State export financial support of brazilian manufactured products : a microeconometric analysis

Abstract

We investigate the impact of Brazilian state financing to exports – Proex, Exim and Drawback – on the performance of firms in foreign trade between 1998 and 2007. We focus on the (i) risk of abandonment of export activity; (ii) number of destinations; and (iii) export value. Through a quasi-experiment with a unique dataset of Brazilian firms entering foreign markets, we find a positive relationship between export programs and the intensive and extensive export margins, as well as with persistence in international trade, although not all three programs are effective. Supported firms had their chance to keep exporting augmented between 4% and 13%, increasing their number of destinations by up to 43% and the export value between 74% and 90%. The results suggest that financial constraints may limit the export potential of firms and highlight the importance of the government’s export promotion policies, mainly in developing countries which systematically suffer from credit market failures.