The Impact of Export Incentives and Export-Related Policies on the Firms of the Less Developed Countries - A Case Study of the Philippines

Abstract

This study attempts to shed some light upon how export incentives and other export-related policies influence the behavior of actrive and potential exporters. It asks several interrelated questions: 1) how do firms view the export activity itself, 2) how do firms view and react to government policies in terms of their perceptions of exports, and 3) how do these views of both exports and export policies depend upon the economic and political environment in which the firms are embedded? In seeking answers to these questions a survey of 193 exporters and potential exporters in the Republic of the Philippines was conducted in April and May, 1974. Our single most important observation is that direct financial incentives have not led Philippine firms to consider exports; rather it has been the more immediate prodding of domestic difficulties and external contacts which has done so. At the later stages of export, however, firms seem more cognizant of the direct profitability of exports and thus of the role of export incentives. Yet here the incentives required may be far smaller than those needed at the earlier stages. We thus conclude that government policies should more carefully distinguish between the recruitment of new export firms and the encouragement of existing firms. Direct financial incentives, although possibly effective for the latter purpose, do not seem effective for the former.