Showing posts from February, 2014

Export promotion subsidies and incentives - Justified?

The question regarding benefit accruing out of providing export incentives/subsidies to firms involved in exports has been debated since Bhagwati's time and earlier. The idea of providing such subsidies and incentives have come under strong criticism from economists such as Arvind Panagaria in the past. You can read a working paper by him in the world bank series on the topic, here . (year Y2K) Arvind goes about demolishing all the arguments related to export subsidies and incentives in the paper. Talking about the argument of export products and market diversification related subsidies (the mainstay of our incentive schemes under India's foreign trade policy), Arvind has this to say: I have not come across any quantitative study which does a proper analysis to show that export subsidies, in general, and export-credit subsidies and export-credit insurance, in particular, are a part of the least-cost package for achieving a certain level of export expansion or diversifi