Ex-Im Bank Hurts Domestic Production, Says Think Tank Fellow
Export subsidies ultimately damage economies by funneling production into export channels and depriving the domestic markets of production, said visiting fellow at the American Enterprise Institute Timothy Carney in an Aug. 12 column in The Washington Examiner calling for Congress…
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to permit the Export-Import Bank to expire. Lawmakers remain at loggerheads over reauthorization legislation as a Sept. 30 expiration looms (see 14080509). The Chinese government deprives its economy of a potential three percent gain through its export subsidies, said Carney, citing a London School of Economics paper from 2012 (here). “Loan guarantees for exports -- Ex-Im’s biggest product -- move private banks away from financing businesses that serve the domestic market, and toward businesses that export,” said Carney. Also, “when exporters are subsidized, they use up more materials, real estate, financing, equipment, and services than they otherwise would. This increased demand means the unsubsidized businesses face higher prices for the same materials, real estate, financing, equipment, and services.”