Several studies using firm-level data could not find significant evidence to support that exporting activities promote productivity growth. However, few studies have considered whether exporting companies can create spillovers to domestic firms. In fact, exporting companies create positive...

This paper develops a simple small-country model to explain why the World Trade Organization (WTO) prohibits export subsidies but allows import tariffs. Governments choose protection rates (import tariffs/export subsidies) to maximize a weighted sum of social welfare and lobbying contributions....