To assess the effects of German bilateral aid on exports and the labour market in Germany
Panel analysis and time series analysis
World Bank, OECD
German bilateral aid has – and this is a very robust empirical result – a significant positive influence on the German exports to the respective developing countries (an effect that could not be found in case of multilateral EU aid). It follows that tied aid is not necessary to enhance a country’s exports to the respective partner country.
The order of magnitude of this effect varies slightly over time: it became marginally smaller in the 1990s whereas it increased after 2001.
Using macro econometric input-output-models the study found out that the aid’s positive effect on the exports is correlated with about 140,000 jobs in Germany. Should the sum that is currently spent on development aid be applied to cutting taxes, this would ceteris paribus result in 50,000 fewer jobs due to decreasing exports.
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