Does aid for trade promote green product exports in recipient countries?

This study examines the impact of Aid for Trade (AfT) on green product exports across 126 recipient countries over the period 2002–2021. The empirical analysis employs fixed-effects estimations as the baseline approach and system GMM estimations for robustness checks. The results reveal a positive relationship between AfT and various dimensions of green exports, including total export value, the number of exported products and partners, and the average export value per product and per partner. Further analysis shows that AfT components contribute unevenly to green export expansion, with aid directed toward productive capacity building and trade-related infrastructure playing a particularly important role. The findings also indicate that AfT provided by Development Assistance Committee (DAC) donors is more effective than aid from non-DAC donors. These results suggest that prioritizing support for productive capacity and trade-related infrastructure can enhance green export performance in developing countries. Moreover, greater knowledge sharing and policy coordination between DAC and non-DAC donors could improve the design and implementation of AfT initiatives supporting the development of green export sectors.