Economic Cost and Benefits of Subsidizing Western Credits to the East

Executive Briefing

Daniel F. Kohler

ResearchPublished 1985

In the hope of increasing sales for their export industries, Western governments subsidize credits extended to foreign purchasers of their export products in two ways: directly, by offering loans at rates below their own cost of funds, and indirectly, by guaranteeing repayment of loans, thus absolving the borrower of the need to pay a risk surcharge. This report summarizes research that estimates the value of these subsidies to the Soviet Bloc and analyzes the effects that they have on economic welfare in the exporting and importing countries. The analysis suggests that the costs to Western governments of subsidizing trade to the Soviet Bloc are substantial and probably exceed the benefits.

Document Details

Citation

Chicago Manual of Style

Kohler, Daniel F., Economic Cost and Benefits of Subsidizing Western Credits to the East: Executive Briefing. Santa Monica, CA: RAND Corporation, 1985. https://www.rand.org/pubs/reports/R3129z1.html.
BibTeX RIS

This publication is part of the RAND report series. The report series, a product of RAND from 1948 to 1993, represented the principal publication documenting and transmitting RAND's major research findings and final research.

This document and trademark(s) contained herein are protected by law. This representation of RAND intellectual property is provided for noncommercial use only. Unauthorized posting of this publication online is prohibited; linking directly to this product page is encouraged. Permission is required from RAND to reproduce, or reuse in another form, any of its research documents for commercial purposes. For information on reprint and reuse permissions, please visit www.rand.org/pubs/permissions.

RAND is a nonprofit institution that helps improve policy and decisionmaking through research and analysis. RAND's publications do not necessarily reflect the opinions of its research clients and sponsors.