Developing an Evaluating System to Improve Efficiency , Effectiveness and Governance in the Public Sector : the Case of the Program of Subsidies to Exporting Companies in Brazil

Improving a country’s export is widely acknowledged as a strategic issue. For a developing country, the benefits are multiple: expand the markets for goods and services to a global scale contributing to job creation, set technological and management standards for the sectors of the economy and reduce the country’s external vulnerabilities by generating reserves. Those benefits justify the adoption of public policies to support and foster exports, but it is essential to ensure that the resources invested in these programs are being effectively used, requiring the design and implementation of evaluation systems. This article aims to present and discuss an evaluation model for PROEX, Brazilian Program for Supporting Exports. The model proposed include definition and calculation of a set of indicators that will allow the monitoring of the extent to which the program is achieving its main objectives. We believe that the evaluation model proposed will help to improve the efficiency, effectiveness and governance of the Program.


INTRODUCTION
he performance of a country's exports is widely acknowledged as a strategic issue.Improving exports is equivalent to expand the markets for a country's products and services to a global scale and therefore yielding important contributions to economic growth and job creation (TYLER, 1981;FEINBERG, 1982;KAVOUSI, 1984 NEVEN;SEABRIGHT, 1995;HARRIES, 1998;HARRISON;RODRÌGUEZ-CLARE, 2009).
Empirical data shows that firms that export have better performance than their counterparts that only do business domestically (MELITZ, 2008).For instance, Taylor (1994) found that exporting firms grew up twice as fast in sales and also had higher returns on equities and assets.Other studies found that they also pay significantly better wages (BERNARD;JENSEN, 1995;SCHANK;SCHNABEL;WAGNER, 2007), are more productive and innovative (CASSIMAN; GOLOVKO; MARTÍNEZ-ROS, 2010), and in general are more stable than firms that do not export (RICHARDSON;RINDAL, 1996).
The increase of exports allow a robust surplus on the trade balance, that tends to reduce the emerging countries' external vulnerabilities 1 , allowing them to face international shocks with less damage for the economy.This is why developed and emerging countries alike have, since long designed governmental policies to support the country´s exports (LALL, 1997;HARRISON;RODRÌGUEZ-CLARE, 2009;GILES;WILLIAMS, 2000).Those policies include the creation of institutions or programs to provide funds to finance exports, to finance the exports directly or to back the risk of the buyer's country (BELOC; DI MAIO, 2011).
The Brazilian export financing program -PROEX -is one of such policies.The program is strategic to the country for many reasons.First, Brazilian exports performance has an important effect on reducing the country´s external vulnerability.This was demonstrated over the last years, while the country dealt with serious external shocks that had little or no impact over domestic economy, in comparison with similar situations in previous years (especially until 2002).To some extent, the Brazilian economy resilience to external shocks has been associated to significant trade balance surpluses generated since 2003, which resulted primarily from a robust and consistent increase of Brazilian exports in the last years (from 2002 to 2008 the exports grew from US$ 60 billion to US$ 242 billion (BCB, 2013).Developing an Evaluating System to Improve Efficiency, Effectiveness and Governance in the Public Sector… 100 BBR, Braz.Bus.Rev. (Engl.ed., Online), Vitória, v. 11, n. 6, Art. 5, p. 98 -122, nov.-dec. 2014 www.bbronline.com.brSecond, to compete in foreign markets, companies need to improve their management standards and to continuously invest in technological innovations, and some of these improvements will even spill over to sectors and companies that are not directly related to the external sector (BLOMSTRÖM; KOKKO, 1998).
Third, it is widely recognized that the excellent performance of Brazilian external sector worked as a safety net for the economy, avoiding decrease in 2002/2003 crisis that followed the presidential election, as well as played an important role when the country resumed growth, after 2003.Fourth, the reduction of the external vulnerabilities and the resume of economic growth are usually followed by the increasing of foreign direct investment, which helps the strengthening of balance of payments and work as an additional stimulus to improve growth.
Although PROEX may be important to the performance of economy, it uses public funds, being mandatory to ensure that the funds invested in the Program are used effectively and with transparency.This objective is very important in developing countries, which deals constantly with a scarcity of resources and has the need to attend an increasing and complex array of demands, especially in terms of social policies.
Thus, to ensure that the public funds invested in the PROEX are used efficiently, effectively and with transparency is an important and urgent task, due to the increasing social pressure for accountability of the use of public funds, frequently through the use of egovernment initiatives, especially in developed countries (UN, 2012).This is the goal of the present paper, organized in four sections.
In the following section we will briefly present the international trade practices and regulations and a brief review of Brazilian policies in this matter.The third section presents a detailed presentation of the PROEX, its operational characteristics and some information on the program results, and previous evaluation.Fourth section discuss the analytical framework for evaluating public programs and present a model to provide a systematic evaluation of the program, and a methodology to enhance the application of the equalization of interest rates, improving its transparency and governance.The fifth section presents the final remarks and conclusions.

INTERNATIONAL PRACTICES AND REGULATIONS
The expansion of exports is one of the highest priorities of governments worldwide, for both developed and developing countries.According to a comprehensive empirical literature, exports are considered one of the major drivers for economy growth (Harrison and Rodrìguez-Clare, 2009;Giles and Williams, 2000).Also the government may intervene with the objective to choose the sectors in which the country should specialize (LALL, 1997;AN;IYIGUN, 2004;HAUSMANN et al., 2007).
To attain such objectives, policies and practices known as Export Promotion Practices (EPP) have been conducted by the majority of the countries to enhance their exports (LALL, 1997;BELOC;DI MAIO, 2011).OECD defines EPPs as the set of 'specific measures that generally amount to the government bearing a portion of the private cost of production of export' (OECD, 1984).
Beloc and Di Maio (2011) point out that in general EPPs encompass all the measures and programs to aid current and potential exporters in foreign markets penetration, with instruments such as export subsidies, reduced tax rates to exporting firms' earnings, favorable insurance rates, advantageous financial conditions, or variations in the exchange rates.Export promotion activity is nowadays widespread and most governments intervene in one way or another, with policies ranging from providing infrastructure support to offering direct export subsidies (BELOC; DI MAIO, 2011).
Studies from the Organization for Economic Cooperation and Development (OECD, 2005) gather a broad array of evidence that financing, subsidies and guarantee mechanisms directed to international trade are widely adopted.In this study the OECD summarized the mechanisms and instruments adopted by 34 countries.All countries surveyed had some sort of system to ensure the political risk of the buyers.Most of them also cover the commercial risk and some of them offer reinsurance to private institutions.
Therefore, supporting exports is a very common practice.Even developed countries have their EPPs, sometimes even subsidizing interest rates (FEINBERG, 1982;HARRIES, 1998) ECAs can be organized in many ways: governmental agency, independent agency, publicprivate firm or even a private institution operating in accordance to the government.
Since the creation of the World Trade Organization (WTO), there is a tendency towards more transparency in the mechanisms to support international trade from all countries, no matter which structure is adopted.Although governments have largely used trade policies to influence export flows, the use of selective export subsidies is currently severely limited by the WTO rules (BELOC; DIMAIO, 2011).Beloc and Dimaio (2011)  For the countries that are members of the WTO, the failure to comply with the trade regulations is considered a liability that can lead to suing and, eventually to penalties and fines.In fact, a few years ago Brazil was involved in a commercial dispute at WTO -World Trade Organizationwith Canada that complained about subsidized aircraft exports.In 2007, Brazil signed an agreement with OECD country members that establishes the export credit aspects of this sector.Thus, the governance of the country's policies should ensure that it will not create liabilities before international regulators.

THE BRAZILIAN POLICIES AND INSTRUMENTS TO FINANCE AND SUPPORT EXPORTS: A HISTORICAL OVERVIEW
The public policies created to support Brazilian exports followed two distinctive stages: before and after the trade liberalization that was implemented in the 1990s in the administration of President Fernando Collor.Veiga and Iglesias (2003) characterized the first stage, from 1964 to 1990, as a centralized model with strong use of subsidies and regular devaluation of the Brazilian currency.In the second stage, after 1990, a more complex and integrated public system directed to support Brazilian exports was created.
It is important to mention that the first stage of public policies to support exports represented a radical change in the country's strategy toward economic development, which existed for decades.In fact, the wave of economic growth that Brazil experienced in the 1950s was based upon the "imports substitution" model, inspired by CEPAL (PREBISCH, 1949).According to this model, adopted in many other Latin American Countries, the economic development would require the creation of an integrated industrial sector, and that industrialization should be fostered through the domestic production of goods previously Costa, Castanhar, Castanhar Reyes, Almeida imported, hence "import substitution" (TAVARES, 1963).The international trade policies then, emphasized the protection of the local industry sectors through trade barriers and tariffs.
Therefore, in the late 1960´s and 1970´s, although the restrictions to imports were persistent, the focus of the trade policies changed to support Brazilian exports with an emphasis on manufactured goods.The policies were needed to promote growth and development of the economy.In the period comprising 1962 to 1967 the country underwent an economic stagnation.Although the real GDP growth rate had reached 10.3 % in 1961 it had diminished to 2.4% in 1964, and the balance of payments was not in a good situation due to poor export performance and low level of both public and private inflows (BAER, 1973).
The policies embraced reductions on tax burden for exports, simplification of administrative procedures for exporters, a number of tax incentives to increase imports were introduced, along with the reduction of tax on imported goods used as inputs to exports (a strategy known as "draw back") as well as an aggressive use of tax and credit subsidies (BAER, 1973).The implementation of these policies was heavily dependent on public funds.
Although not solely affected by export sector performance, the governmental policies seem to have been effective, in the the period 1968-72 the country's real GDP has grown at average annual rates of 10 per cent (BAER, 1973).The flow of international trade reached another threshold in this period, breaking the US$ 10 billion of annual exports in the second half of 1970s.
In the 1980s years Brazil and other developing countries faced two simultaneous threats: a fiscal crisis in the public sector that followed an imbalance between declining fiscal revenues and growing public expenditures, and the external debt crisis that followed the Mexico default in 1982, which interrupted the flow of international funds to the country.The priority to fiscal adjustment, at the time, made difficult to implement any kind of policy to support exports that demanded fiscal subsidies.All these factors resulted on the discontinuity of the prevailing exports promotion model.To compensate the interruption of foreign investments and loans and to restore the equilibrium in the country's Balance of Payment, the policies turned, once again, to a strict control of imports to allow the generation of significant trade surpluses.In fact, the volume of imports fell from US$ 23 billion in 1980 to an average of US$ 14.4 billion between 1983 and1988.The average trade surplus in this period was US$ 11.8 billion (BCB, 2012), which allowed the country to face and overcome the shortage of international funds that followed the default in 1983.As the flow of international capitals to emerging countries normalized in the beginning of 1990s, the governmental policies to support Brazilian exports were resumed, but within a different framework, defined before as the second stage.Under this new framework, the policies would emphasize the use of "non-budgetary" public funds to finance exports, and even so, only as a complement of private funds.In this period, the exports approached the level of US$ 50 billion (BCB, 2013).
The budgetary resources were to be used primarily to compensate the higher cost of funds to Brazilian companies, influenced by the high "country risk" spread, a mechanism known as "equalization of the interest rate".In fact, in 1990 the BNDES (Brazil National Social and Development Bank) EXIM (Export-Import) Funds was created, and in 1991 the PROEX program was established.A compact timeline of the events is presented below:   The rationale of the PROEX instruments answers to different objectives.Thus, the export financing mechanism intents to complement the supply of private funds, offering more competitive conditions in terms of interest rates, especially to industry sectors considered strategically priorities.As for the equalization of interest rate mechanism, the goal is to bring the final cost of funds used by Brazilian exporting companies to levels comparable to international standards.This is a crucial problem for Brazilian companies, since the final cost of the loans are increased by the Brazilian "country risk".Since the Brazilian country risk, as in many other developing countries, is usually very high, volatile, and eventually distorted, the lack of an equalization mechanism would compromise the competitiveness of Brazilian exports in the global markets.

LEGAL AND OPERATIONAL ASPECTS
The following criteria are considered to set PROEX equalization operations: 1) up to 85% of the exports proceeds are entitled to equalization.2) the maximum loan period to benefit from the equalization is defined by product type; and 3) the maximum equalization spread allowed is 2.5% p.a. (250 basis point per annum), depending on the period of financing.Besides these conditions, for the aircraft sector, the minimum rate after equalization should be equal to OECD rate (CIRR).
In the last 11 years the Brazilian country risk experienced a significant improvement, falling from 700 basis points (which mean 7% per annum over the US Treasuries) in 2001 to approximately 180 points in April of 2012 (BCB, 2012).Country risk is a concept that aims to express, in an objective manner, the risk of credit that foreign investors are exposed when they invest in a given country (BCB, 2012).That reduction followed a general improvement of the Brazilian macroeconomic conditions in the period, especially related the external vulnerabilities.In this period the Brazilian exports grew from US$ 50 billion to US$ 256 billion in 2011, the governmental external debt was paid off and the country's reserves in hard currencies reached more than US$ 370 billion by May, 2012(BCB, 2012).
As a consequence of country risk reduction, the cost of funds for Brazilian companies also experienced a significant reduction.Despite the improvement in the country risk, the maximum equalization spreads allowed by PROEX regulation are the same since 1999 (250 basis points).Therefore, market conditions, represented by the external financing cost, and the granted subsidy are not aligned.For instance, eleven years ago, the funds for Brazilian firms could cost 10% per annum, in dollars term.This was the result of the international rate (Libor) plus the Brazilian Country Risk (700 basis point at the time).So, an equalization subsidy of 2.5% would reduce the final cost to 7.5% per annum, which would still be a cost significantly high.Currently, Brazilian firms could raise money in the international market at 5% per annum (corresponding to the currently Libor rate plus a country risk of approximately 200 basis point).In this scenario, a subsidy of 2.5% (250 basis points) would lower the final cost to 2.5% per annum, which is lower than the market conditions, even for companies from developed countries.
That subsidy puts Brazilian companies in a convenient condition to compete in the international market, but might raise problems.It can lead to legal liabilities to Brazil with organizations, such as the WTO.In addition, it represents a fiscal burden that is shared by the society as a whole, while resources could be applied in issues that may be more urgent.
Consequently, an alternative for a new equalization methodology for export operations would be simply reviewing the maximum spreads allowed.A technical analysis of the country risk reduction impact on the exports financing costs for Brazilian firms over the last 7 years would determine the level of spread reduction recommended.However, this is not purely a technical matter.Then, in the following sections an equalization methodology that considers other relevant aspects regarding export financing will be suggested.

SOME STYLIZED FACTS ON PROEX RECENT PERFORMANCE
PROEX is a program created to support the exports for strategic sectors of the economy using either financing or equalization mechanisms.In 2011, most exports that used equalization mechanism were composed of machines and equipment (72%), followed by transports (20%) and services (8%).
The funds of equalization mechanism were virtually exclusive to large companies, 96% of funds, and 99% of operations in 2011 were assigned to large companies, although the small and medium firms comprise 26% of the companied benefited (n=7 In comparison, the financing mechanism in the same year was used mostly to support agribusiness (58%), and textiles and leather products (24%) exports.The funds were more evenly distributed between companies of different sizes than in equalization mechanism.
Large companies received 47% of the funds; medium firms (300 to 60 employees) had 35% of the resources, while small received 8% of the total funds.Sao Paulo state again was the more represented, with 44% of the exporters, and Rio de Grande do Sul exports accounted for an additional 29% (MDIC, 2011).These results reflect one important characteristic of the equalization mechanism, which is its leverage capacity.Since this mechanism would not require governmental funds for financing the principal of the exported volume, but only a small part of the operation represented by the rebate of interest rate, a relatively small volume of funds may benefit a significant volume of exports, as shown in table 1.

PROEX PREVIOUS EVALUATIONS
Previous attempts to evaluate the PROEX focused on the estimation of the overall program's impact on exports growth and diversification.Thus, using an econometric model, Moreira and Santos (2001) analyzed PROEX contribution to the growth of manufactured goods exports from 1991 to 2000.The results allowed the conclusion that PROEX, had a positive impact on the growth manufactured good exports.Moreira et al (2006) extend the original model and developed an econometric model to measure PROEX impact from 1991 to 2005.They also found evidence that PROEX positively influenced the growth and diversification of Brazilian exports in the period considered.A few studies tried to identify the problems faced by firms as far as public and private financing are concerned (CNI, 2002;BLUMENSCHEIN;LEON, 2002;VEIGA;IGLESIAS, 2000).The main difficulties found were limited funds, excessive bureaucracy, information access, requirement of guarantees, and high costs.
As mentioned before, the market mechanisms were benefited by the reduction of funding costs.The progressive reduction of the country risk was responsible for a better quality credit to Brazilian companies.Measured by the Emerging Markets Bonds Index (EMBI) the Brazilian Country Risk decreased approximately 75% in the last 7 years.
Regarding OECD criteria, Brazilian country risk fell from 6 to 3 in a 0 to 7 scale (OECD, 2007).
Nevertheless, Brazilian firms still are not able to compete in the same levels of developed countries firms, as far as funds availability and costs are concerned.The existence of market mechanisms does not imply that an official support program is not necessary.Yet, the recognition of important changes in the economic environment makes it necessary to think of improving and adapting the mechanisms and criteria adopted in the official programs.
To our knowledge, there is a lack of empirical studies dedicated to evaluate the effectiveness of the program (PROEX) in terms of reaching its specific objectives, as well as the governance and operational aspects of the program, although international initiatives are abundant.Nevertheless, Wilkinson and Brouthers (2000) state that the majority of the evaluations use qualitative perceptions of the quality and effectiveness of the export promotion programs instead of evaluations based on export data.Although the use of perceptions of the users of the programs is important, it has several limitations concerning the evaluation of the real impact of export promotion programs.

AN EVALUATION MODEL
Public managers face a continuous challenge: how to deal with an increasing demand for public policies and services that require growing public expenditure in an environment of limited capacity to increase governmental revenues (BARZELAY, 2001).Frequently the solution suggested for this dilemma is the implementation of comprehensive "Administrative Reforms" to redefine the role and size of the public sector, or a "Tax Reform" to improve financial strength of public finances.The problem with this "Big Reforms" approach is that they are technically controversial, politically complex and time consuming.Although the concern and commitment with "structural changes" should not be abandoned, public managers need to seek solutions to improve the efficiency, quality and governance of the public sector in the short term, which can be attained with a better performance management and evaluation.Wholey (2012) states that Performance Management and Program Evaluation Systems have a synergic effect, because when performance data and indicators are collected in a regular basis a Program Evaluation becomes more feasible, less costly and more useful.In addition, the demand for such Evaluation Systems tend to be greater after agencies measure their programs, with the inputs, process, outputs and outcomes.
Therefore, the implementation of Evaluation Systems for the public programs and policies could allow for incremental changes in the quality of the public management (COSTA; CASTANHAR, 2003).In the specific case of evaluation of Export Promotion Program, the evaluation is essential for two main reasons.First, a well-designed evaluation program is likely to provide useful information to enhance the export promotion strategies and the knowledge about the benefits the policies may be able to increase firms' awareness and willingness to apply for the programs (BELOC; DIMAIO, 2011).
The evaluation system proposed comprises two different components.The first component is a panel of indicators that could be used by the program's managers to check to which extent the program's goals are being achieved in order to make recommendations for This second component is the most important part of the evaluation system, since it can impact the governance of the program on several aspects, such as: defining the volume of the subsidies and costs of the program, improving the effectiveness, improving the transparency in the program management, while helping the country to comply with international regulations.

THE PROGRAM LOGICAL FRAMEWORK AND INDICATORS
Although the primarily focus of this study was to design a more effective methodology for the equalization subsidy, a few evaluation indicators were calculated for the program as a whole.The objective here is to provide information for the program managers, especially for the fiscal authorities in Brazil about the efficiency, effectiveness and impact of the program.
The objectives of the Program were identified and described, using the Logical Framework instrument (Pffeifer, 2000;Mokate, 2002).The Logical Framework developed for the USAID as a tool to help conceptualize a project and analyze the assumptions used (Rosenberg & Posner, 1979).The Logical Framework has proven to be a valuable tool for project design, implementation, monitoring, and evaluation.Program's Logical Framework is in Table 2:    A positive sign means that firms of a specific size have greater representativeness on PROEX benefited exports compared with total exports of the program, while a negative sign means higher participation on total exports compared with total PROEX benefited exports.For instance, even though large firms have great representativeness on PROEXequalization, they have an even greater share of total exports.For smaller firms the sign is positive for both financing modes, proving that the program stimulates their access to exports.We also took this decision based on the higher proportion of financed exports through equalization subsidy (85%), and the limited space to present findings for both subsidies.Services -10,5% -6,5% -5,9% -9,8% -9,0% -7,3% 10,8% 3,0% -6,3% Sources: Bank of Brazil, MDIC, Treasury Department, Central Bank.Data not available: -We can see that despite a negative growth in 2004, the volume of exports using the equalization mechanism grew at a significant rate in the period considered, reflecting the effectiveness of the instrument, as measured by indicator A, while in 2011 it reflected a small decrease.In addition, the productivity of the program experienced a continuous growth in the small and medium companies is being narrowed in the period considered, almost converging to a similar value in 2008 and the subsequent years.Costa, Castanhar, Castanhar Reyes, Almeida Indicator G reflects one interesting result.We can see in table 3 that from 2003 to 2008 the representativeness of the large and small and medium companies in the PROEX as compared to the total exports experienced a radical change.Thus, up to 2005 the large companies were more represented in the PROEX than in the total export and that profile changed after that year.Conversely, the small and medium companies were under-represented in the PROEX program up to 2005 and became over-represented after 2005.This result may indicate that the program is benefiting an increasing proportion of small and medium companies, which is one of the program's goals.
As for the industry sector representation, the H indicator shows a significant and increasing concentration in the Transports and Machines and Equipment industries.When considering the average period of PROEX utilization, the indicator E shows that there is an apparent stability, with the an average period of utilization ranging from 2,24 to 2,5 years for the years with available data.
The panel of indicators shows that, for the period considered, the program achieved some very positive results, like the increasing productivity and the increasing access for small and medium companies, but also showed disappointing results, like the decreasing number of companies and a further sector concentration.This kind of results reinforces the necessity of extending the evaluation methodology, discussing the governance of the program, what will be developed in the following section.

EQUALIZATION SETTING METHODOLOGY
The second part of the evaluation model consists of a methodology for setting the equalization subsidy in the interest rate for exports operations, alternatively to the current practice of granting the maximum subsidy allowed by law.The model would seek, hence, to ensure an efficient and effective use of public resources, as well as the strategic aspects related to the use of the program to foster Brazilian exports and benefit a broader array of companies and sectors, especially small and medium companies.In addition, the model proposed was concerned with the legal aspects of the subsidies, in order to avoid future liabilities for Brazil.
The proposed model defines a set of measurable criteria for the PROEX operations, in order to calculate a more consistent equalization spread within the limits established by law.
Nowadays, the spread is defined based on what we call "legal criteria".Current legislation establishes the products that may be benefited (Brazil, MDIC, 2002) as well as the maximum

1
According to IMF (Debt-and Reserve-Related Indicators of External Vulnerability, IMF (2005) Important indicators of the external vulnerability of the financial sector are gross external liabilities, open foreign currency positions (if significant), and indicators of the maturity and quality mismatch in the foreign currency position that include off balance sheet items such as derivatives.
also affirm that WTO rules allow the use of trade policy interventions in the form of selective subsidies to promote (a) domestic investment in research and development, (b) regional development, (c) environment friendly activities.

3
PROEX: CHARACTERISTICS, ANTECEDENTS AND PRESENT SITUATION The PROEX is one of the main official mechanisms to support Brazilian exports.The program has two different instruments: export financing and equalization of interest rate.The funds for both mechanisms are defined every year in the Governmental Budget under the account Official Credit Operations.In the financing mode, the Treasury Department offers funds to finance loans to Brazilian firms' exports.Banco do Brasil is the program manager and the agent of its operations in the financing mode.In the equalization mode, the Treasury Department According to the Logical framework developed for the program, objectives 1 and 5 are composed by only one indicator, while objectives 2, 3 and 4 have two indicators each.It's important to mention that the indicators were selected through an interactive process with program managers.We sought to compile a relevant group of indicators for continuous monitoring that also could be used as a management tool.Their definitions are presented below: A) Growth of exports funded by the program -This indicator expresses the annual percentage increase or decrease of exports benefited by the program: If the indicator is positive it reflects a growth on PROEX financed exports, while negative results indicate a decreasing.B) Exported value for each dollar expended -This indicator is the annual value of funded exports divided by the money expended in the program.It represents the value being exported for each dollar lent and is calculated as follows: C) Share of exports benefited by the program on total exports -This indicator expresses the representativeness of exports benefited by the PROEX over the total value of Brazilian exports.It is calculated as follows: The closer to 100%, the greater is the program impact.On the contrary, percentages close to 0% indicate a low impact.D) Growth of the number of benefited firms -This is an indicator that represents the annually percentage change, positive or negative, of benefited firms by the program: Therefore, positive results indicate an increase of benefited firms when compared to the previous year.A negative percentage expresses the decrease of benefited firms.

E)
Average period of PROEX utilization -This indicator expresses how many years, in average, firms used PROEX during a specific period of time.For the calculation of this indicator, all firms that used PROEX during the defined period are listed.For each year, a value is attributed to the firm: 1 if it used PROEX funds or 0 if it didn´t use PROEX funds.Hence, the sum for each firm will be equal to the number of years that it had PROEX financing.The final indicator is the average result of all firms.The indicator was calculated for a time span of four years.This indicator is a proxy of the 'turnover" of firms in the program.A high value will indicate that, once the firm has access to the program, it will benefit from it continuously and a lower value will reflect a greater turnover of beneficiaries in the program.F) Exported value for each dollar expended by firm size -This indicator compares the exports by firm size with the volume of money spent by the program in that particular firm size segment.This goal of this indicator is to evaluate whether funds efficiency might be related to firm size.It is calculated as follows: G) Export structure by firm size (PROEX x Total) -This indicator compares a particular firm size segment share on the total exports benefited by PROEX, to this firm size segment share on total Brazilian exports.It is calculated as follows: This indicator compares the share of the main sectors supported by PROEX to their performance regarding total Brazilian exports.The first part of the formula indicates each sector share on the program benefited exports, while the second part represents each sector share on total Brazilian exports value.Therefore, a positive sign means that a specific sector has greater representativeness on PROEX exports than on Brazilian total exports, while a negative sign means greater representativeness on total exports.Table 3 summarizes the values of the indicators defined for the 2003-2011 period, only for equalization of interest rate mechanism.Although we have calculated the indicators for both the direct funding and the equalization mechanisms, we opted for presenting and discussing only the performance of the equalization of interest rate mechanism, as the main objective of the research was to establish an optimal rate of subsidy for equalization program.
period, as shown by indicator B. The volume of exports generated by each dollar invested in the program almost doubled in the period, growing from 13.42 (2003) to 29.91 in 2010, with a decrease of the performance in 2011 with indicator B reaching 18.88.This result reflects the fact that in the last five years the volume of subsidy required had significantly decreased, also confirmed by indicator C that shows a decreasing dependency of the exports to the equalization rate benefit (ranging from 5.56 in 2003 to 1.4 in 2011).One of the most disappointing results is the decrease of the number of benefited companies between 2003 and 2006.Although we found that this number resumed growth after 2006, it is still very low.The total number of benefited firms is only 346 in 2011, compared with 510 in 2001.As for the productivity (or elasticity) of the resources invested in the program to generate exports, the indicator F shows that the difference between large and Almeidacompensates foreign operations costs by granting to the financing agent (usually a private bank) a subsidy to reduce the final loan rate, in order to make it comparable to international rates.The equalization is granted through bond issuing (NTN-I: Treasury Department Bond, I Series) and represents a credit subsidy.The program regulation allows financial and credit institutions in Brazil and abroad, other than the official banks, to operate this instrument.

Table 1
summarizes the main figures of the program between 2001 and 2011, allowing us to identify some of its virtues and problems.For instance, we can see the reach of the program is still very limited.Considering the financing instrument, the number of companies that benefited from the program has ranged between 300 and 450 approximately, in the period considered.As for the equalization instrument, the number is still lower, only benefiting less than 40 companies per year:

Table 1 -PROEX Summarized results 2001/2011 Statistics Instrument 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
steadily since 2002, reaching almost 3.000 deals in 2008.This result can be related to the significant volume of exports that were benefited with the equalization mechanism, reaching US$ 4.6 billion in 2008, and diminishing in 2010/2011 with approximately US$ 3.5 billion.BBR, Braz.Bus.Rev. (Engl.ed., Online), Vitória, v. 11, n. 6, Art. 5, p. 98 -122, nov.-dec.2014 www.bbronline.com.brDeveloping an Evaluating System to Improve Efficiency, Effectiveness and Governance in the Public Sector… 108 Developing an Evaluating System to Improve Efficiency, Effectiveness and Governance in the Public Sector… 110 adjustments and improvements in the program.The second component is a methodology for setting the equalization rate for the loans benefited by the program.