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Working together on transforming 'Aid for Trade' into 'Investment for Trade'.
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Major Issues
(1) Evaluation and effectiveness
Countries have reported difficulty in identifying and measuring AfT flows and impacts. The challenge of measuring the economic and trade impacts of AfT lie in:
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lack of capacities and tools to measure such outcomes, and
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difficulty in isolating those results that are directly attributable to specific AfT programmes or projects.
This difficulty in attribution is due to significant time lapse between design of the intervention and its implementation, lack of credible data, and difficulty in assessing intangible capacities. Moreover, in case of AfT, there is wide scope and multiple objectives such as economic growth and poverty alleviation which complicates identifying clear indicators for measuring outcome of AfT programmes and projects.
(2) Coordination
In addition to attribution problem, lack of coordination amongst different stakeholders in AfT initiative is also recognized as one of the constraints. There is a need to develop aligned approaches to design AfT programmes and to measure the progress towards trade and overall development based on commonly agreed indicators.
(3) Flows
Even though there is considerable interest on part of donor countries to provide AfT, there is a concern that most of these funds are re-allocation of existing aid funds and through increase in total amounts of aid to developing countries.
(4) Mainstreaming
It is evident that more countries are taking initiatives to integrate trade
into national development strategies. However, some countries are slower
than others. Mainstreaming is an important tool to achieve maximum results
offered by trade. Aid for Trade and overall trade development strategies
need to be integrated with the national development strategies through
national and regional dialogues and by setting clear priorities. Without an
integrated strategy, it is difficult for the donors or development partners
to address development priorities. Mainstreaming Aid for Trade carries
significant implication for national poverty reduction strategies since
trade led growth can impact poverty and aid for trade covers a major ground
of development areas like trade related infrastructure, trade policy and
other areas.
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