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Export subsidies in a heterogeneous firms framework

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  • Helmers, Christian
  • Trofimenko, Natalia

Abstract

We evaluate the impact of firm-specific export subsidies on exports in Colombia. Using a two-stage Heckman selection procedure, we obtain firm-specific predicted subsidy amounts that can be explained by the characteristics that determine the firms' eligibility for the government support and its amount. Drawing on the accounts of the discretionary allocation of subsidies in developing countries, we regard the discrepancy between the predicted and the observed subsidy amounts as a proxy for the firm's ties to government officials. Controlling for observable and unobservable firm characteristics and persistence in exports, we find that although, in general, subsidies exhibit positive impact on export volumes, this impact is diminishing in subsidy size and in the degree of firm's connectedness to government officials.

Suggested Citation

  • Helmers, Christian & Trofimenko, Natalia, 2009. "Export subsidies in a heterogeneous firms framework," Kiel Working Papers 1476, Kiel Institute for the World Economy (IfW Kiel).
    • Handle: RePEc:zbw:ifwkwp:1476
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    References listed on IDEAS

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    Cited by:

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    2. Sourafel Girma & Holger Görg & Joachim Wagner, 2009. "Subsidies and Exports in Germany. First Evidence from Enterprise Panel Data," Applied Economics Quarterly (formerly: Konjunkturpolitik), Duncker & Humblot, Berlin, vol. 55(3), pages 179-198.
    3. Shabbir, Safia & Iqbal, Javed & Hameed, Saima, 2013. "Risk Premium, Interest Rate Differential, and Subsidized Lending in Pakistan," MPRA Paper 48250, University Library of Munich, Germany.

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    More about this item

    Keywords

    Export subsidies; exports; Heckman selection; System GMM;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General

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