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This report examines exporters’ challenges and possible solutions for public intervention to promote foreign trade. Based on fieldwork conducted in Georgia, we explore which policy approaches can help to stimulate Georgian exports further. Our outcomes show that exporters face substantial barriers such as navigating complex trade regulations, lack of knowledge about target markets, trade finance gaps, as well as new export promotion programs (EPPs) in competitor countries. Other upper-middle-income countries can learn from our results that exporters can significantly benefit from a comprehensive export promotion strategy combined with an ecosystem-based “team” approach. EPPs related to awareness and capacity building in Georgia should be part of this strategy, focusing on challenges such as a lack of knowledge about trade practices and international business skills. Other EPPs must help to mitigate related market failures, as information gathering is costly, and firms have no incentive to share this information with competitors. Furthermore, targeted marketing support and customer matchmaking can answer Georgian exporters’ challenges, such as lack of market access and low sector visibility. Our results also show that public intervention through financial support and risk mitigation is essential for firms with an international orientation. The high-quality, rich outcomes provide significant value for other upper-middle-income countries by exploring the example of Georgia’s contemporary circumstances in an in-depth manner based on extensive interviews and document analysis. Limitations include that our work primarily relies on qualitative data and further research could involve a quantitative study with a diverse range of sectors.
In an extensive research project, we have assessed the application of different service models by export credit agencies (ECAs) and export-import banks (EXIMs). We conducted interviews with 35 representatives of ECAs and EXIMs from 27 countries. The question guiding this study is: How do ECAs and EXIMs adopt public service models for supporting exporters? We conducted a holistic multiple case study, investigating if and how these organisations apply public service models developed by Schedler and Guenduez, and which roles of the state are relevant. We find that there is a variety of different service models used by ECAs and EXIMs, and that the service model approaches have great potential to learn from each other and innovate existing services.
International trade requires sufficient, reliable, and affordable sources of financing. Export credit agencies (ECAs) fill trade finance gaps by offering financing, insurance and guarantees to provide liquidity or mitigate risks. They help to create or secure jobs in the domestic economy. However, comprehensive government support is required to create significant impact. This includes ‘full faith and credit’ of the state. In the context of public foreign trade promotion, full faith and credit is defined as an explicit, direct or indirect, irrevocable, legal commitment to accept all liabilities of an ECA as unconditional obligations of the respective government. Our policy recommendations for countries with relatively young ECAs, for example in Ukraine, Armenia, and Malawi, are to establish a full guarantee in addition to an efficient legal set-up, sufficient capital, and sound risk management of the respective agency. Without full faith and credit, policy goals of fostering economic growth through foreign trade fall short.
Public export credits and trade insurance require a global framework of institutions, rules and regulations to avoid subsidies and a race to the bottom. The extensive modernisation of the Arrangement on Officially Supported Export Credits (Arrangement) of the Organisation for Economic Co-operation and Development intends to re-level the playing field. This Practitioner Commentary describes the demand for adequate government interventions, considers the need for the reform and discusses key aspects of the new Arrangement. We argue that there is a breakthrough in several important areas such as tenors, repayment terms and green finance. However, we also find that the modernisation falls short in areas such as the interplay between different rulebooks, pre-shipment instruments' regulations and climate action.
This paper aims to draw attention to an urgent need for reform of the regulatory framework of the broader export credit system to ensure a new and comprehensive "safe haven" for officially supported export credits. The purpose is to analyse the complex debate on disciplines of the World Trade Organization (WTO) and the Organisation for Economic Co-operation and Development (OECD), creating a point of reference for future analysis of and debates around the "carve-out clause" of the Agreement on Subsidies and Countervailing Measures (ASCM) and a "safe haven" in a broader sense.
Innovative financing schemes in public management comprise provisions of funds for public expenditure by taxation, user charges, borrowing or other fundraising in a novel way. Scholarly research regarding public finance already appeared in the 16th century, but the role of public funding schemes became much more important in the last decades. Theoretical frameworks are related to political, economic, legal and administrative aspects. Although innovation and public management might be seen as antithetical, there is an emerging practice of innovative financing tools both in highly-industrialised economies and developing countries. Examples for novel mechanisms raising money are green bonds, onshore local currency financing, public private partnerships (PPPs) and resource-financed infrastructure. Public policy tools include innovation financing for digital infrastructure or export credits for trade-driven innovation, often focusing on the United Nations Sustainable Development Goals (SDGs) including climate action.
As the world economy rapidly decarbonises to meet global climate goals, the export credit sector must keep pace. Countries representing over two-thirds of global GDP have now set net zero targets, as have hundreds of private financial institutions. Public and private initiatives are now working to develop new standards and methodologies for shifting investment portfolios to decarbonisation pathways based on science.
However, export credit agencies (ECAs) are only at the beginning stages of this seismic transformation. On the one hand, the net zero transition creates risks to existing business models and clients for the many ECAs, while on the other, it creates a significant opportunity for ECAs to refocus their support to help countries and trade partners meet their climate targets. ECAs can best take advantage of this transition, and minimise its risks, by setting net zero targets and adopting credible plans to decarbonise their portfolios. Collaboration across the sector can be a powerful tool for advancing this goal.
Financing trade and development sustainably will be crucial for Africa. Enhanced collaboration between multilateral development banks, development finance institutions and ECAs could greatly enhance intra-regional trade. Furthermore, setting up a ‘level playing field’ on the continent will allow governments to make strategic interventions for successful export credits and trade finance solutions, fostering growth through trade. African trade is already showing signs of rebounding from the coronavirus- induced recession. Through concerted, co-operative and continent-wide efforts, drawing on the knowledge and resources of all types of institutions and policy experts, Africa will continue to grow confidently and quickly into its increasingly important role as an engine of economic growth and global trade.