Credibility and the Cost of Export Subsidies
December 1, 1991
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Summary
Recurring balance of payments crises in countries that pursued import substitution have led some of them to establish a variety of export incentives, in particular subsidies, as a way to revive and re-orient their economies. However, exporters are likely to be uncertain of the government’s commitment to export promotion because of the years of neglect. This paper analyzes the issue of the credibility of export subsidies and suggests that a government is able to convince exporters of its commitment only at a cost, which reduces the attractiveness of promoting exports by means of subsidies.
Subject: Export competitiveness, Export subsidies, Exports, Financial institutions, International trade, Stocks, Trade policy
Keywords: capital stock, Export competitiveness, export preference, Export subsidies, export target, Exports, high-export government, low-export government, Stocks, supply curve, target ratio, Trade policy, WP
Pages:
44
Volume:
1991
DOI:
Issue:
129
Series:
Working Paper No. 1991/129
Stock No:
WPIEA1291991
ISBN:
9781451855081
ISSN:
1018-5941
