Working Paper: CEPR ID: DP6054
Authors: Holger Grg; Michael Henry; Eric Strobl
Abstract: This paper investigates whether government support can act to increase exporting activity. We use a uniquely rich data set on Irish manufacturing plants and employ an empirical strategy that combines a non-parametric matching procedure with a difference-in-differences estimator in order to deal with the potential selection problem inherent in the analysis. Our results suggest that if grants are large enough they can encourage already exporting firms to compete more effectively on the international market. However, there is little evidence that grants encourage non-exporters to start exporting.
Keywords: Difference-in-differences; Exporting; Propensity score matching; Subsidies
JEL Codes: F2; H2; L2; O3
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Government grants (H81) | Exporting activity (F10) |
| Large grants (H77) | Export intensity of already exporting firms (F12) |
| Small and medium grants (I23) | Exporting activity (F10) |
| Grants (H81) | Non-exporters starting to export (F10) |