Leave Export Promotion to Goldilocks

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The successful WTO Ministerial at Bali has placed trade facilitation in the spotlight, but it is export promotion that takes pride of place in most national trade policy agendas. Sometimes export promotion seems a virtuous exercise, targeting small firms most in need of help.  The US Government’s efforts through its Small Business Administration or under the National Export Initiative are an example.  At other times, it seems cold-bloodedly pragmatic, geared towards large firms most able to use assistance.  Examples are government support for national champions from Brazil to South Korea.

Both types of efforts may be misplaced.  Export promotion provides the biggest “bang-for-the-buck” when it combines virtue with pragmatism and focuses on firms that both need it and can use it.  That may mean avoiding the politically appealing small firms as well as the economically dynamic large firms, and focusing instead on medium-sized firms.

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Authors

Ana Fernandes

Senior Economist, Development Research Group, World Bank

Aaditya Mattoo

Research Manager, Trade and Integration, World Bank

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