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Letters

Author(s):
International Monetary Fund. External Relations Dept.
Published Date:
March 1986
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Credit and Investment Insurers, I have seen how such programs have helped the OECD countries. We should now try to encourage others to reap their benefits.

Delio E. Gianturco

Arlington, VA, USA

Export advice

Anil Sood and Harinder Kohli’s excellent article, “Industrial restructuring in developing countries” (December 1985), failed to draw one conclusion that jumped out at me. After noting the pressure on developing countries to increase their manufactured goods exports and the fact that it is critical to develop efficient financial institutions to help disseminate technology, management, and marketing know-how, the authors do not mention the vital role that export credit, guarantee, and insurance institutions can play in this process.

Some units of the World Bank and IFC are aware of this potentially enormous stimulus to a balanced and dynamic industrial development effort, as reflected in new loan approvals, but this awareness does not seem to be widespread. A key part of industrial and financial restructuring should be to encourage improvements in export finance institutions which will “level the playing field” for borrowing countries and permit them to maximize their industries’ comparative advantages in international trade. It is no coincidence that the newly industrializing countries with the most impressive export growth have all established export credit agencies with a full array of financial programs.

The World Bank can play a key advisory role to developing countries with regard to export credit, guarantee, and insurance programs, and should consider assistance to these types of institutions as part of its restructuring efforts. As a former Vice Chairman of the US Export-Import Bank and Vice President of the International Union of Export

Harinder S. Kohli and Anil Sood reply:

We agree with Mr. Delio Gianturco that in many circumstances efforts to promote exports of manufactured goods need to be supported by the development of effective export credit and insurance institutions. Such institutions can provide vital services needed by private exporters. In the increasingly competitive, international markets, the availability of appropriate credit terms is an important factor in the purchasing decisions of importers. In addition, insurance institutions can help exporters to manage better the risks associated with exports.

At the same time, however, experience indicates that such institutions cannot increase manufactured exports by themselves; the policy and incentives framework must make exports profitable and attractive to individual producers, compared to sales in domestic markets. Considering the magnitude of economic distortions in most developing countries, which made exports relatively unattractive in the past, such policy reforms must precede or accompany the development of specialized institutions, as we emphasized in the article.

Statement of Ownership, Management, and Circulation required by 39 USC 3685.

1a. Title: Finance & Development. 1b. Publication No. 123–250. 2. Date of filing: 9/13/85. 3. Frequency: Quarterly. 4. Complete mailing address of known office of publication: Finance & Development, International Monetary Fund, Washington, DC 20431.

6. Complete mailing address of the headquarters of general business offices of the Publisher: International Monetary Fund and the International Bank for Reconstruction and Development, Washington, DC 20431.

6. Full names and complete mailing address of Publisher, Editor and Managing Editor: Publisher: International Monetary Fund and International Bank for Reconstruction and Development, Washington, DC 20431. Editor: Bahram Nowzad, same address; Managing Editor: Shuja Nawaz, same address.

7. Owner: international Monetary Fund and the International Bank for Reconstruction and Development, Washington, DC 20431.

8. Known bondholders, mortgagees, and other security holders owning Or holding 1 percent or more of the total amount of bonds, mortgages or other securities: None.

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nature of circulation
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issue in preceding 12 months
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A. Total No. of copies55,42054,540
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D. Free distribution by mail, carrier or other means Samples, complimentary and other free copies54,58653,576
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I certify that the statements made by me above are correct and complete.
I certify that the statements made by me above are correct and complete.

Shuja Nawaz, Managing Editor

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