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elated infrastructure (e.g., road, telecommunica� on, electricity); ii)
building produc� ve capacity (e.g., enhancing produc� vity of agriculture,
industry, fi shery); iii) trade development (e.g., investment promo� on, trade
promo� on, business services); iv) trade-related adjustment (e.g., retraining
of workers, compensa� on for retrenched workers); v) trade policy and
regula� ons (e.g., training of offi cials and stakeholders, help in designing
policies and compliance with trade rules); and vi) other areas (e.g., other
needs of the recipient countries that are not included elsewhere).
The OECD's CRS database on AfT fl ows basically follows the Task Force's
defi ni� on, but clubs building produc� ve capacity and trade development
together, and places trade-related adjustment under the category of trade
policy and regula� ons. This database has remained the principal source
of data on AfT provided by members of the Development Assistance
Commi� ee.
The fi rst two categories—infrastructure and building produc� ve
capacity—are so broad that a lot of aid ac� vi� es remotely related to trade
can be included in them. This problem takes on addi� onal signifi cance when
one notes that the main objec� ve of the AfT ini� a� ve is to address traderelated
supply-side constraints and that these categories represent the most
important areas for addressing such constraints. Since the launch of the AfT
ini� a� ve, aid to economic infrastructure and building produc� vity capacity
has dominated AfT fl ows (about 97 percent of total AfT commitments during
2006-2009).Taking it at face value would mean that AfT is mostly going
towards addressing trade-related supply-side constraints. But the broadness
of defi ni� on coupled with the fact that the database relies on self-repor� ng
by donors evokes skep� cism. The inclusion of aid for the construc� on of an
urban transport system in Istanbul and a mass transit system in Bangkok is
an example of how the broadness of defi ni� on distorts the AfT picture.
The broadness of defi ni� on emerged as a major issue in the interviews
with stakeholders carried out for the Nepal study. Serious doubts were
expressed over the en� re US$986 million (in 2008 constant prices) Nepal
received in AfT commitments during 2006-2009 being really AfT proper, with
some going so far as to dub AfT "old wine in a new bo� le". According to
a government offi cial handling trade ma� ers, aid for the construc� on of a
road with li� le or no signifi cance for Nepal's interna� onal trade was counted
as AfT by donors.
The Report does admit that defi ni� on remains an issue and that the
OECD's AfT categories are at best proxies to keep track of aid fl ows geared
towards "suppor� ng" trade. It quotes Nepal's dissa� sfac� on with the
broadness of defi ni� on. It also cites the case of India, which, despite being
the largest recipient of AfT commitments since 2002, takes the posi� on that
except for a single project it has received no AfT! The Report a� ributes this
to India's narrow defi ni� on of AfT. Possible ways to address this problem are
not explored, however. Because the defi ni� onal issue is fundamental to any
reliable assessment of AfT, the WTO and the OECD should seriously engage
in sor� ng it out, although determining the precise "trade" component of aid
Changing paradigms of aid eff ec� veness in Nepal 177