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Third-Country Effects of Export Incentives

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  • Svetlana Ledyaeva

    (Hanken School of Economics)

Abstract

The existing empirical literature on export promotion policies is almost exclusively focused on their effects for domestic exporters. This paper contributes to this research by empirically examining the effects of export incentives for third-country exports. Using novel CEPR Global Trade Alert data, the study investigates the impact of Brazilian, Indian and Chinese export incentives on exports of OECD and emerging countries. The findings confirm the existence of negative third-country effects of export incentives and demonstrate that these effects are expectedly larger for foreign exporters who exhibit higher similarity in geography of export with subsidized exporters. These results further point to the importance of destination diversification in export strategies. Following strategic trade theory, the study further examines the moderating effect of industries` proclivity to imperfect competition for third-country effects of export incentives. Whereas Chinese export incentives, as predicted by strategic trade theory, cause largest negative effects in industries with higher proclivity to imperfect competition, Brazilian and Indian export incentives, contrarily, cause larger negative third-country effects in industries with lower proclivity to imperfect competition.

Suggested Citation

  • Svetlana Ledyaeva, 2024. "Third-Country Effects of Export Incentives," Open Economies Review, Springer, vol. 35(1), pages 71-98, February.
    • Handle: RePEc:kap:openec:v:35:y:2024:i:1:d:10.1007_s11079-023-09714-9
    DOI: 10.1007/s11079-023-09714-9
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    More about this item

    Keywords

    Export incentives; Third-country effects; Similarity in geography of export destinations; Market concentration; Proclivity to imperfect competition;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General

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