resources have been allocated to that, which justifies the necessity of a more rigorous analysis to understand the results of these agencies.<sup>3</sup> During the last two decades, a wide variety of literature has covered the impact of export promotion agencies around the world looking into questions related to different margins of trade (see Espinoza and Crespi (2000), Bernard and Jensen (2004), Volpe Martincus (2010), Lederman et al. (2010), Gil-Pareja et al. (2014), Hayakawa et al. (2011), Cadot et al. (2012), Schminke and Van Biesebroeck (2013)). However, few of them (e.g. Bernard and Jensen (2004) and Schminke and Van Biesebroeck (2013)) are analyzing the impact of EPAs on the pure extensive margin.<sup>4</sup> In this paper I evaluate the impact of services provided by the Brazilian Trade and Investment Promotion Agency (Apex-Brasil) on the export propensity of non-exporting firms. The paper uses a unique firm-level database covering the full manufacturing sector in Brazil with information on approximately 300,000 firms from 2005 to 2010. In addition to providing detailed information on firms’ characteristics, the data allows the identification of firms that received support from Apex. To identify the causal effect of the program on the probability to export, I rely on a procedure of matching difference-in-difference estimators.

This essay contributes to the prevailing literature in several ways. First, it provides policyrelevant evidence on a largely unexamined issue: the impact of EPAs on promoting new exporters, using a uniquely rich dataset for a large economy. Second, it evaluates potential heterogeneous effects with respect to the different size of the firms. Third, it evaluates the impact of the program on promoting new exporters among untreated firms by testing the spillover hypothesis. To my knowledge, the impact of EPAs’ assistance on the export propensity of non-exporting firms in developing or emerging countries has not been addressed before.

The results show that Apex’s treatment increases the probability of a non-exporting firm to start exporting by 2.3 percentage points (pp) one year after the program is implemented and by about 2.2 pp in the year of program implementation. This means that firms that received the program increased their propensity to export by almost 130% (from 1.75% to 4.05%) when compared with other similar non-exporting firms one year after the treatment. Also, the program seems to be more effective when focusing on micro, small and medium firms, particularly the

> 3It is worth noting that even with few recent findings about the effectiveness of export promotion, the World Association of Investment and Promotion Agencies (WAIPA) has 236 affiliated members from 162 different countries. Most of theses agencies are focusing on attracting FDI and promoting export. Further information is available on www.waipa.org.

> 4The definition of margins of trade refers to the different dimensions (e.g. market, product) of transactions that can be accounted as intensive or extensive. The pure extensive margin refers to the variation on export induced by a non-exporting firm that becomes an exporter. The extensive margin can also account for previously exporting firms that start to export a new product or to a new market, or both. The intensive margin refers to the export performance from a previously exporting firm to a previously exported market or previously exported product (see Chaney (2008)).

2