The impact of export promotion on export market entry

For small open economies, it is essential that many firms find their way to the export market and most governments provide some form of export promotion assistance. We use detailed firm-level data for Flanders, the largest region in Belgium, to evaluate whether its program raises firms' propensity to start exporting outside the EU single market. We find robust evidence for such an effect by relying on the selection-on-observables assumption which we implement using various estimators. We address a likely upward bias due to self-selection into support using two strategies: (i) focus on sub-samples of firms where endogenous selection into treatment is less likely, and (ii) use firms that receive the weakest form of support as controls for firms receiving more extensive support. The effects remain positive and statistically significant, but are smaller in magnitude and in the second case estimated much less precisely.