Does Trade Openness contribute to driving Financing Flows for Development?

This paper questions whether trade openness could be an important driver of financing for development flows, notably development aid (ODA), Foreign Direct Investment (FDI) inflows, and government public revenue, the latter being the ultimate financing source for development for any country. The paper also takes advantage of the framework of analysis to investigate the interplay between these three types of financial flows. Relying on an unbalanced panel dataset comprising 125 countries, of which 37 are Least Developed Countries (LDCs), the empirical analysis uses the three stage least squares econometric approach and provides two important pieces of evidence: first, international trade openness is an important tool for driving financial flows for development, including government public revenue, development aid and FDI. As a result, it could contribute to mobilizing the substantial financial resources needed for development, including for the implementation of the SDGs. Second, there are strong interactions (complementarity and substitutability) between these three types of financing for development flows.

N°: ERSD-2017-06

Autores: Jean-François BRUN (UCA, CNRS, CERDI) and Sèna Kimm GNANGNON (WTO)

Fecha de redacción: marzo de 2017

Palabras clave:

Trade Openness, Government public revenue, ODA inflows, FDI Inflows

Código JEL:

F13, F30, P33, O11

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Declinación de responsabilidad 

Este es un documento de trabajo y se refiere, por consiguiente, a un estudio en curso. Refleja las opiniones de sus autores. No pretende reflejar la posición o las opiniones de la OMC o de sus Miembros y se entiende sin perjuicio de los derechos y obligaciones de los Miembros en el marco de la OMC. Los errores que puedan existir son responsabilidad de los autores.

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