Subsidies with export share requirements in China

Defever, Fabrice; Riaño, Alejandro

doi:10.1016/j.jdeveco.2016.12.003

Cited by 68 publications

(64 citation statements)

References 65 publications

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“…1 Leaving aside macroeconomic measures such as exchange rate policy, some of these instruments provide firms directly with financial resources or help them indirectly to cope with a credit crunch. These include direct subsidies associated with export requirements (Helmers and Trofimenko, 2013;Defever and Riaño, 2014) and export credit guarantees (Abraham and Dewit, 2000;Egger and Url, 2006;Moser et al, 2008;Felbermayr and Yacin, 2013). Some other policies that subsidize firms directly do not target exports, but are likely to affect them, for example production subsidies , support to invest in technology, training, and physical capital (Görg et al, 2008), VAT reimbursement rules (Gourdon et al, 2014), and preferential regulation and taxation in economic development zones (Schminke and Van Biesebroeck, 2013).…”

Section: Defining Export Promotionmentioning

confidence: 99%

Did export promotion help firms weather the crisis?

Biesebroeck

Konings

Martincus³

2016

Econ Policy

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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. We would like to thank Carlos Salamanca Malagón and Victoria Valente for excellent research assistance, the National Bank of Belgium, FIT and PROMPERU for access to the Belgian and Peruvian data respectively, and Heather Booth di Giovanni for helpful suggestions. The views and interpretations in this paper are strictly those of the authors and should not be attributed to the Inter-American Development Bank, its executive directors, its member countries, the National Bank of Belgium, PROMPERU, or FIT. Executive SummaryThe academic literature as advanced and tested several explanations for the notable decline in the volume of international trade during the Great Recession of 2008-2009. Shocks to both demand and trade costs have been suggested as important channels. There has, however, been surprisingly little discussion how governments could help firms cope with the fallout from foreign demand or with the increase in trading frictions.In this paper we first document for Belgium and Peru that trade volumes rebounded remarkably quickly. By 2010 exports had regained their pre-crisis levels and by 2011 they were even back on the pre-crisis trend. Using firm-level information for both countries, we investigate whether export promotion programs played a role in this recovery. A growing literature has documented the success of such programs in raising exports in general and they could be a valuable tool to help the private sector recover from a large trade decline as well.Most countries now run active export promotion programs to facilitate domestic firms' entry into the export market and support subsequent export sales. Rather than provide direct subsidies, these programs work mainly as an information depository or a way to share fixed information acquisition costs between exporters. They help firms to learn about foreign demand for their products, establish relationships with importers, identify promising new distribution channels, and overcome administrative or trade frictions such as customs procedures and differences between domestic and foreign regulations or product standards.The evidence suggests export promotion has indeed been an effective tool to help firms survive on the export market. We show that firms active on the export ma...

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Section: Defining Export Promotionmentioning

confidence: 99%

Did export promotion help firms weather the crisis?

Biesebroeck

Konings

Martincus³

2016

Econ Policy

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“…Given the product and destination-specific requirements featured in the CISE export subsidy, our paper also adds to the body of work that investigates the consequences of imposing performance requirements on export subsidies (Davidson et al, 1985;Rodrik, 1987;Defever et al 2016;Defever and Riaño, 2017). We improve upon the existing empirical work studying the effects of conditional export subsidies, in that we are able to directly observe the subsidy disbursements made to each firm instead of just whether a firm is eligible to obtain incentives, for instance, based on its export intensity, location in a special economic zone or its ownership status.…”

Section: Figure 1: Nepal's Total Exports and Imports Of Goods And Sermentioning

confidence: 99%

All These Worlds Are Yours, Except India: The Effectiveness of Export Subsidies in Nepal

Defever

Reyes²,

Riaño

et al. 2017

Self Cite

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. This paper evaluates the effect on firm-level export outcomes of the Cash Incentive Scheme for Exports program provided by the Government of Nepal. The analysis utilizes customs-level data for 2011-14, combined with information on the subsidy payments made to individual firms provided by the Central Bank of Nepal. The Cash Incentive Scheme for Exports cash subsidy is available to firms exporting a select group of products, and requires firms to export to countries other than India. Overall, the subsidy has not produced a significant impact on firm-level export values, prices, quantities, or their growth rates. However, the study finds a small positive effect on the number of eligible products exported to countries other than India and the number of destination markets reached among firms that receive the subsidy. These results are consistent with the fact that the subsidy was granted primarily to large exporters that were already shipping eligible products to countries other than India. The findings suggest that although the cash subsidy has not produced a significant increase in exports, it has achieved a positive impact on export diversification for firms that were already satisfying the scheme's eligibility criteria. JEL-Codes: F120, F130, O470. Terms of use: Documents in

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“…In the Chinese case, strong policy incentives have been implemented to favour exporting firms, leading researchers to argue that such preferential treatments (i.e. taxes and exporter subsidies) may have lowered productivity among firms that export a very large proportion of their goods (Defever and Riaño ). No studies have directly examined the possible link between export intensity and social insurance participation and generosity.…”

Section: Employer Participation In Social Insurance: Theory and Evidencementioning

confidence: 99%

Inequality in Social Insurance Participation and Generosity: Do Firm Characteristics Matter?

Gao

Rickne

2015

Soc Policy Adm

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Income inequality in China has been much documented and debated. However, one important aspect of income inequality – social insurance inequality – has been largely understudied. We use a large national panel of firm data to examine the possible influence of various firm characteristics on the inequalities in social insurance participation and generosity in the period 2004–07. Our findings reveal substantial ownership sector and regional gaps in social insurance provision by firms, with the private domestic sector and those in the central region lagging behind. Unionized firms, larger firms, and firms with greater market shares also tend to provide better social insurance to their employees. While being an exporting firm is linked with greater social insurance participation and generosity, being a purely exporting firm, however, is associated with reduced social insurance generosity. Lastly, highly educated workers receive substantially better social insurance coverage than their less educated peers. These social insurance inequalities are highly relevant as China pushes forward with establishing a unified social insurance system across urban‐rural boundaries, ownership sectors and industries.

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Subsidies with export share requirements in China

Cited by 68 publications

References 65 publications

Did export promotion help firms weather the crisis?

Did export promotion help firms weather the crisis?

All These Worlds Are Yours, Except India: The Effectiveness of Export Subsidies in Nepal

Inequality in Social Insurance Participation and Generosity: Do Firm Characteristics Matter?

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