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Can Export Credit Agencies Facilitate Cross Border Trade to Emerging Markets and Help Increase Investments and Innovations in Their Food Processing Industries?

Hilmar Tor Hilmarsson and Trung Quang Dinh
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Trung Quang Dinh: School of Business and Science, University of Akureyri, Iceland

Journal of Applied Management and Investments, 2013, vol. 2, issue 3, 176-186

Abstract: Export Credit Agencies (ECAs) played an important role in cushioning the downturn in cross border trade to emerging market economies during the economic and financial crisis that started in the fall 2008. In addition to facilitating trade during times of crisis, ECAs can also help companies in emerging countries access long term funding and at lower interest rate than they could access locally. This can also help companies modernize their processing lines, especially those engaged in capital intensive activities, and enable economies in transition increase the value added of their industries. This article discusses the role of ECAs in facilitating cross border trade to emerging markets as well as the economic rationale for the existence of such agencies. It also demonstrates how selected risk mitigation instruments of ECAs, namely: (i) buyer credit guarantee, (ii) supplier credit guarantees and (iii) export loans have been applied in practice to facilitate investment and innovations in the food sector. Finally cases are presented that highlight how companies have used the service of ECAs, for example, to obtain better terms, including longer term loans and/or lower interest rates.

Keywords: cross border trade; emerging markets; financial crisis; export credit agencies (ECAs); commercial and non-commercial risks; risk mitigation instruments (search for similar items in EconPapers)
Date: 2013
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Handle: RePEc:ods:journl:v:2:y:2013:i:3:p:176-186