Supporting SMEs to Export: The Importance of the Dynamics and Sequence of the Effects

This paper presents evidence of the dynamics and sequence of the causal effects of a SME export support program in Latin America. Using firm-level administrative data of the universe of formal firms in Argentina from 1998... [ view full abstract ]

This paper presents evidence of the dynamics and sequence of the causal effects of a SME export support program in Latin America. Using firm-level administrative data of the universe of formal firms in Argentina from 1998 to 2013 and lagged dependent variable models, we assess the impact of Credicoop Bank’s Diverpymex Program on SME export, performance, and productivity measures. Our results show that the program has positive impacts on participant firms’ export behavior, growth, and productivity. In particular, we find that the effect on the likelihood of exporting is higher in the short term and is maintained but decreases over time, highlighting the role of entry costs to foreign markets. Firm growth and survival measures follow a similar pattern. However, the impact on the value of total exports of firms that already exported appears only in the medium term. This finding may be more related to the solution of more specific market and product information barriers that firms need to overcome to increase penetration or access more sophisticated new foreign markets. Finally, we find that the program increases firm productivity in the long term, indicating that efficiency gains due to knowledge acquired by increasing foreign sales actually occurred.