We have published our review of UK aid for trade. We awarded an amber-red score and made five recommendations for the government. we expect the government’s response to be published in due course.
Trade is an important driver of economic growth, with the potential to contribute to poverty reduction in developing countries. However, gains from trade are rarely evenly distributed across the economy and changes to trading patterns can create winners and losers.
Since 2015, there has been a shift in the focus of UK aid towards trade and economic growth, referred to as ‘aid for trade’. The international development strategy 2022 emphasises the potential of trade to help countries grow their economies, raise incomes, create jobs and lift people out of poverty.
The UK’s objectives also include supporting developing countries to increase their exports and to trade more with the UK, thereby creating secondary benefits for UK businesses. However, the UK remains committed to untied aid, as set out in the International Development Act 2002. This means that aid must not be offered on the condition that it be used to procure goods or services from the UK.
Over recent years, the changing aid and trade context, in the UK and globally, has affected the direction of aid for trade and the shape of the portfolio. This includes UK-specific factors such as aid budget reductions and Brexit, as well as global factors such as the COVID-19 pandemic, war in Ukraine and the rise in protectionism.
This review examines the relevance and effectiveness of UK aid for trade since 2015, assessing to what extent programmes address binding constraints to trade and promote poverty reduction and inclusion.