For several decades ‘trade, not aid’ was a prevalent dictum. In the mid-1960s, when the founding father and first Secretary-General of UNCTAD, Raul Prebisch (1964) coined the ‘trade gap’ concept, it became apparent that official development assistance (ODA) would be insufficient to provide the necessary foreign exchange resources that developing countries would need to import the capital goods that are so crucial for enhancing productive capacity, trading and moving up the development ladder into more value-added and higher-paying economic activities. The ‘trade, not aid’ philosophy was also justified by a number of imperfections of aid and aid policies.
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UNCTAD. (2009). Aid for Trade and Development. In: De Lombaerde, P., Puri, L. (eds) Aid for Trade: Global and Regional Perspectives. United Nations University Series on Regionalism, vol 2. Springer, Dordrecht. https://doi.org/10.1007/978-1-4020-9455-2_1
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