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Evaluation of investment subsidies: when is deadweight zero?

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  • Anu Tokila
  • Mika Haapanen
  • Jari Ritsila

Abstract

In the evaluation of investment subsidies one of the critical issues concerns the assessment of deadweight, that is, the degree to which projects would have been carried out without grant assistance. With the increasing restrictions on and cuts in subsidies for investment projects in the EU countries maximisation of the impact of the public resources that remain can be achieved through their allocation for projects with minimum deadweight. This paper studies the profile of subsidised zero deadweight investment projects - projects that would be abandoned without public subsidies - in Finland. The empirical analysis is conducted using micro level data on investment projects by private sector firms. The data set comprises 3,423 projects that were granted public investment subsidies between 2001 and 2003. Our results show that the likelihood of zero deadweight is significantly dependent on the characteristics of the subsidised firm, the characteristics of the investment project and the location of the subsidised firm.

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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal International Review of Applied Economics.

Volume (Year): 22 (2008)
Issue (Month): 5 ()
Pages: 585-600

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Handle: RePEc:taf:irapec:v:22:y:2008:i:5:p:585-600

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Related research

Keywords: Investment subsidies; deadweight effect; investment projects; public policy; regional policy;

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Cited by:
  1. Reiljan, Janno & Paltser, Ingra, 2013. "The implementation of research and development policy in European and Asian countries," Discourses in Social Market Economy 2013-03, OrdnungsPolitisches Portal (OPO).
  2. Berumen, Sergio A., 2012. "Evaluación del impacto de la política de incentivos sectoriales en el desarrollo de los municipios mineros de Castilla y León," Journal of Economics, Finance and Administrative Science, Universidad ESAN, vol. 17(33), pages 15-30.
  3. Antonio Garcia-Tabuenca & Jose L. Crespo-Espert & Federico Pablo-Marti, 2011. "Women, Entrepreneurial Activity And Territory: Differences Or Myths?," ERSA conference papers ersa10p1465, European Regional Science Association.
  4. Antonio Garcia-Tabuenca & Jose Crespo-Espert, 2010. "Credit guarantees and SME efficiency," Small Business Economics, Springer, vol. 35(1), pages 113-128, July.

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