DP6054 Grant Support and Exporting Activity

Author(s): Holger Görg, Michael Henry, Eric Strobl
Publication Date: January 2007
Keyword(s): difference-in-differences, exporting, propensity score matching, subsidies
JEL(s): F2, H2, L2, O3
Programme Areas: International Trade and Regional Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=6054

This paper investigates whether government support can act to increase exporting activity. We use a uniquely rich data set on Irish manufacturing plants and employ an empirical strategy that combines a non-parametric matching procedure with a difference-in-differences estimator in order to deal with the potential selection problem inherent in the analysis. Our results suggest that if grants are large enough they can encourage already exporting firms to compete more effectively on the international market. However, there is little evidence that grants encourage non-exporters to start exporting.