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Export Competitiveness: Fiscal Incentives

Fiscal Policies


Papers

Case Studies 

Websites 

Tax, duty drawbacks, bonded warehouse facilities and smart subsidies

Financial sufficiency is core to export competitiveness. New exporters face significant start-up costs as they gather information on foreign markets, develop marketing channels, adapt products andpackaging to foreign tastes, and learn to deal with new bureaucratic procedures. Market and government failures mean that these 'sunk costs' bar firms from joining the export markets.

Fiscal and financial policy incentives for export competitiveness is an unfolding area of research. Current literature covers topics such as exchange rates and tax-based policy incentives, duty drawbacks and bonded warehouse facilities, and smart subsidies like export loan subsidies, export credit guarantees and matching grants.

Papers
  • Sunk Costs: Why Exporters Remain Exporters?

    Author: The World Bank

    Source: Development Brief, Number 54, May 1995

     

    One-time expense of gathering information on foreign markets, upgrading product quality, changing packaging, and establishing marketing channels are important in private companies’ decision to enter export market. It is possible for policymakers to abandon export subsidies while providing market intelligence, improving export infrastructure, and replacing uncertainty with policy stability and consistency.

  • Financial Development and International Trade: Is There a Link?

    Author: Thorsten Beck
    Source: Journal of International Economics, 57 (2002) 107–131

     

    There is a possible link between financial development and trade in manufactures. The sector with high scale economies usually requires higher level of financial development than other sectors. As a result, financial support to some certain sectors is important to export competitiveness.
    View this Article on ScienceDirect.com


  • Bank Evaluation of Matching Grants
    Author: David A. Phillips
    Source: Policy Research Working Paper 2589, April 2001, the World Bank

    Support to enterprises can be justified if interventions efficiently supply public goods, such as technical and management knowhow. Any subsidy for an intervention should be temporary and should be phased out when the main objective of intervention is achieved off. The matching grant model is one solution for support enterprises, but it must be justified and carefully designed.

  • Credit Guarantee Schemes for SMEs: An International Review
    Author: Jacob Levitsky
    Source: Small Enterprise Development Vol8 No 2, June 1997

    Credit guarantee schemes can be used to help small enterprises with growth potential to enter donor credit programs, and help banks to learn about lending to SMEs. This article provides reference on how credit guarantee schemes are implemented all over the world, and some of the problems faced, as well as the advantages of such schemes.

  • Incentives for SMEs
    Author: Kristin Hallberg
    Source: Discussion Paper, International Finance Corporation, April 2000

    The role of the State in development of SMEs is mainly to provide an enabling business environment that opens access to markets and reduces policy-induced biases against small firms. Improving the development impact of SME strategies will require much more attention to the monitoring and evaluation of intervention outcomes.

  • Support Services for Exports
    Author: Paul Hogan, Donald B. Keesing, Andrew Singer
    Source: Economic Development Institute of The World Bank, 1991

    This series of three papers are focused on the following question: what institutional arrangements, policies, and external assistance can be expected to yield good results in the area of support services for exports? The authors are trying to provide useful, and at times entertaining, answers for this question.

  • The Role of Factoring for Financing Small and Medium Enterprises
    Author: Leora Klapper
    Source: The World Bank

    Factoring may allow a high-risk supplier to transfer its credit risk to higher quality buyers. Using the case of the Nafin reverse factoring program in Mexico, this paper provides some insight on how "reverse factoring" could help mitigate the problem of borrowers’ informational opacity.

  • Does Finance Matter? A Policy Note
    Author: The World Bank

    This note is a review on literatures about the relationship between a country’s financial system and its trade performance. Financial sector development is an important policy instrument, and flows will not grow unless appropriate financial infrastructures, institutions and instruments are made available to facilitate complex transactions related to export.

Case Studies
  • Mauritius Technology Diffusion Scheme
    Author: Tyler Biggs
    Source: Regional Program on Enterprise Development, November 1999

    The Technology Diffusion Scheme in Mauritius is effective in improving enterprise technical capabilities.This scheme puts aid resources into government institutions that supplied technical services in the hope that this would provide what was analyzed as being ‘missing”.

  • Pakistan: Export Incentives and the (Mis)Allocation of Credit: Micro-Level Evidence
    Author: The World Bank

    The provision of subsidized credit to exporting firms is widespread in emerging markets. This paper combines an exogenous shock to the supply of subsidized credit with unique loanlevel data from the export sector in Pakistan to identify the impact and allocation of such financial incentives.

Websites



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