CROSS BORDER TRADE, INCREASED VALUE ADDED AND ECONOMIC GROWTH IN EMERGING MARKET ECONOMIES: CAN EXPORT CREDIT AGENCIES HELP?

Trung Quang Dinh and Hilmar ?ór Hilmarsson

Proceedings of the INTERNATIONAL MANAGEMENT CONFERENCE, 2013, vol. 7, issue 1, 35-47

Abstract: Cross border trade is an important engine of global growth. Export Credit Agencies (ECAs) can be useful facilitators and promoters of export from home to host country, especially during economic and financial crisis. In fact, ECAs can help both home company (exporters) increase sales opportunities, as well as their business partners, who are operating in emerging market economies with less developed financial systems, and need to import new machinery to modernize their processing lines and increase their value added. This is especially true for companies engaging in capital intensive activities, including investments with long repayment periods. This article discusses the role of ECAs in facilitating cross border trade to emerging markets and demonstrates how selected risk mitigation instruments have been applied in practice. Cases are presented that highlight how companies (the importers) have used the service of ECAs to obtain better lending terms, including longer term loans and at lower interest rates. The cases also illustrated home companies (the exporters) can benefit from ECAs’ service when selling their products.

Date: 2013
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