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Evaluating the impact of public subsidies on a firm’s performance: a two-stage quasi-experimental approach

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Author Info

  • Duch, Néstor

    ()
    (Barcelona Institute of Economics (IEB))

  • Montolio, Daniel

    ()
    (Barcelona Institute of Economics (IEB))

  • Mediavilla , Mauro

    ()
    (Interdisciplinary Group on Educational Policies (GIPE))

Abstract

In this paper we evaluate the effectiveness of regional R&D public programs in Catalonia (Spain) with a two-stage procedure. Firstly, we compare the performance of publicly subsidised companies (treated) with that of similar, but unsubsidised companies (non-treated). We use the Propensity Score Matching (PSM) methodology to construct a control group which, with regard to its observable characteristics, is as similar as possible to the treated group, and that allows us to identify firms which maintain the same propensity to receive public subsidies. Secondly, and once a valid comparison group has been established, we compare the respective performance of each firm using regression techniques. As a result, we find that recipient firms, on average, seem to increase their value added as a direct result of public subsidy programs.

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Bibliographic Info

Article provided by Asociación Española de Ciencia Regional in its journal Investigaciones Regionales.

Volume (Year): (2009)
Issue (Month): 16 ()
Pages: 143-165

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Handle: RePEc:ris:invreg:0082

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Related research

Keywords: R&D policy; evaluation; firm performance; Propensity Score Matching;

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References

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  1. H Lenihan, 1999. "An evaluation of a regional development agency's grants in terms of deadweight and displacement," Environment and Planning C: Government and Policy, Pion Ltd, London, vol. 17(3), pages 303-318, June.
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  3. Jeffrey Smith & Petra Todd, 2003. "Does Matching Overcome Lalonde's Critique of Nonexperimental Estimators?," University of Western Ontario, CIBC Centre for Human Capital and Productivity Working Papers 20035, University of Western Ontario, CIBC Centre for Human Capital and Productivity.
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  6. Rajeev H. Dehejia & Sadek Wahba, 1998. "Propensity Score Matching Methods for Non-experimental Causal Studies," NBER Working Papers 6829, National Bureau of Economic Research, Inc.
  7. Arvanitis, Spyros & Hollenstein, Heinz & Lenz, Stephan, 2002. " The Effectiveness of Government Promotion of Advanced Manufacturing Technologies (AMT): An Economic Analysis Based on Swiss Micro Data," Small Business Economics, Springer, vol. 19(4), pages 321-40, December.
  8. Ivan Turok, 1997. "Evaluating European support for business development: evidence from the structural funds in Scotland," Entrepreneurship & Regional Development, Taylor & Francis Journals, vol. 9(4), pages 335-352, January.
  9. Blanes, J. Vicente & Busom, Isabel, 2004. "Who participates in R&D subsidy programs?: The case of Spanish manufacturing firms," Research Policy, Elsevier, vol. 33(10), pages 1459-1476, December.
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  11. Isabel Busom, 2000. "An Empirical Evaluation of The Effects of R&D Subsidies," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 9(2), pages 111-148.
  12. Lerner, Josh, 1999. "The Government as Venture Capitalist: The Long-Run Impact of the SBIR Program," The Journal of Business, University of Chicago Press, vol. 72(3), pages 285-318, July.
  13. Sascha O. Becker & Andrea Ichino, 2002. "Estimation of average treatment effects based on propensity scores," Stata Journal, StataCorp LP, vol. 2(4), pages 358-377, November.
  14. Pilar Socorro, M., 2007. "Optimal technology policy under asymmetric information in a research joint venture," Journal of Economic Behavior & Organization, Elsevier, vol. 62(1), pages 76-97, January.
  15. Czarnitzki, Dirk & Fier, Andreas, 2002. "Do Innovation Subsidies Crowd Out Private Investment? Evidence from the German Service Sector," ZEW Discussion Papers 02-04, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  16. LaLonde, Robert J, 1986. "Evaluating the Econometric Evaluations of Training Programs with Experimental Data," American Economic Review, American Economic Association, vol. 76(4), pages 604-20, September.
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  18. Klette, T.J. & Moen, J. & Griliches, Z., 1999. "Do Subsidies to Commercial R&D Reduce Market Failures? Microeconometric Evaluation Studies," Papers 16/99, Norwegian School of Economics and Business Administration-.
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Citations

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Cited by:
  1. Michalek, Jerzy & Ciaian, Pavel & Kancs, d'Artis, 2013. "Firm-Level Evidence of Deadweight Loss of Investment Support Policies: A Case Study of Dairy Farms in Schleswig-Holstein," Proceedings Issues, 2013: Productivity and Its Impacts on Global Trade, June 2-4, 2013. Seville, Spain 152258, International Agricultural Trade Research Consortium.
  2. Andries Brandsma & d'Artis Kancs & Pavel Ciaian, 2013. "The Role of Additionality in the EU Cohesion Policies: An Example of Firm-Level Investment Support," European Planning Studies, Taylor & Francis Journals, vol. 21(6), pages 838-853, June.
  3. Arpino, Bruno & Mattei, Alessandra, 2013. "Assessing the Impact of Financial Aids to Firms: Causal Inference in the presence of Interference," MPRA Paper 51795, University Library of Munich, Germany.

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