Document Type : Research Paper
Authors
Abstract
The purpose of this paper is to provide an understanding of how the export credit worthiness of an importing country affects export sales of agricultural and other manufactured products and how export credit guarantee or insurance can mitigate risk of nonpayment. This paper makes a contribution to specific literature on how export credit risk affect agricultural and other exports, and also contributes to the broader literature on international trade theory by showing that risk is indeed an economically significant factor in trade.
Data on export values per capita were obtained from three different source data for 2007 Iranian export values for all industries and for agricultural and related services industries were obtained from statistic of Iran׳s trade data online. This data set consists of over 117 different countries matched to their credit scores. To confirm the generality of the result, also trade data were obtained for Iran, Canada and Australia from
the international trade statistics yearbook published by the World Bank. A theoretical model is developed. It shows how risk mitigation through export credit insurance could increase exports to high-risk importing countries.
Results show that there is a significant positive relationship between credit worthiness and export values.
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