TY - JOUR

T1 - The Effect of Export Promotion on Firm-Level Performance

AU - Munch, Jakob

AU - Schaur, Georg

PY - 2018/2

Y1 - 2018/2

N2 - Most countries promote exports. This paper answers two questions: Does export promotion improve firm performance, and do any benefits outweigh costs? We solve self-selection problems by accounting for an extensive set of firm characteristics. In addition, we distinguish firms that self-selected into promotion services from firms the Danish Trade Council approached based on observed information. We find that export promotion increases sales, value added, employment, and value added per worker. For small firms, summing expenditures on export promotion, subsidies, and tax distortions, the gain in value added is roughly three times higher than the direct costs of export promotion.

AB - Most countries promote exports. This paper answers two questions: Does export promotion improve firm performance, and do any benefits outweigh costs? We solve self-selection problems by accounting for an extensive set of firm characteristics. In addition, we distinguish firms that self-selected into promotion services from firms the Danish Trade Council approached based on observed information. We find that export promotion increases sales, value added, employment, and value added per worker. For small firms, summing expenditures on export promotion, subsidies, and tax distortions, the gain in value added is roughly three times higher than the direct costs of export promotion.

KW - Faculty of Social Sciences

KW - D22 Firm Behavior: Empirical Analysis

KW - F13 Trade Policy; International Trade Organizations

KW - F14 Empirical Studies of Trade

KW - L25 Firm Performance: Size, Diversification, and Scope

KW - L53 Enterprise Policy

U2 - 10.1257/pol.20150410

DO - 10.1257/pol.20150410

M3 - Journal article

VL - 10

SP - 357

EP - 387

JO - American Economic Journal: Economic Policy

JF - American Economic Journal: Economic Policy

SN - 1945-7731

IS - 1

ER -