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Can export promotion reduce unemployment?

Author

Listed:
  • Olarreaga, Marcelo
  • Ugarte, Cristian

Abstract

The paper examines the impact of export promotion on aggregate unemployment. We findnd that increases in the share of Export Promotion Agencies' (EPAs) budgets on total exports lead to small decreases in aggregate unemployment. This effect is amplifi ed when export promotion efforts are concentrated in sectors in which the country has a comparative advantage. On the other hand, when EPAs aim at reducing aggregate unemployment by focusing their efforts in sectors with high levels of unemployment, then aggregate unemployment increases. These results suggest that even if EPAs' pri- orities were to shift towards reducing unemployment, this would be better addressed by focusing on sectors in which the country has a comparative advantage rather than sectors with high labor market frictions.

Suggested Citation

  • Olarreaga, Marcelo & Ugarte, Cristian, 2020. "Can export promotion reduce unemployment?," CEPR Discussion Papers 15049, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:15049
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    More about this item

    Keywords

    comparative advantage; Export Promotion; unemployment;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations

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