"Export Subsidies"

The Economist, December 14, 2000.

Synopsis:

Export subsidies are one of the main instruments of trade policy, with the purpose of helping domestic producers gain export markets. As this article explains, however, the subsidies usually result in negative outcomes. The existence of the subsidies tends to protect the inefficient, rather than promoting efficiency. As a consequence, the policy has not been successful in expanding exports. Instead, less interventionist policies are proven to be a better approach. This article also explains the distorting effects of Foreign Sales Corporations (FSCs).

Full-text Article:
http://www.economist.com/finance/displayStory.cfm?Story_ID=451674&CFID=467262&CFTOKEN=6567573

Text connection:

Chapter 5 "The Political Economy of International Trade" (pp.153-157).

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