How can policymakers address obstacles to exporting?

In July 2023, our “Promoting inclusive growth via developing exporting” project team (Professor Yingqi (Annie) Wei, Professor Frank McDonald, Dr Emma Liu and Dr Han Jin), alongside colleagues in the West Yorkshire Combined Authorities (WYCA), held a workshop to facilitate roundtable discussions and gain insights from attendees on how to promote inclusive growth via developing exporting.

Participants included policymakers, practitioners, and academics from organisations such as the West and North Yorkshire Chamber, UK Export Finance, and Federation of Small Business West Yorkshire.

Before the roundtable discussion took place, there were two presentations. One from Amanda Potter, Trade and Investment Manager at West Yorkshire Combined Authority, focusing on how exports fit into the regional development strategy, and the second from Dr Jun Du, Director of Centre for Business Prosperity and Professor of Economics at Aston Business School, focusing on export’s contribution to regional development.

The workshop was also used to disseminate findings from our 2023 survey into the factors conducive to, and barriers for, exporting. Read our first blog post for a summary of the key findings.

Below is a summary of the main comments made during the two roundtable discussions. The discussions focused on problems with the current policy environment and how it could be improved, and what policy interventions should be made to help companies with exporting and so that excluded parts of the region can also benefit from exporting. Although the discussions centred on the West Yorkshire region, many of the issues raised have significance for other UK regions.

Complexity of networks

The discussions centred on the complexity of the policy environment and the wide range of organisations involved in the networks.

This makes it difficult for companies, especially SMEs, to navigate the system when seeking information or help. The complexity also makes it difficult for companies to understand how interventions are decided, implemented and developed.

The politicisation of the public parts of the networks was also seen as problematic as budgets, policy stances and the public organisations involved in promoting exports often change when the political order changed at a national or regional level. Frequent political interference on budgets and policy stances from central and regional governmental level was also thought to increase volatility.

This contrasts with the export promotion policies in many European countries that are often based on compulsory membership of Chamber of Commerce that seemed to lead to a less volatile system compared to the UK.

Export policy should be based on public-private partnerships to help companies begin or expand exporting. Developing networks to better communicate information and knowledge was regarded as the major area of developing the capabilities of the region to enhance exporting. However, a risk from such export policy was identified if companies become resource-dependent on support from public-private networks. Such resource dependency could lead to failure by companies to invest, learn and innovate to develop firm-level capabilities conducive to exporting.

Developing public-private partnerships for knowledge sharing among companies risks adding layers of agents and organisations in what are already complex and often poorly coordinated export promotion networks. Expanding these networks may therefore undermine effective coordination within the networks.

Export support interventions

A lack of differentiation in export support interventions leads to a tendency to overlook important differences in company size, sector and export experience. Some participants noted that regional disparities relate to specific sectors concentrated in certain areas, especially in the city of Leeds.

Devolution of more powers regarding export promotion to elected Regional Mayors could create a more coherent and stable policy framework. Linking export promotion to internationalisation more generally encompassing importing, and inward and outward foreign investment was also considered as beneficial.

Institutional backing to raise awareness of how internationalisation benefits companies and the region, driving productivity, innovation, and high-wage jobs, was seen as important. The assumption was that these benefits would extend to non-exporting entities via trickle-down effects.

Strengthening public-private partnerships (such as with universities, R&D centres, and chambers of commerce) was deemed valuable. Facilitating information sharing among companies about exporting advantages and overcoming barriers was suggested.

The discussions revealed numerous short-term programmes addressing finance, skills, innovation, and technology. Many of these initiatives weren't export-specific and suffered from discontinuation or limited support, however.

Improving export promotion through devolution to elected Regional Mayors requires them to be able to run effective governmental bodies. Varying powers and budgets among Mayors lead to unequal inter-regional competition in export support.

Trickle-down and spillover effects

Advocating for export growth relies on the trickle-down concept, where benefits spread from exporting firms to the whole region. This theory implies that increasing exports drives innovation, jobs, wages, and demand for goods and services in the non-exporting sector thereby leading to a trickle-down of the benefits. Spillover effects that arise from the transfer of knowledge to non-exporting firms also contribute to the spread of the benefits of exporting. However, the benefits of trick-down and spillover normally require supportive government policies.

The issue of the spread of the benefits of enhancing exports is complicated by agglomeration benefits, often seen in specific sectors and geographic clusters. Promoting exports within clusters enhances productivity and innovation, primarily in favourable locations. For balanced benefits, extending trickle-down from clusters to other areas is vital.

Raising awareness

The discussions revealed that many companies (including those already exporting) were often unaware of the capabilities and know-how that was required to export. Solutions included awareness campaigns and sharing success stories.

Encouraging more companies to export by inviting them to trade fairs and providing information about growing markets was regarded by some as problematic if the companies lacked the necessary capabilities and knowledge to successfully export. Proposed interventions required evidence of export-readiness before offering support. Companies committing resources to exporting would reduce reliance on public-private networks.

Raising awareness about emerging international challenges, like digital and ‘green’ technologies, was deemed important. Promoting sustainability and resilience implied shifts in exports. Enhancing awareness of available assistance in these areas was viewed as an important intervention.

Service and knowledge exports

The current focus on exporting goods was questioned as services exports and knowledge trade in manufacturing is growing. These non-goods aspects are likely to grow as technological advances, sustainability, resilience and security of supply issues are growing due to climate change and security considerations.

These changes are reshaping global supply chains for sustainability, security, and pandemic resilience New prospects and challenges for exports are emerging from these developments, requiring new interventions.

Targeting sectors and individuals

Targeting potential exporting sectors within regions gained some support, though identifying winners is complex. Instead, spreading awareness about export capabilities to growth-oriented, innovative entrepreneurs was favoured. Identifying such individuals, however, posed a challenge.

A lack of entrepreneurial drive to grow companies from small- to medium-sized, and in some cases to become large companies, hindered interventions, especially for non-exporters. Enhancing the entrepreneurial culture through targeted awareness and shared experiences among diverse business groups was suggested to locate individuals with international outlooks.

Recommendations – developing a regional export promotion framework

The development of a regional export promotion framework may help to mitigate problems of volatility in the policy environment and identify core organisations and their responsibility for interventions.

The framework could be based on social network theory (a theory used to examine relationships between individuals, teams and organisations) to construct networks with central players with good connections to peripheral players, and suitable bridging links to networks with complementary functions not directly connected to export promotion.

The framework would outline the core objectives for the development of exports and the major policy interventions to help secure the objectives. Identification of the major organisations in public-private networks with major responsibilities for developing and executing key interventions would provide clearer pathways from policy to implementation.

An online system could be developed that would guide companies to the key organisations within the networks that could help them with the issues they face.

Core objectives and accompanying interventions would be set based on the constraints of budgets and capabilities of the members of the networks. The size of budgets, the quality of the capabilities of the central players, and the effectiveness of the coordination mechanism between organisations would influence the scope for the objectives and interventions.

Such a framework might reduce the coordination issues inherent in the present environment and provide a means to enhance the effectiveness of policy.

Additionally, the framework could adapt core objectives and interventions in response to political volatility. Shifting government policies and funding necessitates adjustments; the framework would maintain continuity by setting objectives, interventions, and organisational roles amid changing constraints and opportunities.

The framework could connect major interventions with knowledge networks according to companies' needs, preventing superfluous networks and excessive complexity.

It should seek to limit unproductive regional competition and address exclusion issues, directing interventions toward neglected areas for trickle-down and spillover benefits.

Read the report for further information.

This project was funded by the Research England 2022-23 Policy Support / Participatory Research Fund.