The fourth group of covariates is related to firms’ sector and regional environment. First, in order to control for potential exporting neighbourhood-effect we used the variable “export-spillover.” This equal to the sum of the total number of other exporting firms by micro-region (a territory classification from IBGE that divides Brazil in 555 geographical areas). The number of Peiex regional units by state (Number NO by State) was built based on the year of implementation (see table 4) of Peiex regional units in the state of firms’ headquarters. This is an important variable for the analysis as it is used as one of the instruments. Lag of dummy sector Apex by state refers to a dummy identifying sectors (at 5 digits CNAE) in which there were firms that received assistance from other Apex programs (excluding Peiex) in a previous year _(t-1)_ in the state.

# **3 The Peiex Program and the Identification Strategy**

Peiex was launched in late 2008/2009 as a program of assistance services offered for medium and small firms by Apex-Brasil.<sup>20</sup> According to their own definition, the program “aimed to boost competitiveness and raise the export awareness of micro, small and medium-sized enterprises” by providing capacity building and management coaching. The initiative was set up as a supplementary assistance for firms interested in taking part of export promotion services already provided by the agency (e.g. participation in trade fairs and business rounds–meetings with foreign buyers) but that were not prepared to take full advantage of these services yet (this could be seen as a pre-export preparation program).

The program offers consulting services in partnership with universities and institutes of technology in fields such as marketing, human resources management, finance, product design and trade. The existence of such a center locally is crucial for the program and this requires some time to be set up. Although Peiex does not charge firms for these services, their condition is that owners and managers of these firms must be committed in attending interviews and standard evaluations to verify management procedures adopted by them. After applying for the assistance, firms receive a visit from a Peiex extension agent who will explain them the methodology of the program. Once these firms confirm their interest in participating to the program, they receive a standard competitive strength assessment covering different areas of the enterprise (e.g. strategic organization, human capital, finance and costs, sales and marketing, international trade, product design, production and innovation) with a final report identifying their strengths and weaknesses. This assessment is followed by a plan with suggestions to be implemented focusing on improving firms’ competitiveness.<sup>21</sup>

> 20See further details at www.apexbrasil.com.br.

> 21The role played by extension agents (in Portuguese, _t ́ecnico extensionista)_ is widely known in Brazil as associated to specialists in agriculture who provide assistance to transfer knowledge on production best practices and new technologies available. In Brazil these services became popular with Embrapa (Portuguese acronym for the Brazilian Research Corporation) and Emater (Portuguese acronym for Institute for Technical Assistance and Knowledge Extension).

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