Export Promotion Activities in Developing Countries: What kind of Trade Do They Promote?

Aug 2010
Information problems involved in trading differentiated goods are a priori acuter than those associated with trading more homogeneous products. The impact of export promotion activities intending to address these problems can be therefore expected to differ across goods with different degree of differentiation. Empirical evidence on this respect is virtually inexistent. This paper aims at filling this gap in the literature by providing estimates of the effect of these activities over firms trading different goods using highly disaggregated export data for the whole population of Costa Rican exporters over the period 2001-2006. We find that trade promotion actions favor an increase of exports along the extensive margin, in particular, in terms of destination countries, in the case of firms that are already selling differentiated goods. However, these actions do not seem to encourage exporter to start exporting these goods. Further, no significant impacts are observed for firms exporting reference-priced and homogeneous goods.