Problem

Export credit competition

Nature:

The amount of sales in the international market depends, to a very great extent, on the facilities for deferred payments. For the importer, suppliers' credit may often be the chief, if not the only, available source of finance, particularly if he belongs to another developing country and is importing consumer manufactures or capital goods. Consequently, the payment terms become a crucial part of the contract, in addition to price and quality, and competition in the field of export credit becomes as important as pure price or quality competition. The severity of export-credit competition is such that a 'race' tends to develop, resulting in excessive borrowing on the wrong terms. This is particularly difficult for developing countries which may find themselves willing to ignore over-pricing and lower quality in favour of longer periods of credit.
Broader Problems:
Obstacles to world trade
Unbridled economic competition
Aggravates:
Decline in export credits
Strategies:
Competing for exports
Subject(s):
Commerce → Conditions of trade
Commerce → Credit
Commerce → Import, export
Related UN Sustainable Development Goals:
GOAL 10: Reduced InequalityGOAL 12: Responsible Consumption and Production
Problem Type:
D: Detailed problems
Date of last update
04.10.2020 – 22:48 CEST