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All these worlds are yours, except India: The effectiveness of export subsidies in Nepal

Author

Listed:
  • Fabrice Defever
  • José-Daniel Reyes
  • Alejandro Riaño
  • Gonzalo Varela

Abstract

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.

Suggested Citation

  • Fabrice Defever & José-Daniel Reyes & Alejandro Riaño & Gonzalo Varela, 2017. "All these worlds are yours, except India: The effectiveness of export subsidies in Nepal," Discussion Papers 2017-04, University of Nottingham, GEP.
  • Handle: RePEc:not:notgep:17/04
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    File URL: https://www.nottingham.ac.uk/gep/documents/papers/2017/2017-04.pdf
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    Cited by:

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    2. Paras Kharel, 2021. "Nepal's elusive quest for export success meets LDC graduation," Working Papers wp/21/01, South Asia Watch on Trade, Economics and Environment.
    3. Paras Kharel & Kshitiz Dahal, 2021. "Trade Policy Coherence and Coordination in Nepal : An Explanatory Assessment," Research Papers rp/21/01, South Asia Watch on Trade, Economics and Environment.
    4. Jorge F. Chávez & Antonio Cusato Novelli & Max Perez Leon, 2020. "Export Subsidies in Emerging Markets During the Great Trade Collapse," Economics Bulletin, AccessEcon, vol. 40(3), pages 1879-1892.
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    6. repec:saw:wpaper:wp/22/01 is not listed on IDEAS
    7. repec:saw:wpaper:rp/22/01 is not listed on IDEAS
    8. Posh Raj Pandey & Paras Kharel & Kshitiz Dahal & Dikshya Singh & Swastik Aryal, 2022. "Nepal's graduation from the LDC category : Implications for international trade and development cooperation," Research Papers rp/22/01, South Asia Watch on Trade, Economics and Environment.

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    More about this item

    Keywords

    Export Subsidies; Export Diversification; Performance Requirements; Trade Policy; Nepal;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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