation of many Least Developed Countries (LDCs) in an increasingly liberal global trade environment. At its 2005 Hong Kong Ministerial Conference, the World Trade Organization launched its Aid for Trade (AFT) initiative aimed at coordinating global financial support for strengthening trade capacity in Least Developed Countries (LDCs). This paper examined the effect of foreign aid, particularly Official Development Assistance, on Uganda’s external trade and its AFT component in strengthening the country’s trade capacity. Using time series Error Correction Modelling and the World Bank’s World Development Indicators and official national statistics, the paper finds small but positive aid influence on Uganda’s exports and imports and generally close alignment between...
Targeting Aid for Trade for Impactful Capacity‐Building in the Least Developed Countries
Global Policy
For the least developed countries (LDCs) facing supply-side constraints, the SDGs target of doubling the share of their global exports by 2020 is a chimera. Various mechanisms have been put in place to help LDCs to enhance their trade capacity, of which WTO Aid for Trade (AfT) is a notable one. Although the Enhanced Integrated Framework (EIF) pre-dates the AFT initiative, the EIF's focus on evidence based needs assessment, institutional and policy support and productive capacity building support have helped a number of LDCs overcome their binding constraints to trade expansion. Besides, country ownership principle, partnership approach and targeted nature of AfT support means that the chances of achieving success is much higher than other development interventions.
Ugandan trade policy and export performance in the 1990s
1998
The Ugandan economy has been transformed since 1987. We ask how effective have the reforms been in increasing the incentives to exporters. Uganda has made significant progress in reducing the anti-export bias in its trade policy. Taxes on exports have been abolished, the foreign exchange market is liberalised and exporters are allowed to retain their export earnings. Import protection has also been reduced considerably. However, while the relative incentives to exporting have improved, export earnings have not. The real problem facing Uganda is the severe lack of export diversification and the fact that it is a price taker on world markets. Uganda can take measures to encourage export diversification, both in terms of quality and niche markets for traditional commodities and in terms of encouraging non-traditional exports. Trade policy reforms are only part of such a strategy. Improved infrastructure and institutional support are an important component of export support, to reduce the adverse effects of natural barriers.
We study trade policy in Uganda, particularly focusing on the post conflict period of 1986 to date. We divide trade policy reforms in that period in two generations. A first generation associated to the structural reforms agreed between the National Resistance Movement (NRM) and the international institutions, which wanted to limited state intervention and impose a free market oriented economy open to international trade. We conclude that Uganda's first generation of reforms, beginning in 1987, have been largely successful in kick-starting the integration into global markets of an economy that had collapsed under the previous 15 years of political instability and economic mismanagement. Nonetheless, mixed results in terms of promoting export diversification, creating an adequate regulation of the trade system and integrating with neighbour countries, among other factors, warranted a more active intervention of the public sector in trade policy, a change that we termed second generation reforms.
Journal of Management Policy and Practice, 2011
This study is about the impact of supply side constraints such as production, infrastructure, economic and governance on the performance of Uganda in the global marketplace. Uganda's handicap is her inability to enter and sustain export growth in the open market. The study was designed to understand the relationship of these supply side constraints to export growth. A sample of critical exportable products was selected. Research found a significant correlation between Uganda's supply side constraints and the performance of exportable products in the global market. The paper presents recommendations to minimize the constraints in an effort to improve export earnings.
Facilitate Trade for Development: Aid for Trade
2017
The 2030 Agenda for Sustainable Development with the Sustainable Development Goals (SDGs) at its core calls to “increase aid-for-trade support for developing countries, in particular least developed countries”. This echoes the aid-for-trade reference in the Addis Ababa Action Agenda of the Third International Conference on Financing for Development. This paper discusses how aid for trade already contributes to the SDGs after highlighting the achievements of the Aid for Trade Initiative. This is followed by a section analysing the continued importance of aid in financing development, particularly in the least developed countries. Next, the role of the private sector in aid for trade is presented as an example of how to improve partnerships for development. Finally, the paper draws on lessons from the monitoring of aid for trade for the SDGs and the need, but also difficulty in making the process truly country driven. The paper concludes by stressing that aid for trade – ten years aft...
Sectoral Aid for Trade and sectoral export performance in East Africa
Journal of Economics and International Finance, 2019
The study set out to evaluate the relationship between sectoral Aid for Trade (AfTS) and sectoral exports within East Africarepresented by the East African Community partner states including Burundi, Kenya, Rwanda, Tanzania and Uganda. The Estimation method used was the Seemingly Unrelated Regression Equation (SURE) model. The SURE estimation results show a positive significant relationship between AfTS and exports from the agriculture, manufacturing and services sectors in the East Africa Region, implying that the initiative has and continues to foster the growth of exports from the region. This relationship however is inelastic, implying that percentage increases in aid disbursed lead to smaller percentage increase in sectoral exports. The results also show a highly significant, positive and elastic relationship between value addition and exports. Other regressors like regulatory quality and corruption control also show a higher impact on exports than AFTS. This shows that while AfTS can contribute to improved export performance, improvements in value addition, the quality of the regulatory environment, and the level of corruption control are equally or even more important in facilitating export growth. From the correlation coefficients between the sectors, all the three sectors are positively correlated. It can also be seen that the greatest correlations exist between the manufacturing sector and the agriculture sector, which could be because the countries in the studyfrom East Africa are mainly agriculture exporters, with a lot of inputs feeding from the agriculture sectors to the manufacturing sectors.
Increasing the effectiveness of Aid for Trade: The circumstances under which it works best
This review paper seeks to assess the impact of Aid for Trade thus far, and what has worked and what the barriers to improving the impact of Aid for Trade are. Aid for Trade has emerged as an important vehicle for assisting developing countries to improve their trade capacity and to benefit from the expansion of global markets (see Section 2). These improvements are supporting economic growth and job creation, and in doing so also aiding developing countries to move from reliance on aid to using trade as a means to generate higher standards of living. Aid for Trade investment has increased rapidly in recent years (see Section 3), increasing from 20.6billionin2006to20.6 billion in 2006 to 20.6billionin2006to32.1 billion in 2010. It now constitutes about a third of all official development assistance (ODA). While much of the investments originate from traditional donor countries, emerging economies have also increasingly started contributing to global Aid for Trade flows. Aid for Trade investments support recipient countries efforts in 1) trade policy and regulations, 2) trade development, 3) trade-related infrastructure, 4) building productive capacity and 5) trade-related adjustments. But any optimism on the volume of Aid for Trade flows is punctuated by the ongoing global economic crisis, which is likely to have important implications for trade and development. First, the prolonged recovery of the feeble global economy means world trade is expanding only slowly, which in turn reduces developing countries’ opportunity to use trade as a source of growth. Second, the implications of the crisis on advanced economies are already placing a premium on ODA. The crisis is likely to reduce the ability of traditional donors to sustain or increase ODA. As resources shrink, there will be greater competition over competing developmental priorities (e.g. economic, social or environmental). And, in this age of fiscal austerity, it will be important to provide evidence on the impact of Aid for Trade to justify continuation. The World Trade Organization (WTO) and the Organisation for Economic Co-operation and Development (OECD) have evaluated Aid for Trade every two years since 2005. The 2007 report by the OECD and WTO took stock of Aid for Trade and found that investments were increasing. The 2009 report examined how Aid for Trade was being operationalised on the ground, and found a wide diversity of methods employed by donors and recipients in addressing Aid for Trade needs. The 2011 report shows results on Aid for Trade since it was launched in 2005. These reports have been complemented by the findings of studies produced by a number of organisations analysing the impact of Aid for Trade at various levels – global, regional and national. The empirical literature tends to confirm that Aid for Trade has been effective in raising exports and improving the investment climate (see Section 3). More precisely, Aid for Trade investments in improving trade facilitation and developing trade-related infrastructure have significant positive impacts on recipient countries’ exports. For example, empirical assessment indicates that a 10% increase in Aid for Trade investment to trade-related infrastructure leads to an average increase of 2.3% in the developing country’s exports to gross domestic product (GDP) ratio. Similarly, a 10% increase in Aid for Trade investment in improving transportation and energy results in a 6.8% increase in manufacturing exports. And Aid for Trade investment in enhancing trade policy and reform significantly lowers the costs of trading in the processed agriculture and primary agriculture sectors. The econometric evidence therefore paints a rather positive picture on the impact of Aid for Trade in economic performance such as exports, GDP or the investment climate. However, the impact of Aid for Trade tends to vary considerably depending on the type of intervention, the income level and geographical region of the recipient country and the sector to which Aid for Trade flows are directed. Table ES1 summarises the findings of a review of the econometric studies. [...]
2008
Attempts to correlate increases in aid with economic growth have persisted in research and policy circles for over five decades to justify foreign assistance from rich to poor countries. While the vast majority of studies find no causal connection between them, some argue that there is a correlation between aid and growth for certain countries having strong policies and institutions. It is this argument that has the greatest significance for Uganda’s aid infrastructure in today’s socio-economic climate. Uganda has come a long way from the aiddependent post-civil war economy of the late 1980s, where aid levels once reached 30 percent of GDP (Roberts & Fagernas, 2004). Pertinent questions have to be raised that take into account the improved level of economic development and institutional capacity of Uganda. Now that Uganda is on a sustained economic growth path with sound fiscal, monetary, and trade policies, will increasing aid flows have an important impact on growth? Or, is there ...
Effects of multilateral and preferential trade policy reform in Africa: The case of Uganda
Journal of International Trade and Economic Development, 2007
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