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inflows. This would make the domestic products more expensive, suggesting higher real exchange rate and overall decrease of export sector. In other words, the 'terms of trade' of this country get deteriorated. Another symptom of 'Dutch Disease' is that the industries which get assisted would attract more labour or capital from other industries. This would directly increase other industries' production cost and squeeze their profits, making the whole country's trade environment get worse. One example of this would be El Salvador (Drabek and Laird, 2001), which received a huge amount US aid between 1982 and 1987. During this period, El Salvador experienced high inflation and high interest rate accompany with the US economic aid, which was more than twice of the military aid (Richard A. H., 1988).

The third side effect of aid on trade is that it may be utilized as a channel for the donor countries to get a better control of the recipient countries' markets, which would weaken the recipient countries' independence on trade. One typical type aid of this is 'tied aid', including aid tied with source and aid tied with project. The source tied aid requires that the loans or grants received can only be used to purchase the goods or services from the donor country. One consequence is that this would make the purchase prices even higher as the money is requested to be used in a specific way. More importantly, this tied aid would help donor countries open up recipient countries' markets, which would highly reduce recipient countries' trade independence (Cho, 1995). For instance, in 1994, the Britain's government promised to offer a project aid which amounted to USD 627 million to help Malaysia build the Pergau 600 mW hydroelectric dam in the northern state of Kelantan. This amount of money accounted for more than half of the costs of the project and also was the biggest aid in a single scheme under Britain's Overseas Development Administration's (ODA) Aid and Trade Provision programme. And also, Malaysia was permitted to repay this money at an interest rate of 0.809 per cent over a period of 14years. Such generous sparked a huge argument and an investigation report, from which we learned about more about this 'tied aid'. The report showed that the Conservative government profited USD 350 million in 1991 to finance this Pergau project, and it also disclosed the efforts from Britain's Government to win contracts from Malaysia in the form of aid. That just explained why Britain had become one of the chief recipients of Malaysia contracts since 1998. From this example, we can conclude that aid sometime is more than what it looks like.

Another aid's effect that might hurt trade is 'expenditure switching', which basically means that the resources would flow out from the productive activities to the aid-based activities. Firstly, for governments, they would put the money on the areas which are more easily to get donor countries' aid, or which are more comply with the donor countries' benefits. By doing this, the rare and valuable resources, like capital, materials, labour would be invested in those less critical projects. Also, the private businesses would adjust their development strategies following the governments' policy changes and the international economic outlook. Finally, for valuable labours-talents, highly-skilled workers, entrepreneurs would highly likely to change their career plans, flowing into those lucrative