Direct loans-loan guarantees and credit insurance
Do you think that government of the country must assist the private business in conduction of the international trade through the direct loans, loan guarantees, and/or credit insurance?
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Whenever the government of country provides below-market financing directly to the foreign importers, or provides loan guarantees to the domestic banks financing foreign import, or offers low cost credit insurance to the U.S. exporters in order to mitigate the political and commercial risk in sale, this is using taxpayers’ money in order to subsidize foreign trade. As a result, foreign trade is not paying for itself. However, if governments of developed countries provide such assistance to their domestic exporters, it becomes really difficult for one in order to refuse in case country desires to have its export-oriented industries to remain competitive.
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