Did export promotion help firms weather the crisis?

an article by Johannes Van Biesebroeck, Jozef Konings and Christian Volpe Martincus (KU Leuven and CEPR; KU Leuven and CEPR; Inter-American Development Bank) published in Economic Policy Volume 31 Issue 88 (October 2016)

Abstract

In the global recession of 2009, exports declined precipitously in many countries. We illustrate with firm-level data for Belgium and Peru that the decline was very sudden and almost entirely due to lower export sales by existing exporters.

After the recession, exports rebounded almost equally quickly and we evaluate whether export promotion programs were an effective tool aiding this recovery. We show that firms taking advantage of this type of support did better during the crisis, controlling flexibly for systematic differences between supported and control firms.

The primary mechanism we identify is that supported firms are generally more likely to survive on the export market and, in particular, are more likely to continue exporting to countries hit by the financial crisis. In terms of absolute magnitudes, the mid-point of the range of estimates suggest a 6% to 11%, respectively for Belgium and Peru, higher probability of survival on the export market for supported firms and approximately 20% to 10% higher exports for surviving exporters.

JEL Classification: D22, F13 F14

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