Olarreaga, Sperlich, and Trachsel 6 The rank of EPA responsibility takes the value 1 if export promotion is the only responsibility of the agency; 2 if it is the top two priorities, 3 if it is one of the two top priorities, 4 if it is one of three or more top priorities, and 5 if it is secondary to other priorities. Thus as its number increase the focus of the agency in export promotion is diluted.

Whether the strategy of the agency is to target all sectors and destinations ranks from 1 to 8 the importance of this strategy relative to strategies that focus on certain types of products, destinations, or firms. The higher the value of this variable, the more targeted by sector and destination are EPAs’ interventions.

The numbers in table 1 suggest that EPAs have an average budget of USD 8 million (exponential of 15.904), but there is a large variance behind these averages with a budget of USD 60,000 for Support for Export Developement and Investment Corporation (SLEDIC) in Sierra Leone and USD 500 million for United Kingdom Trade and Investment (UKTI) in the United Kingdom. If a distinction is made between developed and developing countries using the World Bank threshold of a GNP per capita above and below USD 12,736, the budget of EPAs in developed countries is twice as large as the budget of EPAs in developing countries. It can also be seen from the averages reported in table 1 that the average share of executive board seats in the hands of the private sector is 48 percent. But this varies between 0 and 100 percent. In fact, as can be seen in table 1 all the variables that have to do with EPA characteristics span from their minimum possible value to their maximum possible value. For example, if the share of public funding in the EPA budget is close to 5 (meaning that the share is on average somewhere between 50 to 75 percent), it spans from 0 (meaning a share of 0 percent) to 6 (meaning a share of 100 percent).

To better illustrate the variance behind some of these average numbers a supplementary ap- pendix provides several boxplot figures for these variables. An important message to take away from the figures in the supplementary appendix is that there are important differences in EPAs’ characteristics in the sample. Some of these differences may matter. In this empirical exercise the study exploits these differences in EPA characteristics to examine if they help explain export-promotion returns in terms of exports and GDP per capita across countries.

# **3. Empirical Strategy**

The EPA characteristics this study is interested in can be divided into three broad categories (summary statistics are provided for all these variables in table 1). First, characteristics regarding the sources and allocation of the export-promotion budget: share of public funding ( _public_ − _funding_ ); share of budget coming from user fees ( _fees_ ); share of budget allocated to marketing activities ( _marketing_ ), and share of budget allocated to export support services ( _ESS_ ). Second, characteristics associated with the targeting of certain types of firms in export-promotion programs: share of budget spent on established exporters ( _established_ − _exporters_ ); share of budget spent on non-exporters ( _non_ − _exporters_ ); share of budget spent on small firms ( _small_ ); and share of budget spent on medium-size firms ( _medium_ ). Finally, characteristics regarding the structure and governance of EPAs: share of the executive board in the hands of the private sector ( _private_ − _board_ ); the extent to which export promotion is the main responsibility of the EPA ( _responsibility_ ); the importance of the use of matching grants ( _matching_ − _grants_ ), and the extent to which its strategy involves targeting all sectors and destinations versus only some sectors and destinations ( _strategy_ ).<sup>9</sup>

> 9 Note that EPA’s characteristics are not the only dimensions across which heterogeneous effects of export promotion can be expected. Lederman, Olarreaga, and Payton (2010) using a fully parametric log-linear model find that the returns to increases on export-promotion budgets is larger for exports of differentiated goods and when facing more restrictive trade barriers abroad. This paper focuses on the heterogeneity of the effects due to EPA characteristics. Of course, these