Subsidizing Exports
Definition
This is when a government provides financial assistance to domestic businesses, enabling them to sell their products overseas at lower prices, thereby increasing their competitiveness in international markets.
Analogy
Imagine if your parents gave you extra money for every A grade you got. You'd probably study harder because you know there's an incentive waiting for you. That's what subsidizing exports does - it gives companies an incentive (financial support) to export more.
Related terms
Export Incentives: These are benefits given by the government to encourage exporting as a means of stimulating economic growth.
Dumping: This refers to selling products in another country at prices below production cost or below prices in its home market, often with the help of subsidies.
Trade Surplus: This occurs when the value of a country's exports exceeds that of its imports.
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