AN EVALUATION OF THE ECONOMIC-EFFECTS OF THE AID AND TRADE PROVISION

This article offers an evaluation of the Aid and Trade Provision from its introduction in 1978 up to 1990. In economic terms it is an export subsidy, and we ask if it meets the criteria for a subsidy under strategic trade policy. The commercial benefits to specific industries and companies are shown to be quite high, especially relative to the initial outlay, and ATP appears to go to some industries earning monopoly rents and exhibiting scale or external economies so it could form part of a strategic trade policy. We argue that even where it is awarded to suitable industries ATP is unlikely to confer strategic benefits on the UK, largely because of international practice and rent-seeking. We conclude that ATP is unlikely to be of a net economic benefit to the UK or LDCs.