The Use and Abuse of Export Subsidies: Evidence from Colombia

22 Pages Posted: 4 Apr 2013

See all articles by Christian Helmers

Christian Helmers

Santa Clara University - Leavey School of Business; Universidad Carlos III de Madrid

Natalia Trofimenko

Kiel Institute for World Economics

Date Written: April 2013

Abstract

We evaluate the impact of firm‐specific export subsidies on exports in Colombia. Using a two‐step selection model, we predict firm‐specific subsidy amounts that can be explained by the characteristics that determine firms’ eligibility for government support and its amount. Drawing on the accounts of the discretionary allocation of subsidies in developing countries, we interpret the discrepancy between the predicted and the observed subsidy amounts as a proxy for a firm's ties to government officials. Controlling for observable and unobservable firm characteristics as well as persistence in exporting, we find that although, in general, subsidies exhibit a positive impact on export volumes, this impact is diminishing in subsidy size and in the degree of a firm's connectedness.

Suggested Citation

Helmers, Christian and Trofimenko, Natalia, The Use and Abuse of Export Subsidies: Evidence from Colombia (April 2013). The World Economy, Vol. 36, Issue 4, pp. 465-486, 2013. Available at SSRN: https://ssrn.com/abstract=2244729 or http://dx.doi.org/10.1111/twec.12033

Christian Helmers (Contact Author)

Santa Clara University - Leavey School of Business ( email )

500 El Camino Real
Santa Clara, CA California 95053
United States

Universidad Carlos III de Madrid ( email )

CL. de Madrid 126
Madrid, Madrid 28903
Spain

Natalia Trofimenko

Kiel Institute for World Economics ( email )

P.O. Box 4309
Kiel, Schleswig-Hosltein D-24100
Germany

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