Aid for trade in sustainable development: An econometric analysis on the determinants of Germany's aid for trade

In this study, Aid for Trade (AfT), an important and rising component of development assistance, is examined from the perspective of traditional donor country. Germany is the second country that has provided the most aid for trade in the world since 2002. The 23 countries to which Germany provided the most aid for trade between the years of 2002 and 2021, were analyzed using the panel data fixed effect method in order to explain the determining variables in its AfT. Within the scope of the seven tested independent variables, two separate econometric models were established. It was seen that Germany does not act solely on the basis of its own interests or just the needs of the recipient countries, but it shows a hybrid character regarding aid for trade. A statistically significant positive relationship was found between the Germany's aid for trade flow and export amount, income per capita, unemployment rate, life expectancy and population variables. Germany provides more aid to the recipient countries with higher German-exports, higher income per capita, higher life expectancy, higher unemployment rate and larger population. On the other hand, it was observed that the ratio of foreign direct investment to GDP and the ratio of natural resources income to GDP in the recipient country are not significantly effective variables on Germany's aid for trade flow. Keywords: Development cooperation, Development assistance, Aid for trade, Traditional donor, Aid motivation