Evaluate the long-run and short-run sustainability of export subsidy? The question is base on export subsidy.

Export subsidies have actually been an important part of the rapid growth of countries such as Japan and Korea. Implemented wisely and for a short period of time, they appear to be an effective means of supporting economic growth.

The basic idea of an export subsidy is quite simple: Every time you sell a product to another country (either a specific product, or in some cases any product at all), the government pays you money. This provides an additional incentive for you to sell exports, over and above the price paid for them; it also allows you to sell those exports at lower prices.

The lower price could be an unfair price, undercutting other countries; this can create inefficiencies in the market and could ultimately lead to trade wars between countries where subsidies and tariffs are used to try to gain advantage over other countries, ultimately resulting in no country gaining advantage but a lot of inefficiency created by the distortionary policies.

However, it is also possible for the lower price to be a fair price, in that the country which is implementing the subsidy is currently at a lower level of technology and capital, so they would have a disadvantage in global markets without the addition of the subsidy. This appears to be what happened in Korea and Japan (I've provided a source on the extensive export subsidies and following huge economic growth that happened in Korea). This is sometimes called the infant industry argument.

Of course, this only makes sense in the short-run, or maybe the medium-run of a couple of decades. Eventually the poor country catches up to rich countries in capital stock and technology, and the subsidies are no longer necessary. If the country insists on keeping them---perhaps because the industries being subsidized have a powerful political lobby---then they can create inefficiency and cause trade wars. But if countries are wise enough to remove them once they become unnecessary, export subsidies can be a very powerful tool for promoting economic development.