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A Survey of Theoretical and Empirical Literature Related to Export Assistance

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  • Seitzinger, Ann Hillberg
  • Paarlberg, Philip L.

Abstract

The literature about export assistance divides such programs according to whether they apply to each unit of a particular commodity exported by the subsidizing country or whether they are targeted toward specific markets. These global and targeted export assistance programs are further distinguished by whether payment of the subsidies is made in cash or in kind. Traditional theory determines global cash export assistance to be welfare reducing for the exporter, while the effect of global export assistance paid in kind depends on the cost of in kind subsidies. Global cash assistance may become a rational instrument for capturing of greater market shares in the future or for satisfying influential political interest groups. Targeted assistance offers potential benefits to the exporting country by directing subsidies toward markets with greater income and substitution effects, leading to greater price responsiveness. However, empirical studies find that targeted assistance offers only small benefits in expanding exports and causes substantial disruptions in trade flows.

Suggested Citation

  • Seitzinger, Ann Hillberg & Paarlberg, Philip L., 1989. "A Survey of Theoretical and Empirical Literature Related to Export Assistance," Staff Reports 278240, United States Department of Agriculture, Economic Research Service.
    • Handle: RePEc:ags:uerssr:278240
    DOI: 10.22004/ag.econ.278240
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    References listed on IDEAS

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