Export Credit Guarantees Research Articles

A study on the Problems and Improvement of Export Credit Guarantee System in the Trade Insurance

A study on the Problems and Improvement of Export Credit Guarantee System in the Trade Insurance

Mitigating Liquidity Constraints: Public Export Credit Guarantees in Germany

Reportedly, firms often find it impossible to finance large and long-term projects despite positive net present values. Should governments step in and can their assistance be effective? This paper studies the case of public export credit guarantees in Germany. Covering the default risk of exporters’ foreign customers, the policy is supposed to enable funding of international business opportunities that would otherwise remain unexploited. Using German firm-level data covering the universe of publicly insured firms for the years 2000 to 2010, this study tests for the causal effect of guarantees on sales and employment. It employs a difference-in-differences strategy combined with a matching approach, to create an appropriate control group of untreated firms. It finds that guarantees increase firm-level sales and employment on average by about 4.5 and 3.0 percentage points, respectively. During the financial crisis of 2008/09, effects turn out larger. These findings suggest the presence of credit constraints and provide an argument justifying the observed government intervention.

Problems Faced by Indian Poultry Farm Exporters and Role of Exim Bank

Poultry has a crucial place in India as the eggs and chicken meat are important and rich sources of protein, vitamins and minerals. Poultry provides rich organic manure and is an important source of income and employment to millions of farmers and other persons engaged in allied activities in the poultry industry. Exim Bank ( Export-Import Bank of India) is an Indian government-owned financial institution for the public sector created by and Act of the Parliament of India: the Export-Import Bank of India Act 1981. Exim Bank is managed by a Board of Directors, which has representatives from the Government, Reserve Bank of India, Export Credit Guarantee Corporation of India (ECGC), a financial institution, public sector banks, and the business community. India is the world's fifth largest egg producing country. It also produces 530 million broilers per year. Poultry provides employment to about 1.5 million people. The annual per capita consumption in India is only 33 eggs and 630 grams of poultry meat. This is much lower as compared to the world average of 124 eggs and 5.9 kg meat. Indian companies acquire manufacturing units and distribution outlets in world markets. Remarkable feature of India's exports was that they were driven by domestic companies. Only 10 per cent of India's exports were by multinational corporations, while in the case of China, MNCs accounted for 52 per cent of exports.The National Committee on Human Nutrition in India has recommended per capita of 180 eggs (about one egg every two days) and 10.8 kg meat. To meet this target, it was estimated that 2010, the requirement will be 180 billion eggs and 9.1 billion kg poultry meat while the estimated production may only be around 46.2 billion eggs and 3.04 billion kg poultry meat. This shows that there is a tremendous scope for growth with rapid urbanization, and increasing demand from the present 250 million economically strong, consumer market base (which is likely to go up to 350 million by year 2010), there is bright future for this industry in India. It is estimated that, at present, Indian Poultry Industry contribution to the GDP is about ` 80 billion which is likely to reach ` 300 billion by the Year 2005.

Problems Faced by Indian Poultry Farm Exporters and Role of Exim Bank

Poultry has a crucial place in India as the eggs and chicken meat are important and rich sources of protein, vitamins and minerals. Poultry provides rich organic manure and is an important source of income and employment to millions of farmers and other persons engaged in allied activities in the poultry industry. Exim Bank ( Export-Import Bank of India) is an Indian government-owned financial institution for the public sector created by and Act of the Parliament of India: the Export-Import Bank of India Act 1981. Exim Bank is managed by a Board of Directors, which has representatives from the Government, Reserve Bank of India, Export Credit Guarantee Corporation of India (ECGC), a financial institution, public sector banks, and the business community. India is the world's fifth largest egg producing country. It also produces 530 million broilers per year. Poultry provides employment to about 1.5 million people. The annual per capita consumption in India is only 33 eggs and 630 grams of poultry meat. This is much lower as compared to the world average of 124 eggs and 5.9 kg meat. Indian companies acquire manufacturing units and distribution outlets in world markets. Remarkable feature of India's exports was that they were driven by domestic companies. Only 10 per cent of India's exports were by multinational corporations, while in the case of China, MNCs accounted for 52 per cent of exports.The National Committee on Human Nutrition in India has recommended per capita of 180 eggs (about one egg every two days) and 10.8 kg meat. To meet this target, it was estimated that 2010, the requirement will be 180 billion eggs and 9.1 billion kg poultry meat while the estimated production may only be around 46.2 billion eggs and 3.04 billion kg poultry meat. This shows that there is a tremendous scope for growth with rapid urbanization, and increasing demand from the present 250 million economically strong, consumer market base (which is likely to go up to 350 million by year 2010), there is bright future for this industry in India. It is estimated that, at present, Indian Poultry Industry contribution to the GDP is about ` 80 billion which is likely to reach ` 300 billion by the Year 2005.

How Much Credit for Export Credit Support Under the SCM Agreement?

This contribution examines the degree of policy space the WTO leaves its Members to support export credits for non-agricultural goods. In the light of existing case law, it illustrates that export credit support offered by export credit agencies that aims at complementing the private trade finance market would in principle be prohibited under the SCM Agreement. However, while some low-income countries can rely on a specific exception on the prohibition on export subsidies, all WTO Members can, on the basis of the Illustrative List of Export Subsidies, justify certain subsidized export credits that are in accordance with the interest rate provisions of the OECD Arrangement. But, as the case law and the OECD Arrangement currently stand, subsidized export credit guarantees and insurance as well as subsidized short-term export credits cannot rely on this safe haven. Hence, the article shows that export credit agencies, except for those of some low-income countries, cannot play a complementary role to the private market in offering such support. Moreover, this contribution demonstrates that export credit support in accordance with the safe haven might still be countervailable and actionable. Finally, it is argued that an exception which can be modified by a subgroup of WTO Members, like the safe haven, can no longer be accepted.

NIGERIA–CHINA: Export Credit Guarantee Offer

Africa Research Bulletin: Economic, Financial and Technical SeriesVolume 45, Issue 3 p. 17767B-17767C NIGERIA–CHINA: Export Credit Guarantee Offer First published: 09 May 2008 https://doi.org/10.1111/j.1467-6346.2008.01556.xRead the full textAboutPDF ToolsRequest permissionExport citationAdd to favoritesTrack citation ShareShare Give accessShare full text accessShare full-text accessPlease review our Terms and Conditions of Use and check box below to share full-text version of article.I have read and accept the Wiley Online Library Terms and Conditions of UseShareable LinkUse the link below to share a full-text version of this article with your friends and colleagues. Learn more.Copy URL Share a linkShare onFacebookTwitterLinked InRedditWechat No abstract is available for this article. Volume45, Issue3May 2008Pages 17767B-17767C RelatedInformation

Critical Analysis of Credit & Guarantee Corporation Limited, India (ECGC): Finance, Risks & Guarantee in Context of Contemporary Crisis of Currency Appreciation

Export Credit Guarantee Corporation of India Limited, (ECGC) is a company wholly owned by the Government of India. It functions under the administrative control of the Ministry of Commerce and is managed by a Board of Directors representing Government, Banking, Insurance, Trade and Industry primary objective is to promote country's exports by covering the risk of exports on credit by providing insurance cover to Indian exporters against non-realisation of export proceeds due to commercial or political risks; and giving guarantee to banks and other financial institutions to enable them to extend credit facilities to exporters on liberal basis. ECGC is performing well to assist Indian exporters and bankers. The export business in India is growing, whether it is related to goods or services. The India is a growing consumer hub as well. The contemporary international financial issues, namely US sub-prime lending, appreciation of Indian currency; growing export and flow of FIIs investment in India are changing the equation for exporters, bankers, investors and therefore ECGC. This research study aims at determining how ECGC will be able to fulfill its objective in the current scenario. The research will address studying present level of ECGC performance and to compare with their counterparts, and to evaluate performance on various measurable parameters. What shall be the impact of current trend if it continues on spread sheet and its impact on stakeholders and ECGC? And finally, to suggest what additional measure ECGC should take to perform in adversity. The study envisages critical analysis of various schemes of ECGC vis-a-vis financial performance. Study will use Secondary data and review of present literature available, prepare a theoretical framework and using primary data, an analysis will be carried out to test hypothesis in line of objective of the study.

Public Export Credit Guarantees and Foreign Trade Structure: Evidence from Austria

Foreign trade is usually not based on cash transactions, but rather sales on credit are the rule. The resulting monitoring costs for lenders and the risk of default on accounts receivable are part of the costs associated with cross‐border goods transactions. Relative to domestic trade credit, cross‐border credit creates trade barriers due to differences in language, business practice, jurisdiction and payment enforceability between trading partners. Export credit insurance has long been a domain of public export credit agencies. Only since the early 1980s private insurance is gaining ground. Using disaggregated panel data for goods exports from Austria over the period 1996 to 2002, we show that public export credit guarantees have a less than proportional positive effect on international trade volume. They predominantly affect the country structure of foreign trade but leave the industry specialisation almost unchanged.

Political Risk and Export Promotion: Evidence from Germany

Political risk represents an important hidden transaction cost that reduces international trade. This paper investigates the claim that German public export credit guarantees (Hermes guarantees) mitigate this friction to trade flows and hence promote exports. We employ an empirical trade gravity model, where we explicitly control for political risk in the importing country in order to evaluate the effect of export guarantees. The idea behind export promotion through public export credit agencies (ECAs) is that the private market is unable to provide adequate insurance for all risks associated with exports. As a consequence, firms' export activities are limited in the absence of insurance provision. Using a novel data set on guarantees we estimate the effect of guarantees in a static and dynamic panel model. We find a statistically and economically significant positive effect of public export guarantees on exports which indicates that export promotion is indeed effective. Furthermore, political risk turns out to be a robust determinant of exports and hence should be taken into account in any empirical model of trade.

Nuclear power for Australia?

n 2005 there were rising expectations for nuclear power. High rates of economic growth and energy demand, particularly from China and India, combined with environmental constraints, energy security concerns, and on-going energy poverty in the developing world raised the possibility of a nuclear revival. Worldwide there were 441 nuclear power plants operating at the end of 2005, totalling 368 GWe of generating capacity, and supplying about 16 per cent of the world’s electricity. This latter figure has remained relatively stable over the past two decades, indicating that nuclear power has grown at about the same rate as total global electricity production over the period. Current expansion, as well as perceived near-term and long-term growth prospects, is centred on Asia. Thomas (2005) reports that China, France, Korea and Japan have all announced possible orders over the next two years, although approval processes in France and Japan are likely to push back the scheduled dates of construction. Twenty four of the last 34 reactors to have been connected to the grid were in Asia. At year-end 2005 there were 27 reactors described as being ‘under construction’ worldwide — although construction has effectively ceased on three of them, and for a further three construction started before 1990 and there must be doubts about whether these plants will ever be completed. Of those still under construction, 17 are based upon Indian, Russian, or Chinese technology, designs that would be highly unlikely to be adopted in OECD countries due to the rigours of the licensing processes required, and Western reactor manufacturers still face a dearth of new orders particularly from Europe and the United States. Sixteen of the reactors under construction are in Asia and just one is in an Organisation for Economic Cooperation and Development (OECD) country (Finland). The Olkiluoto reactor in Finland is widely regarded as a special case. It is not being built for an electricity utility but rather for a consortium of industries who will guarantee to take all power on a ‘not-for-profit’ basis. It will not therefore compete in the Nordic electricity market. Construction costs are estimated to be €3.2 billion (€2000/kW), with finance being provided by the Bayerische Landesbank (€1.95 billion) at a nominal interest rate of 2.6 per cent, and loan guarantees of €720 million from the French and Swedish export credit guarantee agencies. The European Commission is currently considering complaints that the plant has received illegal state subsidies. Whether or not these construction costs can be achieved (or repeated) is an unknown factor. The project is currently running nine months behind schedule.

Export Credit Guarantees, Moral Hazard and Exports Quality

AbstractWe analyse the role played by export credit guarantees (ECGs) in encouraging exports to developing countries. The existence of moral hazard on the side of the firm is introduced. We show that the inability of the exporter's government to verify the actual quality of the product will limit its ability to encourage trade through ECGs, once the coverage provided goes beyond a certain threshold. This result provides a rationale behind the limited coverage on ECGs.

The Ilisu Dam Environmental Impact Assessment Report: Review and critique

Pessimists about the power of public opinion against global corporations should take heart from the developments over the Ilisu Dam project in Turkey. In mid-November 2001, the main British engineering contractor, Balfour Beatty, pulled out of the whole project after a barrage of informed criticisms of the political, ecological, social and archaeological implications of Ilisu. Up to then, the British government had clung to its decision to offer the firm export credit guarantees for the dam. One of the most devastating and detailed condemnations came from two archaeologists, Maggie Ronayne and Willy Kitchen. Below, we print extracts from their review of the Ilisu Dam Environmental Impact Assessment Report (full text available on http://www.wac.uct.ac.za/whd/ eiarfinal.htm). The range of concerns expressed by the authors, like the protests from the Wodd Archaeological Congress which we printed in the last issue of this journal, demonstrate the scope and power of public archaeology in political action. This may not be the end of the story, however. The Turkish government insists that Ilisu must go ahead. At the time of writing, there is a possibility that Turkey might demand American export credit guarantees for a US replacement for Balfour Beatty, in return for Turkey's participation in the international force in Afghanistan.

U.S. Agricultural Trade with Mexico

This study examined the effects of exchange rates, economic growth, trade liberalization, and export assistance programs on U.S. agricultural exports to Mexico. The Commodity Credit Corporation's GSM-102 Export Credit Guarantee Program reduces the risk associated with export financing and payment. The impact of the export credit guarantee program on U.S. agricultural exports to Mexico was estimated in an import demand model using quarterly data from 1980 to 1996. The results indicate that for every $1 of export credit guarantees, Mexican imports of U.S. farm products increased $0.30. Real income growth in Mexico, however, was the most important factor in the expansion of U.S. exports. Trade liberalization under NAFTA also increased U.S. exports to Mexico.

Effects of Wheat Export Policies on Market Shares

since the late 1970s. In response, the composition of export strategies has changed. All major wheat exporting countries have increased their use of export policies and strategies, many of which vary substantially across importing countries. During the mid to late 1970s, the primary export policies were PL480 for the United States and long-term agreements (LTAs) and credit guarantees for some competitor countries. In the early 1980s, the United States, Australia, and the European countries (EC) expanded their use of credit guarantees. In addition, Argentina had infrequent credit sales. In the late 1980s, use of direct price subsidies escalated while other strategies continued.' The fundamental objectives of most export policies are to increase export volume and/or to alter the distribution of market shares among exporting countries. In general, export policies affect both total imports by altering the importing country's budget constraint and the distribution of imports among exporting countries. As program administrators and policy makers review export policies, it is important to evaluate their comparative effectiveness on sales and market shares.2 Export policy instruments are intended to expand sales, but their impact depends on the composition and effectiveness of competitor countries' programs. Thus, impacts of alternative policies should be examined within a multicompetitive framework (Cooper and Nakanishi), in which concurrent impacts of other policies are included. Past studies evaluated impacts of policies on trade flows. For example, Anania, Bohman, and Carter analyzed the impact of export subsidies on international wheat exports. Fleming used pooled data to evaluate impacts of export strategies on the cross-sectional distribution of rice trade flows. Other studies have focused on the subsidy implied in provision of export credit guarantees (Skully; Baron). No known studies have analyzed multi-competitive interactions of export policies on the cross-sectional variability in international market shares.

Export credit guarantees: The commodity credit corporation and US agricultural export policy

A model is presented to explain the economic incentives for export credit guarantee programs. A methodology for estimating the discount component of credit guarantees from the importer's perspective is developed and applied. The cost of offering CCC credit guarantees is discussed as are issues regarding the effectiveness of the programs. In general, we find that the program benefits both importers and exporters.

Should aid be used for debt buy‐backs?

AbstractThere is disagreement between different aid agencies and non‐governmental organizations (NGOs) and amongst academics about the efficacy of using foreign aid to enable Third World governments to buy back portions of their own external debt. This article describes four hypothetical transactions and uses them to examine the main issues and arguments. The many different motives which may give rise to a buy‐back make it difficult to use any one technique to appraise their development effectiveness. The article then considers the use of buy‐backs to assist the private sector in LDCs and to reduce the claims of a donor government's own agencies. An interpretation is offered of the UK government's policies towards the use of aid for debt reduction supplemented by reference to the strategy designed for dealing with part of Zambia's debt and the description of the deficits of the Export Credit Guarantee Department (ECGD) as ‘unintended past aid’. In the light of these interpretations the original question is reconsidered.

UNCTAD: Export Credit Guarantee Facility

UNCTAD: Export Credit Guarantee Facility

Social Versus Private Profitability in Pakistan's Export of Manufactures

A recurrent theme in much of the writing on development is that the prospects for the export of agricultural products from underdeveloped countries are bleak, and that these countries should, therefore, concentrate on expanding their exports of manufactures. Pakistan, too, has not been immune to such thinking, and over the years the authorities have attempted to stimulate industrial exports through a wide array of incentive schemes. On the one hand these" took the form of discouraging agricultural exports by the imposition of export taxes and by compelling the sale of these products at the official—and overvalued —exchange rate. On the other hand, the manufacturing sector was given a much more favourable exchange rate by way of the Export Bonus Scheme, was permitted to purchase its imported component at an artificially low rate through the Export Performance Licensing Scheme, and was exempted from taxation on exports. In addition, businessmen were permitted foreign exchange at the official rate in order to travel abroad to make contacts and conduct market surveys, export credit guarantee schemes were drawn up for manufactured products, while government-financed participation in foreign trade exhibitions was chiefly designed to provide a shop window for the products of industry.

The Role of Medium-Term Export Credit Guarantees and Insurance in Financing Foreign Trade

Medium-term export credit guarantee programs exist in almost all of the major industralized countries, and even in many of the developing countries, and are an important means by which export sales of capital goods are financed. It is the intent of this article to explain the operations and significance of government sponsored medium-term export credit guarantee programs. Before doing so, however, it is important to have an understanding of what they are and why the programs have developed to the extent they have. Export credits, also known as supplier credits, are trade credits extended by suppliers to their overseas customers, to accomodate the latter in purchasing their goods on credit. These credits are usually evidenced by negotiable instruments in the form of trade acceptances or promissory notes which obligate the buyer to pay for the goods over an agreed period. Mediumterm refers to the repayment period, ranging generally from six months to five years from the date of obligation. The terms guarantees and insurance, often used interchangeably, refer to the coverage against losses extended by a specialized institution to an exporter or financial institution.

The U. S. enters export credit guarantee competition

The U. S. enters export credit guarantee competition