By providing support in terms of export finance, insurance and guarantees, trade financing facilities can stimulate the participation of developing countries in the globalizing economy. In a survey of 56 developing countries, the UNCTAD secretariat finds that 34 have full-fledged trade financing schemes. Their existence is not determined by the geographical situation of the country, nor by its size; countries having such facilities range from Trinidad & Tobago to India.
Albeit covering only a selected number of countries, the report , entitled "Review of Progress in Trade-Finance Facilities of Developing Countries at the Inter-regional, Regional and Sub-regional Levels" (UNCTAD/ECDC/254) contributes to filling the information gap on this issue, as it is based on first-hand information received from 140 national and regional institutions. In a 40- page annex, the report (89 pages in total) provides a description of the trade-financing, insurance and guarantee schemes in seclected developing countries, as well as the percentage of trade generated.
The institutional structure, the financial conditions and the financing modalities of trade-financing schemes vary from country to country, depending on the local needs. A full-fledged trade-financing scheme entails a comprehensive network of institutions dealing with export credit, guarantee and insurance. As a result, these schemes are able to finance an important portion of national exports, as is the case for example in India and the Republic of Korea. The report also covers the regional schemes, which can effectively supplement the services offered by national schemes. They offer the advantage of risk-pooling and easier access to international financial markets.
A summing-up of policy issues and proposals raised by the institutions surveyed indicates that most countries see merit in establishing and strengthening specialized export-credit, insurance and guarantee agencies, such as export-import banks. The efficiency of these institutions also depends on the development of the commercial banking sector, which offers the basic services to exporters. Hence, the strengthening of the banking system is of major importance. The exchange of experience enormously contributes to the development of the specialized institutions, the survey indicates.
The report provides a basis for policy analysis and concrete actions for enhancing national and regional trade financing. In this respect, the UNCTAD secretariat is preparing a prototype model of government-sponsored trade financing in collaboration with the Export-Import Bank of the Republic of Korea.
