What Do Market-Access Subsidies Do? Experimental Evidence from Tunisia

Investigators CDEP Fellow Nadia Ali, CDEP Co-Director Eric Verhoogen, Aminur Rahman of the Asian Development Bank, Giacomo de Giorgi of University of Geneva.

To promote export diversification, the Tunisian government implemented a $22 million export matching-grant scheme, TASDIR+. TASDIR+ aimed to increase exports and promote export diversification toward higher value-added exports and new markets. This study uses a randomized controlled trial to evaluate TASDIR+, in which eligible firms received a 50% subsidy for eligible export-related expenses. The program only reimbursed fixed costs (that did not vary with number of units of output), not variable costs. The authors find that the program was successful in raising exports but, perhaps surprisingly, did not have an effect on the number of products a firm sells or the number of destinations it sells to. This finding stands in contrast to several standard trade models.

Please see Working Paper 107. The paper has also been circulated as NBER working paper 33985 and CEPR discussion paper 20398.