Foreign aid and donor export performance: The case of Germany

Is German development aid wasted money? While the public criticizes the missing long-term growth effects of development aid, this contribution investigates on the direct effects of development aid on trade relations with recipient countries.

Results: Countries to which Germany provided long-term support reacted by more than proportional trade redirections towars Germany as a donor country. Development aid worked as a door opener and supported the development of trade relations efficiently. The German export industries received substantial advantages from tax finances development aid.

The study is based on econometric estimates for 43 developing countries. It is based on a study for the German Department on economic development and co-operation (BMZ):

Vogler-Ludwig, Schönherr, Taube, Blau
Die Auswirkungen der Entwicklungszusammenarbeit auf den Wirtschaftsstandort Deutschland
BMZ-Studien, Band 124
Preis € 17,38
ISBN 3803904919
Weltforum-Verlag, Bonn 1999