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Trade promotion (international trade)
Trade promotion (sometimes also export promotion) is an umbrella term for economic policies, development interventions and private initiatives to improve the trade performance of an economic area (like countries or regions within countries) or enterprises. Improvement is mainly sought by increasing exports both in absolute terms as well as relative to imports, but trade promotion also, for example, enhancing a company's sourcing of inputs through imports.
As an economic policy with the ultimate goal of increasing domestic welfare, trade promotion comprises a large set of policy instruments, most notably the provision of trade intelligence to domestic enterprises in order to reduce transaction costs and provide them with a competitive advantage vis-à-vis foreign companies. Many countries all over the world have set up special agencies, most of them in the public domain, to implement trade promotion policies and provide support services to domestic enterprises.〔Since trade promotion is a rather vast field, the overall economic rationale for it can only be sought within the individual policy instruments. In case of public and private trade promotion organizations, see for example, Daniel Lederman, Marcelo Olarreaga and Lucy Payton 2007, Export Promotion Agencies: Do They Word?, ''Journal of Development Economics'', 91 (2), pp. 257-265〕
Some international organizations provide assistance to so-called developing countries to help them promote their exports, most prominently the International Trade Centre in Geneva, which is a subsidiary of the World Trade Organization and the United Nations with a mandate to providing trade-related technical assistance to those countries.〔See ITC's mission statement at http://www.intracen.org/about/mission-and-objectives/. For an overview of trade-related technical assistance as part of the WTO's development assistance efforts, please see http://gtad.wto.org/.〕
==Economic theory of trade promotion==
The rationale for public trade promotion measures is based on the observation of market failures and the idea of creating positive externalities. All economic transaction imply so-called transaction costs. In international trade, some transaction costs are significantly higher than when carrying out business in the domestic market: For example, information about foreign consumers is less readily available, foreign jurisdictions might apply different product standards which can pose technical barriers to trade, or transporting goods becomes more expensive and hazardous with increasing distance.〔See for example, Daniel Lederman, Marcelo Olarreaga and Lucy Payton 2007, Export Promotion Agencies: Do They Word?, Journal of Development Economics, 91 (2), p. 257; Christian Volpe Martincus 2010, Odyssey in International Markets: An assessment of the effectiveness of export promotion in latin america and the caribbean, Inter-American Bank, Washington, page 16ff; Olivier Cadot et al. 2011, Are Export Support Programs Effective? Evidence from Tunisia, Working Paper, p. 3〕
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