Is export promotion effective in developing countries? Firm-level evidence on the intensive and the extensive margins of exports

Abstract

How effective are export promotion activities in developing countries? What are the channels through which export promotion affects firms' exports, the intensive margin or the extensive margin? Empirical evidence in this respect is scarce. We aim at filling this gap in the literature by providing evidence on the impact of export promotion on export performance using a unique firm-level dataset for Peru over the period 2001–2005. We find that export promotion actions are associated with increased exports, primarily along the extensive margin, both in terms of markets and products. This result is robust across alternative specifications and estimation methods.