All These Worlds are Yours, Except India: The Effectiveness of Cash Subsidies to Export in Nepal

Fabrice Defever, J-D. Reyes, A. Riaño and Gonzalo Varela

Working Papers from Department of Economics, City University London

Abstract: This paper studies the impact of a `textbook' ad-valorem export subsidy on firm-level export performance. The Cash Incentive Scheme for Exports (CISE) program offered by the government of Nepal offers a cash subsidy to firms exporting a select group of products to countries other than India. Using customs transactions data combined with subsidy disbursements at the firm level from 2011 to 2014, we estimate the impact of the subsidy on exports of targeted and non-target product-destination combinations and their extensive and intensive margins. We employ a range of doubly-robust matching estimators to control for the non-random selection of exporters into the scheme. We find that subsidized firms increased their exports of targeted product-destinations relative to firms in the control group and that this rise is fully accounted for by the extensive margin: a higher number of targeted products exported and foreign markets served. We do not find any significant changes along the intensive margin nor among non-targeted product-destination combinations. While our results show that the CISE scheme fomented export diversification, its limited impact on total exports and high fiscal cost call into question its effectiveness.

Keywords: Export Subsidies; Export Diversification; Export Margins; Least Developed Countries; Special and Differential Treatment for Developing Countries; Nepal (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (22)

Downloads: (external link)
https://openaccess.city.ac.uk/id/eprint/24163/1/Dept_Econ_WP2011.pdf

Related works:
Journal Article: All these worlds are yours, except india: The effectiveness of cash subsidies to export in nepal (2020)
Working Paper: All these worlds are yours, except India: the effectiveness of cash subsidies to export in Nepal (2020)
Working Paper: All these worlds are yours, except India: the effectiveness of cash subsidies to export in Nepal (2020)
Working Paper: All these worlds are yours, except india: The effectiveness of cash subsidies to export in nepal (2020)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cty:dpaper:20/11

Access Statistics for this paper

More papers in Working Papers from Department of Economics, City University London Department of Economics, Social Sciences Building, City University London, Whiskin Street, London, EC1R 0JD, United Kingdom,. Contact information at EDIRC.
Bibliographic data for series maintained by Research Publications Librarian ().