Kiel Working Papers, Kiel Institute for World Economics
No 1476:
Export Subsidies in a Heterogeneous Firms Framework
Christian Helmers and Natalia Trofimenko
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
Keywords: export subsidies, exports, Heckman selection, System GMM; (follow links to similar papers)
JEL-Codes: F10,; F13,; L20,; H20; (follow links to similar papers)
20 pages, January 2009
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