The export development corporation : its role and effectiveness in British Columbia

The objective of this thesis is the evaluation of the Export Development Corporation's effectiveness in British Columbia. This objective is readily devisable into two tasks, an examination of the Corporation's programs in terms of its objectives, and the assessment of the performance and potential of the programs in British Columbia. In Chapter I, a theory of the role of export credit in trade expansion is developed. The importer's demand for export credit and the exporter's supply of that credit are examined separately, and the joint effect of both on trade volume is considered. The effect of export credit insurance and financing in altering trade volume is also presented. The questionnaire, sample, and method of analysis are described. In Chapter II, a profile is presented of British Columbia exporters answering the questionnaire. Six characteristics are examined: industry sector, export experience, sales volume, number of export markets, relative importance of exports and domestic sales, and the relative profitability of exports and domestic sales as perceived by the respondent. In Chapter III, risk perception and compensation are considered. Sample data are presented regarding the relative risk of exports and domestic business, the explanation of that risk, and the difference in selling terms which is deemed in part to compensate for risk differentials. A theory of the effect of risk on profitability is presented and a joint relationship of credit terms, profitability, and risk developed. The theory and data of the first three chapters suggest that the Corporation's services should greatly enhance the export profitability of B.C. firms. However, the response to these services has not been as positive as is to be expected. Chapter IV presents respondent attitudes toward EDC programs. Information sources are suggested as a possible explanation for negative attitudes, and evidence is presented to suggest that the confidence of firms in sources from which they learn of EDC is suspect. Three appendices are included to provide background for the study; the questionnaire, export credit services in other major trading countries, and a description of the historical performance and present status of the Export Development Corporation. This study concludes that the programs of the Corporation are rational in view of its objectives, and that the potential for export expansion in British Columbia is considerable. However, acceptance to date has been poor as a result of an information gap which can be overcome to a great extent by efforts of the Corporation.Business, Sauder School ofFinance, Division ofGraduat