Aid for Trade: Strengthening the Role of Trade in Poverty Reduction

Abstract

The wider development community acknowledges that trade integration is an important element in achieving sustained growth and poverty reduction. The emerging Aid for Trade (AfT) interlocks aid and trade into a broader pro-poor growth strategy. It provides an important framework to support this process by addressing poor people's constraints to taking up the new economic opportunities arising from expanding markets. This paper looks at what we know about the impact of trade on poverty and examines how AfT can support developing countries to maximize the inclusive growth and poverty reduction impacts of trade. It illustrates the potential role of AfT as an instrument to build capacity of poor countries to trade, to help the poor take advantage of new opportunities created, or to protect them against negative effects. It also underlines the need for coherence to ensure that developing countries use trade as an instrument of economic development.