CIAO DATE: 12/2011
November 2011
Danish Institute for International Studies
The recent global economic and financial crises have severely hit export flows from developing countries. This has brought renewed attention on the relationship between crises and export flows, since it is not clear to date to what extent banking crises and global economic downturns are responsible for the drop in exports compared to other factors such as trade finance or foreign aid. Despite anecdotal evidence points out to the existence of a linkage between trade finance and export flows, in the literature the role of trade financing in fostering export flows is still an open question. Moreover, evidence on the impact of aid on trade is still mixed, while the literature on the relationship between financial or economic crises and exports is very thin. In this DIIS Working Paper, Jose Brambila-Macias, Isabella Massa and Matthew J. Salois address these issues looking at a broad sample of developing countries. They argue that trade financing and global economic downturns have significant effects on bilateral export flows, but their impact is very uneven among developing regions. The role of international foreign aid in boosting developing countries’ exports is confirmed.
Resource link: The Impact of Global Crises, Trade Finance and Aid on Export Flows: A Developing Country Perspective [PDF] - 321K