Do Export Promotion Agencies Promote New Exporters?

Cruz, Marcio
Apr 2014
Do export promotion agencies (EPAs) impact the probability of non-exporting firms to export? In the last decade many countries have introduced EPAs to support their firrms in order to deal with asymmetric information problems and make feasible additional gains from trade. Some recent studies have found that the support of EPAs has been effective with respect to the intensive and extensive margins of trade. Nevertheless, due to the lack of information on non-exporting firms, few of them analyze their impact on the probability of promoting new exporters. This paper evaluates the impact of the Brazilian Trade and Investment Promotion Agency (Apex-Brasil) on firms' export status using a unique firm-level dataset which covers the full manufacturing sector in Brazil. In order to identify the impact of Apex's assistance on firms' export propensity this paper relies on a procedure of matching difference-in-difference estimators. The empirical results show evidence of the program's positive impact on the probability of promoting new exporters. Also, the effect is heterogeneous according to firms' size categories and sectors. Although the evidence of positive effect is robust, the low propensity to export for both the treated and the control groups reinforces the importance of other firms' determinants (e.g. productivity) widely emphasized by trade literature.