|
Countertrade
agreements may account for some 10-20% of world trade but are
traditionally regarded as a form of bilateralism and therefore
inefficient. In Discussion Paper No. 946, Research Fellow Dalia Marin
and Monika Schnitzer identify circumstances in which countertrade
may improve efficiency by solving contractual problems that would
otherwise prevent the realization of gains from trade. It does little to
overcome the need for hard currency, since barter accounts for only a
small proportion of the total, and the greater part of countertrade
takes the form of counterpurchase agreements, each involving sequential
deals requiring payment in foreign exchange. Such agreements may however
reduce the contractual hazards and incentive problems that characterize
the exchange of industrial countries' technology-related and investment
goods and for developing countries' consumption goods and raw materials.
An exporter of complex, sophisticated products cannot easily specify all
aspects of their quality and may thus be tempted to undersupply it and
blame adverse circumstances in the receiving country for unsatisfactory
performance. Equally, if the latter's low creditworthiness prevents it
from financing the deal with a simple loan, the exporter is unsure
whether it will be paid. |
|