What are they and what do they aim to do?
Export promotion agencies (EPAs) provide services that aim to help firms sell their products overseas. EPA services fall into four broad categories. EPAs may provide market information regarding export markets; undertake image promotion of the country or region, usually through advertising campaigns, promotional events, and advocacy; provide consultancy services to firms such as employee training and technical assistance; or provide marketing services such as exposure in trade fairs and missions.
EPAs can be based domestically or abroad. Overseas EPAs typically help firms from a specific region export to the host country. EPA support tends to cover all sectors, but take-up is greater in exporting industries.
In the UK, the Department for International Trade, or DIT (Formerly UK Trade & Investment, or UKTI) provides EPA services for exporting firms. DIT also provides support for foreign firms investing in the UK, as covered in our toolkit on. investment promotion agencies (IPAs).
- Do EPAs increase exports? The evidence suggests that EPAs can increase exports, although the proportion of studies reporting positive effects is slightly lower than for relatively cheaper ECA support (see our ECA toolkit).
- Should regions establish EPAs overseas? Regional overseas EPAs are sometimes effective at promoting exports, although there is no evidence that schemes are more or less effective than national support.
- Do increased exports crowd out domestic sales? The evidence offers some reassurance that that exports do not fully crowd out domestic sales: supported firms see increased overall turnover.
- Can EPAs improve other aspects of firm performance? The broader evidence base suggests that firms can ‘learn by exporting’. However, while some schemes may improve firm performance, most don’t. This suggest that other forms of direct business support might be better at delivering general improvements in firm performance (see our business support toolkits).
- Which types of EPA support are most effective? The evidence suggests that limited resources may be most productively spent educating and informing businesses about exporting: (Lighter touch) market information appears to be more effective than (more intensive and expensive) market service provision. Evidence on the relative effectiveness of other types of EPA support is not available. We need to do more to understand cost-effectiveness of different types of support. Which firms benefit most from EPA support? There is some evidence that certain types of intervention may be more beneficial to firms that are already exporting. Other than that, we don’t know which firms benefit most, which suggests that targeting on firm size, sector or product characteristics would need to be based on theoretical considerations (such as barriers to entry) and will not necessarily improve scheme performance.
- Are UK policies effective? Despite criticism of UKTI, there is some evidence that UK support arrangements are at least as effective as support in other countries.
How effective are they?
Five of eleven studies find a positive relationship between EPA support and exports, four studies find mixed effects (positive only for some sectors, types of support, or type of firm) and two find no effect. Three of these studies look specifically at overseas-based EPAs, one reporting a positive effect, one mixed effects and one no effect.
The evidence suggests that EPA support may sometimes improve other aspects of firm performance, but the majority of schemes do not. Two studies find that EPA support increases firm turnover (suggesting that increased exporting does not simply reflect a switch from domestic markets). There is less evidence of increased firm employment (one study positive, three no effect), improved productivity (one study positive, two no effect) or higher wages, value added, or investment (no effect in the one study that considers all three outcomes). Finally, one finds positive effects for firm assets and survival, and another finds improvement on certain measures of firm innovation.
There is some evidence that market information may be more effective than market services. Three studies examine market information in isolation with two finding positive effects, and one finding mixed impacts. Two studies examine market services in isolation with one study finding mixed impacts and another no effect. The only study with a positive employment effect is for a market information programme (the UK’s Overseas Market Introduction Service, OMIS). No studies consider the impact of consultancy or image promotion in isolation.
The majority of the evidence on whether specific types of firms or industries benefit is limited and findings mixed. One study finds small firms benefit more, a second finds the opposite. One study finds that effects are positive only for firms producing differentiated goods and greater for those firms selling higher value added goods. One study finds that EPAs are effective for service firms, but not manufacturing firms. However, one study suggests that firms already exporting may benefit more from an information intervention than non-exporters.
EPA support in the UK appears to be at least as effective at increasing exports as in other countries. Three of four UK studies – one looking at overall support, one at the Overseas Market Introduction Service (OMIS), and one at an information intervention – find positive effects. This compares to only three of seven foreign schemes. The fourth study reports positive effects of Passport to Export for services, but not manufacturing and no effect on other aspects of firm performance. Two studies look at the effect of overall UKTI support on other aspects of firm performance finding mixed effects. This mixed pattern for other aspects of firm performance is in line with studies from other countries.
Are EPAs cost effective?
Only one study reports cost effectiveness information, finding that a £1.3 million investment yielded £10.6 million in exports in Belgium. This implies that every pound spent on EPAs increases exports by £8.