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Investing in Trade Promotion Generates Revenue

image of Investing in Trade Promotion Generates Revenue

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.

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Data sources and summary statistics

We merged information from three rounds of TPOs’ surveys. The first survey was conducted in the autumn of 2005 by the World Bank and the data was used in Lederman et al. (2010). The second round was conducted in the autumn of 2010 also by the World Bank, and the final round was conducted in the autumn of 2014 by the International Trade Center (ITC).

English

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