Effective Complementary Policies to “Aid for Trade” to Enhance Pro-Poor development strategy in Africa

Poverty reduction is one of the main reasons taken into consideration within successive governments all over the world. Economic development and poverty reduction need consistent policies between recipient, donor countries and other international actors. Accordingly, the WTO started focusing on trade-related technical assistance for the least-developed countries (LDCs). Even though WTO is not a development agency, it tries to ensure that trade openness policies work together with development assistance mechanisms effectively as a requirement. This led to launching various technical assistance and capacity building programs on both bilateral and multilateral levels. Aid for Trade (AfT) agenda is considered one of these programs that enable developing countries to benefit from trade liberalization. In many cases, these programs fail in reducing poverty in recipient countries. This paper tests the hypothesis that AfT programs help remove poverty in African countries as well as determines the efficient components of complementary policies. This hypothesis is tested using annual data for 48 countries within 1996-2014. The results of this paper confirms the previous studies that trade openness harms the poor and that AfT was insignificant in reducing poverty. This paper suggests that the coordination between donors and recipients is required. Additionally, AfT programs in African countries need to be supported with some activities that would help them benefit from the integration in world trade.