Sectoral Impact Assessment of the Export Financing Program – PROEX

Abstract

The Export Financing Program (PROEX) is a federal government instrument designed to support Brazilin export of goods and services through two modalities: National Treasury Financing and Interest Rate Support. This study evaluates the impact of PROEX on Brazilian exports between 2010 and 2021, adopting a novel approach that examines different sectors of the Brazilian export industry. The net effect of PROEX on each sector’s overall export capacity was analyzed, accounting for changes in firms’ market power within each sector. To address unobservable endogenous factors affecting PROEX's performance, an exogenous term was developed to reflect the economic attractiveness of Brazil's 20 main export markets. The econometric analysis indicates that a 10% increase in exports PROEX-supported exports, combined with a proportional demand shock in the destination countries, leads to an average increase of 21.3% in Brazilian sectoral exports.