The Role of Operating and Financial Leverage in Exports and Technological Development

Abstract

The collapse of structured finance transactions led to financial constraints in the highly leveraged corporations and their banks due to the complexity of their embedded risks. The possibilities of sales increase or cost reduction at exporters have exhausted, as well. The appearance of need to introduce new technics and skills, as for AI and Industry 4.0 does not question the necessity for international technological and trade relations. The existence of financial and operating leverages is necessarily long-lasting and may change when complex technologies and closely interlinked systems keep spreading Leverages have different impact on the owner of the technology as manufacturer or as supplier depending on the type of technology applied. That may encounter financial barriers, either. A basic issue whether is it possible to reconcile the consistency of capital allocation and financing that flawed attributed to the strengthening banking regulation following the set in of the “Great Financial Crisis” to serve the needs of implementation intensive technological change. System integration may increase financial risks and constrains to the availability of both short and long term financial facilities. To strengthen the capital basis and the liquidity both at banks and corporates is reasonable and inevitable because of the existence of leverages. All that predict increase in the level of lending rates and capital costs.