| An export credit agency, or ECA, is a specialist | | | | single largest source of the several trillion dollars |
| organization designed to facilitate export activity | | | | of debt owed by developing countries. Indicatively, |
| by providing government-supported financing to | | | | some sources estimate ECA's account for more |
| domestic private sector exporters. Most of its | | | | than 25% of developing country debt. This |
| transactions help exporters trade with | | | | position exists even though ECAs do not have a |
| organizations, including governments, based in | | | | direct mandate to assist economic development in |
| developing countries. Organizations in these | | | | the developing world. The amount of debt owed |
| countries are higher risk, hence accentuating the | | | | to ECAs by developing countries far exceeds the |
| role for the government-backed financing | | | | amount they owe to the major development |
| provided by an ECA. | | | | institutions such as the World Bank, the various |
| Most industrialized nations have at least one ECA, | | | | regional development banks, bilateral aid flows and |
| which is usually a government or | | | | multilateral aid flows. |
| quasi-government organization. The financings | | | | The mainstream view of ECAs is that they are a |
| they provide can take a variety of forms including | | | | positive force assisting economic development |
| export credits, insurance, guarantees and direct | | | | around the world. Supporters argue their activities |
| loans. The common element of all these financings | | | | underwrite trade flows, and indirectly investments, |
| is that the risk of non-payment by the buyer is | | | | that would not otherwise proceed. Without ECAs, |
| borne by the ECA, not the exporter. | | | | developing countries would suffer a lower rate of |
| ECAs are best known for their export credit | | | | development. |
| financings. These deals essentially ensure the | | | | On the other hand, ECAs often receive heavy |
| exporter receives payment even if the buying | | | | condemnation. Some critics regard them as |
| company defaults on payment. A credit-assisted | | | | economic imperialists. They argue that ECA |
| trade transaction is usually structured so that | | | | transactions give with one hand and take with the |
| credits are extended to the exporter, also known | | | | other. Their transactions do provide benefits to a |
| as supplier's credits. Alternatively, the credits may | | | | recipient country; however, they also impose a |
| go to the importer, in which case they are known | | | | host of obligations and restrictions. Once the cost |
| as buyer's credits. Credits extend for a variety of | | | | of these is recognized, the overall deals are |
| terms ranging up to ten years. | | | | usually a negative for the recipient countries with |
| Collectively, ECAs are a major force in | | | | the costs outweigh the benefits. |
| international trade and finance. They represent the | | | | |