Does the EU's Development Assistance Framework Need Updating? A Comment

Abstract

The general understanding of international trade has been transformed over the past decade or so with the now massive body of literature developed in the context of so-called "new new trade theory" which takes into account the heterogeneity of firms and the importance of fixed costs of trade. Thinking on economic development has similarly undergone profound change driven by the relative success of the BRICS and the re-evaluation of the role of the state in economic development in general and in industrial policy in particular. Meanwhile, secular trends and cyclical developments – in particular the global economic and financial crisis of 2008-2009 and the ensuing prolonged growth slump in the advanced countries – have fundamentally altered traditional relationships between the advanced countries that serve as donors of development assistance and the developing countries that receive that assistance. All of these changes have implications for donor-recipient relations and raise questions for the design of external aid policies, particularly in the area of trade and private sector development: to "whom" is the aid being delivered (firms, industries, governments?); "what" is being delivered; and "how" is the aid being delivered. In this comment, we consider the implications for EU development assistance policy.