The Independent Commission for Aid Impact (ICAI) has released its review on UK aid for trade. It found that many objectives are being met such as delivering significant reductions in the time to trade across borders and contributing to increases in trade. However, there is a lack of sufficient focus on ensuring aid for trade benefits the poor.
International trade plays a vital role in economic growth and can contribute to increasing incomes, creating employment and reducing poverty in developing countries. The ICAI review examines the extent to which UK aid for trade has been able to impact such outcomes since 2015.
Amrita Saha, Research Fellow and Lead researcher on trade and development at IDS said:
Aid for trade interventions help countries expand trade by addressing the most significant constraints to trade – reducing trade costs and facilitating export diversification. But assessing the impact of this trade expansion to pass through to poverty and inclusion is complex. Aid for trade can impact inclusion through improved productivity or competition effects for firms, labour market and consumption channels for households. However, this impact chain depends on certain critical micro-level factors, and these factors should be considered as intersecting with the trade constraints (rather than simply on their own) to account for the ability of the poor and marginalised to cope with changes or exploit advantages of positive opportunities from trade.
An inclusive aid for trade approach should consider critical factors identified along with conventional aid for trade interventions. This could be achieved by investing in assessments of critical factors as part of a package of interventions targeting trade and inclusion; and recognising that while there are winners and losers from international trade, individuals within these groups will have different capacities, and will value various aspects of benefits and losses differently. Hence, inclusion and the terms of inclusion in production and trade activities deserves attention as part of an aid for trade strategy.
