REVENUE IMPACTS OF MPP BRANDED FUNDS: A FIRM LEVEL ANALYSIS

The USDA recently redirected the Market Access Program (MAP) to allocate all branded products export promotion funds to small firms and cooperatives. The redirection was, in part, a response to reports by the General Accounting Office that were critical of past allocations of export promotion funds to large, experienced exporters. This study uses a firm level analysis to examine firms' effectiveness in using Market Promotion Program (MPP, which is now the MAP) funds to increase revenues. Whereas point estimates suggested that smaller firms were more effective in translating MPP funds into increased revenue than larger firms, these point estimates for small firms were statistically indistinguishable from zero. In contrast, large firms showed an increase in revenue of greater than one dollar for every dollar of MPP funds. Further, the revenue increase was statistically significant. Thus, the firm level analysis supports neither the GAO hypotheses nor the recent program changes.