Aid for trade and value chain cooperation: evidence from China

The impact of Aid for Trade (AfT) on the development of global value chains (GVCs) has attracted much attention in recent years. Based on the cross-country panel data of China's AfT and value chain cooperation (VCC) between China and recipient countries from 2000 to 2016, this paper examines the impact of China's AfT on VCC between China and recipient countries. The study found that China's AfT can significantly increase the degree of VCC between China and the recipient countries. Further mechanism tests show that China's AfT has mainly promoted VCC between China and recipient countries through two channels: improving their infrastructure and reducing trade costs. The research shows that AfT can effectively promote win-win cooperation and common development between donor and recipient countries. In addition, from the perspective of GVCs, aid is effective for developing recipient countries.