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: www.cepr.org/pubs/dps/DP6054.asp.asp

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.