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Can Export Credit Agencies Facilitate Cross Border Trade to Emerging Markets and Help Increase Investments and Innovations in Their Food Processing Industries?

Author

Listed:
  • Hilmar Tor Hilmarsson
  • Trung Quang Dinh

    (School of Business and Science, University of Akureyri, Iceland
    School of Business and Science, University of Akureyri, Iceland)

Abstract

Export Credit Agencies (ECAs) played an important role in cushioning the downturn in cross border trade to emerging market economies during the economic and financial crisis that started in the fall 2008. In addition to facilitating trade during times of crisis, ECAs can also help companies in emerging countries access long term funding and at lower interest rate than they could access locally. This can also help companies modernize their processing lines, especially those engaged in capital intensive activities, and enable economies in transition increase the value added of their industries. This article discusses the role of ECAs in facilitating cross border trade to emerging markets as well as the economic rationale for the existence of such agencies. It also demonstrates how selected risk mitigation instruments of ECAs, namely: (i) buyer credit guarantee, (ii) supplier credit guarantees and (iii) export loans have been applied in practice to facilitate investment and innovations in the food sector. Finally cases are presented that highlight how companies have used the service of ECAs, for example, to obtain better terms, including longer term loans and/or lower interest rates.

Suggested Citation

  • Hilmar Tor Hilmarsson & Trung Quang Dinh, 2013. "Can Export Credit Agencies Facilitate Cross Border Trade to Emerging Markets and Help Increase Investments and Innovations in Their Food Processing Industries?," Journal of Applied Management and Investments, Department of Business Administration and Corporate Security, International Humanitarian University, vol. 2(3), pages 176-186.
  • Handle: RePEc:ods:journl:v:2:y:2013:i:3:p:176-186
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    File URL: http://www.jami.org.ua/Papers/JAMI_2_3_176-186.pdf
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    References listed on IDEAS

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    1. Marios Nerouppos & David Saunders & Costas Xiouros & Stavros A. Zenios, 2006. "Risk Management in Emerging Markets: Practical Methodologies and Empirical Tests," Multinational Finance Journal, Multinational Finance Journal, vol. 10(3-4), pages 179-221, September.
    2. Yescombe, E. R. & Yescombe, E. R., 2002. "Principles of Project Finance," Elsevier Monographs, Elsevier, edition 1, number 9780127708515, August.
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    Cited by:

    1. Anatoliy G. Goncharuk, 2015. "Food Business and Food Security Challenges in Research," Journal of Applied Management and Investments, Department of Business Administration and Corporate Security, International Humanitarian University, vol. 4(4), pages 223-230, November.
    2. Anatoliy G. Goncharuk, 2015. "Application of the Investment Theory in Research and Practice," Journal of Applied Management and Investments, Department of Business Administration and Corporate Security, International Humanitarian University, vol. 4(2), pages 119-126.
    3. Hilmar Tor Hilmarsson, 2013. "How Can International Financial Institutions Support Cross Border Energy Projects in Emerging Market Economies?," Journal of Applied Management and Investments, Department of Business Administration and Corporate Security, International Humanitarian University, vol. 2(4), pages 253-262.

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