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All these worlds are yours, except india: The effectiveness of cash subsidies to export in nepal

Author

Listed:
  • Fabrice Defever

    (LEM - Lille économie management - UMR 9221 - UA - Université d'Artois - UCL - Université catholique de Lille - ULCO - Université du Littoral Côte d'Opale - Université de Lille - CNRS - Centre National de la Recherche Scientifique)

  • José-Daniel Reyes

  • Alejandro Riaño

  • Gonzalo Varela

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.

Suggested Citation

  • Fabrice Defever & José-Daniel Reyes & Alejandro Riaño & Gonzalo Varela, 2020. "All these worlds are yours, except india: The effectiveness of cash subsidies to export in nepal," Post-Print hal-03128820, HAL.
    • Handle: RePEc:hal:journl:hal-03128820
    DOI: 10.1016/j.euroecorev.2020.103494
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    Cited by:

    1. Francesco Manaresi & Alessandro Palma & Luca Salvatici & Vincenzo Scrutinio, 2022. "Managerial input and firm performance. Evidence from a policy experiment," CEP Discussion Papers dp1871, Centre for Economic Performance, LSE.
    2. Rotundo, G. & Ausloos, M., 2007. "Microeconomic co-evolution model for financial technical analysis signals," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 373(C), pages 569-585.
    3. Stjepan Srhoj & Vanja Vitezic & Joachim Wagner, 2020. "Export boosting policies and firm behaviour: Review of empirical evidence around the world," Working Paper Series in Economics 395, University of Lüneburg, Institute of Economics.
    4. Fabrice Defever & Alejandro Riaño, 2022. "The Twin Peaks of the Export Intensity Distribution," Journal of the European Economic Association, European Economic Association, vol. 20(3), pages 1347-1394.
    5. Srhoj Stjepan & Vitezić Vanja & Wagner Joachim, 2023. "Export Boosting Policies and Firm Performance: Review of Empirical Evidence Around the World," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 243(1), pages 45-92, February.
    6. Fabrice Defever & Alejandro Riaño & Gonzalo Varela, 2025. "Evaluating the impact of export finance support on firm‐level export performance: Evidence from Pakistan," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 58(3), pages 1070-1091, August.
    7. Fang, Yuxia & Li, Yuhua, 2024. "How does internet finance affect firm exports? Evidence from China," Research in International Business and Finance, Elsevier, vol. 71(C).
    8. 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.
    9. Alderremy, A.A. & Saad, Khaled M. & Agarwal, Praveen & Aly, Shaban & Jain, Shilpi, 2020. "Certain new models of the multi space-fractional Gardner equation," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 545(C).
    10. Coma, Julià & Chàfer, Marta & Pérez, Gabriel & Cabeza, Luisa F., 2020. "How internal heat loads of buildings affect the effectiveness of vertical greenery systems? An experimental study," Renewable Energy, Elsevier, vol. 151(C), pages 919-930.
    11. Yuping Deng & Yanrui Wu & Helian Xu, 2022. "Emission Reduction and Value-added Export Nexus at Firm Level," Economics Discussion / Working Papers 22-19, The University of Western Australia, Department of Economics.
    12. Zhu, H.B. & Zhou, Y.J. & Wu, W.J., 2020. "Modeling traffic flow mixed with automated vehicles considering drivers ’ character difference," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 549(C).
    13. Nie, Binjian & Zou, Boyang & She, Xiaohui & Zhang, Tongtong & Li, Yongliang & Ding, Yulong, 2020. "Development of a heat transfer coefficient based design method of a thermal energy storage device for transport air-conditioning applications," Energy, Elsevier, vol. 196(C).
    14. Chang,Kuo-I & Hayakawa,Kazunobu, 2025. "Subsidies for Reshoring: Evidence from Taiwan," IDE Discussion Papers 974, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    15. Li, Zhiyu & Xu, Xiwei & Jiang, Enchen & Han, Ping & Sun, Yan & Zhou, Ling & Zhong, Peidong & Fan, Xudong, 2020. "Alkane from hydrodeoxygenation (HDO) combined with in-situ multistage condensation of biomass continuous pyrolysis bio-oil via mixed supports catalyst Ni/HZSM-5-γ-Al2O3," Renewable Energy, Elsevier, vol. 149(C), pages 535-548.
    16. Sharma, Rishi R., 2023. "An anatomy of Nepal’s remarkable export decline: A note," Journal of Asian Economics, Elsevier, vol. 89(C).
    17. Shi, Xin & Jiang, Haizhou & Li, Huan & Xu, Dong, 2020. "Maritime cluster research: Evolutionary classification and future development," Transportation Research Part A: Policy and Practice, Elsevier, vol. 133(C), pages 237-254.
    18. Yoo, Yeawon & Escobedo, Adolfo R. & Skolfield, J. Kyle, 2020. "A new correlation coefficient for comparing and aggregating non-strict and incomplete rankings," European Journal of Operational Research, Elsevier, vol. 285(3), pages 1025-1041.

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    Keywords

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    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F61 - International Economics - - Economic Impacts of Globalization - - - Microeconomic Impacts
    • O24 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy

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