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German Institute for Development Evaluation

Aid for Trade (concluded)

The Aid for Trade (AfT) initiative launched at a World Trade Organization (WTO) Ministerial Meeting in 2005 aims at supporting developing countries in realising potential welfare gains from trade liberalisation and to compensate them for challenges arising from the implementation of trade agreements. The exact definition, nature and value added of AfT have been fiercely discussed: AfT is neither a new global development fund nor a new aid category. Instead, its scope is broad and forms an integral part of a wide variety of regular Official Development Assistance (ODA) programs.

Germany has put considerable efforts into implementing the AfT initiative within its development cooperation structures, on the basis of an AfT concept formulated in 2011. Germany is among the three leading donor countries in terms of total AfT disbursements, together with Japan and the USA. Given the volume of German AfT and against the background of the continuing debate on its effectiveness, it appears appropriate to examine and reassess the approach employed so far. Almost a decade after the launch of the initiative, the time appears ripe for such a renewed effort.

Objectives

There has not been any in-depth reassessment of German AfT since a study carried out by Voionmaa and Brüntrup in 2009 and the publication of the Federal Ministry for Economic Cooperation and Development (BMZ) AfT concept in 2011. The study at hand tries to fill that gap by reviewing and assessing almost 10 years of German AfT support by means of a desk study. There is an overarching interest in learning about the current state of German AfT implemented by Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ), Kreditanstalt für Wiederaufbau (KfW), National Metrology Institute (PTB), Deutsche Investitions- und Entwicklungsgesellschaft (DEG), and Federal Institute for Geosciences and Natural Resources (BGR) and the role that the BMZ AfT concept has played in steering these activities.

The results shed light on how AfT as a cross-cutting sector of development cooperation has developed over the past ten years. By documenting the German approach and portfolio over the whole array of aid categories, German Development Cooperation may use the findings and lessons-learnt of this study for a further refinement of the German approach to AfT.

The specific objectives of the study were to:

- assess whether the current German approach to AfT is adequate in terms of its targeting, as well as its theoretical and organisational setup

- provide an overall picture of the portfolio of trade-related projects in order to assess whether AfT has been adequately mainstreamed as foreseen in the BMZ AfT concept.

Research questions

From these specified objectives, a set of research questions was derived:

Research question 1. In comparison with other donor’s AfT strategies, does the BMZ concept paper reflect the international AfT discussions in an appropriate manner?

Research question 2. Has AfT been successfully mainstreamed within BMZ priority area strategies as well as in sector and country concept papers?

Research question 3. Does the German AfT portfolio reflect the strategic priorities as defined in the BMZ AfT concept?

To be able to methodologically reduce the complexity inherent in the vast definition of AfT over several sectors and aid modalities, the study puts an emphasis on the years starting from 2008 as from this time onwards, AfT can be distinguished into narrow and broad AfT. Narrow AfT (Trade Related Assistance) comprises aid categories with specific trade relevance, while broad AfT focuses on creating the enabling conditions for countries to engage in trade (in particular productive capacities and trade-related infrastructure).