Export Competitiveness: Fiscal Incentives
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.
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.
Mauritius Technology Diffusion SchemeAuthor: 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”.