The Stabilisation of LDCs' Export Earnings. The impact of the EU STABEX programme

As part of the Lome Convention the STABEX programme is one of the instruments of the European Union's development policy. Its objective is to reduce the instability of the agricultural export earnings of the developing countries which signed the agreement. By working on a commodity-by-commodity basis, this paper provides an empirical evaluation of the effects of the financial transfers disbursed by the EU. The results obtained are substantially different from those by other authors because it is shown that STABEX does have a positive impact on the sectors in which the drop of export earnings occurred. Furthermore, it is argued that the delay concerning the payments in favour of the African Caribbean and Pacific countries (henceforth ACPs) influences the effectiveness of STABEX, even if no conclusive evidence has been found to support the widely shared opinion that the relationship between these two variables (impact of the transfers and their delays) is negative.