Does Aid for Trade Increase Trade Flows in Tanzania?

Ruhr-Universität Bochum

Chair of International Economics

Prof. Dr. Matthias Busse

Seminar “Economic Reforms, Income and Poverty”

Does Aid for Trade Increase Trade Flows in Tanzania?

Authors:

Meike Benker (Matriculation number: 108008203422)

Catherine Makinson (Matriculation number: 108012253387)

Closing date: 24.06.2013

Contents

1 Introduction 5

2 Aid for Trade Theory 6

2.1 Relationship between Trade and Growth 6

2.2 Development of Aid to Aid for Trade 7

2.3 Effects of Aid for Trade on Trade 8

3 Empirical Evidence on the Effects of Aid for Trade in Tanzania 10

3.1 Aid for Trade and Trade Flows in Tanzania 10

3.2 Influence of Aid for Trade 11

3.2.1 Influence of Aid for Trade on the Exchange Rate 11

3.2.2 Influence of Aid for Trade on Trade Costs 12

3.3 Policy Implications 17

4 Conclusion 18

List of Acronyms

AINF Aid to economic Infrastructure

AfT Aid for Trade

ATF Aid for Trade Facilitation

ATPR Aid for Trade Policy and Regulations

COMESA Common Market for Eastern and Southern Africa

CRS Creditor Reporting System

EAC Eastern African Community

LDC Least Developed Country

OECD Organisation for Economic Co-operation and Development

ODA Official Development Assistance

PPF Production Possibility Frontier

SSA Sub-Saharan Africa

TCBDB Trade Capacity Building Database

WTO World Trade Organization

List of Tables

3.1 Development of AfT in Tanzania . . . . . . . . . . . . . . . . . . . . . . . . . 11

3.2 Exports and Imports of Tanzania 2000-2012 . . . . . . . . . . . . . . . . . . . 11

3.3 The