Third-Country Effects of Export Incentives

Abstract

The existing empirical literature on export promotion policies is almost exclusively focused on their effects for domestic exporters. This paper contributes to this research by empirically examining the effects of export incentives for third-country exports. Using novel CEPR Global Trade Alert data, the study investigates the impact of Brazilian, Indian and Chinese export incentives on exports of OECD and emerging countries. The findings confirm the existence of negative third-country effects of export incentives and demonstrate that these effects are expectedly larger for foreign exporters who exhibit higher similarity in geography of export with subsidized exporters.