Investing in Trade Promotion Generates Revenue

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Recent analytical literature has concluded that money spent on export promotion tends to foster export growth. This work discusses the findings of recent work by a team of consultants that find that a 1% increase in export promotion budgets increases exports by 0.074%, confirming results in the earlier literature. Their work also suggests that these export gains translate into very large GDP per capita gains. Indeed, a 1% increase in export budgets generates a 0.065% increase in GDP per capita. Trade Promotion Organizations characteristics that tend to generate large export growth do not necessarily generate large gains in terms of GDP per capita growth.



Concluding remarks

The literature on export promotion using both firm and country level data has focused on estimating the impact that export promotion programs have on average. While most of the literature tends to suggest that export promotion helps increase exports, we moved further in two important dimensions. First, we examine not only the impact of export promotion on exports, but also on GDP per capita. Indeed, the ultimate objective of export promotion policies is not exports per se, but social and economic growth. We used GDP per capita as a proxy for social and economic growth and found that the returns in terms of GDP per capita are larger than the export returns, which suggests the presence of positive externalities associated with export promotion.


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