Publication

This paper evaluates the impact of firm-specific export subsidies on exports in Colombia. Using a two-stage Heckman selection procedure, the authors 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. Controlling for observable and unobservable firm characteristics and persistence in exports, they 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.