Aid for trade is intended to support the integration of developing countries into the world trading system. Although this form of aid is being hailed as a promising new development tool, it lacks the strategic dimension that it needs if it is to be truly effective and fulfil donors‘ policy commitments. From a theoretical perspective, this paper presents the various aid-for-trade categories and analyses the linkages between foreign direct investment, aid for trade and development. It also presents a typology of trade-related needs for a panel of countries, to serve as a guide for donors in formulating their aid supply strategies.
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