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 nonparametric 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 nonexporters to start exporting.
Bibliographical note© 2008 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology
- government support
- exporting activity
- nonparametric matching procedure
- difference-in-differences estimator
- exporting firms
- international market