Impact Assessment of the State Support Program for Micro and Small Enterprises in Georgia

This paper analyzes the effects of a state support program for micro and small enterprises in Georgia in 2016. Grants were awarded through a scoring system, according to which only those business plans that scored above a certain threshold were able to claim government subsidies. We use a sharp discontinuity design to study the impact of these government subsidies on firm-level outcomes. Official data from the implementing agency, Enterprise Georgia, was complemented by a firm-level survey of both program beneficiaries and non-beneficiaries. This unique, combined data set allows us to examine a wide range of the social and economic impacts of the government program. We find significant treatment effects on total firm investment in the first year of the program. However, these impacts disappear in subsequent periods. The subsidies appear to have had no effect on sales or employment, even at the early stages of the program. Individual, entrepreneur level social and economic outcomes also seem to be unaffected by the government subsidies. If anything, entrepreneurs receiving support are less likely to be content with the job they are doing.