مشاريع الاستثمار الأجنبي المباشر

WP/2018/02: Has Export Credit Guarantee Any Role in Promoting Exports in Arab Countries?

Abstract: Limitations on the availability of timely and affordable trade financing, including export credit guarantee, are contributing to modest trade growth during the last five years, therefore it must be a matter of priority to improve our understanding of the linkages between financing/risk mitigation and trade activity, ensuring adequate levels of the former, to help fuel growth of the latter.
The existing research works on the effects of export credit insurance on export promotion mostly are concentrated around several European countries. Yet nothing is known about the influence of export credit guarantees on exports in the Arab region, where the structure of export industries and key trading partners significantly differ from other regions. The purpose of this paper is to bridge this gap by investigating empirically the significance of the relationship between exports and credit-worthiness of importing countries, using Arab merchandise export values. Corroborating evidence for such relationship gives support to the usefulness of specialized export financial institutions to finance exports, mitigate credit risk and keep trade finance markets in Arab countries from drying up. A dynamic panel approach is adopted to estimate an adjusted gravity model. The empirical results, based on a balanced panel of 107 Arab partner countries (importer countries) observed between 1997 and 2017, provide a strong and robust justification to the role of export credit insurance and guarantees in promoting merchandise exports in the Arab region.

Author: Riadh Ben Jelili