Working Paper: CEPR ID: DP11776
Authors: Annette Schminke; Johannes Van Biesebroeck
Abstract: For small open economies, it is essential that many firms find their way to the export market and most governments provide some form of export promotion assistance. We use detailed firm-level data for Flanders, the largest region in Belgium, to evaluate whether its program raises firms' propensity to start exporting outside the EU single market. We find robust evidence for such an effect by relying on the selection-on-observables assumption which we implement using various estimators. Results remain positive and statistically significant, but are smaller in size, when we use two strategies to mitigate self-selection concerns: (i) focus on sub-samples of firms where endogenous selection into treatment is less likely, and (ii) use firms that receive the weakest form of support as controls for firms receiving more extensive support.
Keywords: International Trade; Trade Policy; Export Market Entry
JEL Codes: F13; F14
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| export promotion (F10) | probability of entering extra-EU export markets (F10) |
| export promotion (F10) | probability of entering extra-EU export markets (firms with 20 or more employees) (F10) |
| subsidies (H20) | probability of starting to export (F10) |
| export promotion (substantial support) (F10) | probability of entering export markets (F10) |