This paper investigates the factors which control exporting, in an attempt to improve the understanding of persistant trade imbalances. In mixed economies, the decision to export is mostly made by the individual firms, and their decision making processes are examined. A literature survey f the innovation decision process is used as a model for the export decision process. Export promotion activities of Australia, New Zealand, Canada, USA, Japan, Singapore and the U.K. are summarised and compared. The effectiveness of Government export promotion policies in Australia are evaluated in terms of the innovation model.
The law of comparative advantage is found to be a short term control on international trade and therefore macroeconomic models based upon it are unlikely to predict long term trade patterns. Many of the imperfections have been deliberately caused by governments.
The motivation for individual firms to export is shown to be almost completely unrelated to the philosophy of national export promotion policies based on macroeconomic models of international trade.
The microeconomic analysis of exporting gives some insight into the extensive information required in the decision process, the availability of that information from various sources, the costs of using it, the perception of its quality, and the ability of the decision maker to use the information. The large information requirements may disadvantage small firms attempting to export.
The decision to export is considered to be analogous to technological innovation and the paper suggests that entrepreneurial vitality is equally important for exporting as it is in the implementation of other innovations. From this perspective" various policies which have been put forward as ways to increase technological innovative and entrepreneurial activity are recast to relate to export promotion. Government policies which reduce the monopoly power of information and service providers should improve export performance. Australia currently has poor international competitiveness but some current policies appear to be appropriate.