The Effect of Export Promotion on Firm-Level Performance

Most countries promote exports. This paper answers two questions: Does export promotion improve firm performance, and do any benefits outweigh costs? We solve self-selection problems by accounting for an extensive set of firm characteristics. In addition, we distinguish firms that self-selected into promotion services from firms the Danish Trade Council approached based on observed information. We find that export promotion increases sales, value added, employment, and value added per worker. For small firms, summing expenditures on export promotion, subsidies, and tax distortions, the gain in value added is roughly three times higher than the direct costs of export promotion.