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This paper examines whether or not one of the export incentives, i.e. export insurance, provided by the Korean government has promoted the export supply of Korea. The role of transaction cost in administering the export insurance system is considered in the current analysis. The small sample cointegration tests show that the concerned variables are not cointegrated. The empirical evidence using the first differenced data shows that the provision of export incentives in terms of export insurance by the government does not have a significant effect on increasing the export supply of Korea.