Governments in Japan, Singapore, South Korea, and China have supported exports for years which have tremendously helped their economies

Question

Since exporting is a very important component of a country's business strategy, many government programs are offered that support exports. Describe ways by which governments can support exports.

Answer 1

Countries benefit a lot based on their facilitating of export and import business. For example, China has attracted increased foreign investment from DaimlerChrysler, Hewlett-Packard, GM, and other similar corporations by accommodating them to set up production facilities that will support local sales as well as exports to world markets. Governments commonly use four activities to support and encourage firms that engage in exporting. These are tax incentives, subsidies, export assistance, and free trade zones. Tax incentives treat earnings from export activities preferentially either by applying a lower rate to earnings or by refunding taxes already paid on income associated with exporting. Also, tax benefits are offered by governments which may include tax exemption or tax deferral on export income, accelerated depreciation of export-related assets, and generous tax treatment of overseas market development activities. Governments also support export performance by providing outright subsidies. Subsidies are direct or indirect financial contributions or incentives that benefit producers. Governments also provide assistance to exporters. Companies can avail themselves of a great deal of governmental information concerning the location of markets and credit risks. Assistance may also be oriented toward export promotion. Various agencies at different levels hold trade fairs and trade missions designed to promote sales to foreign customers. In an effort to facilitate exports, countries are designating certain areas as "free trade zones" and particular "special economic zones." These zones are geographic entities that offer manufacturers simplified customs procedures, operational flexibility, and a general environment of relaxed regulations. Thus, these ways are very helpful and have helped several companies.