Economic Cost and Benefits of Subsidizing Western Credits to the East

Daniel F. Kohler, Stephen W. Salant, Don Henry, Keith Crane, Mark Myron Hopkins

ResearchPublished 1984

This report provides estimates of the resource costs of Western export credit policies, particularly the granting of guarantees on Western credits to the Soviet Bloc. Official export credit programs are in place because Western governments believe they increase employment and welfare in the exporting (and subsidizing) country, but the authors conclude that subsidies are more likely to reduce welfare in the exporting country than to increase it. They find that the gains to Western export industries are more than offset by the losses of Western consumers and taxpayers. In short, the only clear-cut winners under the current system are the importing countries.

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Kohler, Daniel F., Stephen W. Salant, Don Henry, Keith Crane, and Mark Myron Hopkins, Economic Cost and Benefits of Subsidizing Western Credits to the East. Santa Monica, CA: RAND Corporation, 1984. https://www.rand.org/pubs/reports/R3129.html.
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