Export Promotion Programs: Differences between Advanced and Emerging Economies

Abstract

This paper compares the export promotion system of advanced and emerging economies in fifty countries. Results show that advanced economies offer, on average, more complete export promotion system, i.e. a greater variety of Export Promotion Programs (EPPs) than emerging economies. Advanced countries offer more financial support, informational services, facilitating activities and education and training services. The specific services that contribute most to these differences are also identified, which is important for national export promotion agencies and policy makers to upgrade their offer to firms in order for them to be better prepared for international trade interactions, especially emerging economies.

Keywords:

• Advanced countries
• emerging countries
• export promotion programs
• export assistance

JEL CODES:

• F14
• F63

Notes

Notes

1 Some authors adopt the designation of Export Assistance Programs (EAPs) rather than Export Promotion Programes. However, we adopt the designation of Export Promotion Programes as it is broader concept as it includes programe to assist exporters but also programes to encourage firms to start or continue exporting.

2 The author does not specify which countries, but he presents a list with twenty countries included in the sample that contains both advanced economies and emerging markets.

3 As highlighted by Leonidou (2004), research about export barriers in developing countries is virtually non-existent.

4 Note that, according to Fantom and Serajuddin (2016), advanced countries (high income countries) are not eligible for word bank lending, unlike most emerging countries that can borrow from the International Development Association or from the International Bank for Reconstruction and Development, which highlights the financing needs of the latter.

5 These variables are based on a country with specific choice criteria. Generally, EPPs offer informational services regarding a high number of countries (usually more than 100) and, for practical reasons, we did not check country by country. Instead, we chose a country that is not either a top 10 exporter, a developing country or a neighbouring country. This criterion is explained by the fact that top exporters and neighbouring countries tend to have more information and countries that do not assume a relevant position in international trade tend to have less. Therefore, selecting a country within these conditions allowed us to have an idea of the average information service the EPPs provide.

6 Data was retrieved in May and June 2017 (for specific dates please check Table A1 in the Supplementary Appendix).

7 For different scales reasons, we normalised the quantitative data for them to assume a value between 0 and 1. Therefore, we adopted a OECD, EU and JRC (2008) method, in which each quantitative variable value for each country will be transformed in $I_{qc}= \frac{x_{qc}-{\mathit{min}}_c(x_q)}{{\mathit{max}}_c\left(x_q\right)- {\mathit{min}}_c\left(x_q\right)},$ where min_c(x_q) and max_c(x_q) are the respective minimum and maximum values of variable x_qc across all the 50 countries and x_qc is the current value of the quantitative variable of country c.

8 Note that the maximum score a country can reach in each group is the equivalent of the number of services identified, e.g. 5 financial services where identified in group 1, therefore, the maximum score a country can reach is 5. For groups 2, 3 and 4 these values are 46, 7 and 19 respectively.

9 X23 is the only exception in the 65 qualitative variables. This is the only variable that can assume 3 modalities (0 for no data available, 1 for national level and 2 for state level). Therefore, X23 will be decomposed in the modalities X230, X231 and X232.

10 The SPAD outputs containing the countries and modalities’ contributions in which we based the following interpretations can be provided upon request.

11 For the assumption to be verified, the determinants should be almost equal (column A of Table A8 in the Supplementary Appendix) and the p-value should be higher than the significance level (5%). As shown in column B of Table A8 in the Supplementary Appendix, this is not the case.

12 Due to the big number of modalities in both factors, we will only mention the three first modalities in each side of the columns A and B of Tables A3 and A7. However, note that they all contribute to the construction of the factors and, therefore, they also contribute to the differences between advanced and emerging economies.