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The effectiveness of investment incentives: the Slovenian FDI Co-financing Grant Scheme

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  • Anže Burger
  • Andreja Jaklič
  • Matija Rojec

Abstract

This article analyses the effectiveness of the main instrument of Slovenian FDI policy, the 'FDI Co-financing Grant Scheme'. We look at the post-grant performance of foreign subsidiaries that received grants in 2000--09 using a double-track approach: calculation of performance premia of subsidised foreign subsidiaries, based on financial statements data, as suggested by Bernard and Jensen, and a questionnaire survey to tackle those qualitative aspects of subsidiaries' operations which are used in the official evaluation of grant applications. Subsidised foreign subsidiaries on average show better performance than comparable local companies and better qualitative characteristics than non-subsidised foreign subsidiaries. The main objectives of the scheme, creation of new capacity and jobs in export-oriented activities, have been achieved. The quality of this quantitative increase is more of a question; the data do not indicate any real breakthroughs in technological intensity, human resource development or productivity. In terms of technology and skills subsidised FDI projects remain more or less on the level of average Slovenian firms.

Suggested Citation

  • Anže Burger & Andreja Jaklič & Matija Rojec, 2012. "The effectiveness of investment incentives: the Slovenian FDI Co-financing Grant Scheme," Post-Communist Economies, Taylor & Francis Journals, vol. 24(3), pages 383-401, September.
    • Handle: RePEc:taf:pocoec:v:24:y:2012:i:3:p:383-401
    DOI: 10.1080/14631377.2012.705471
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    References listed on IDEAS

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    1. Theodore H. Moran, 1998. "Foreign Direct Investment and Development: The New Policy Agenda for Developing Countries and Economies in Transition," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 53.
    2. Blomström, Magnus, 2002. "The economics of international investment incentives," Sede de la CEPAL en Santiago (Estudios e Investigaciones) 34904, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    3. Estrin, Saul & Bevan, Alan, 2000. "The Determinants of Foreign Direct Investment in Transition Economies," CEPR Discussion Papers 2638, C.E.P.R. Discussion Papers.
    4. Alan A. Bevan & Saul Estrin, 2000. "The Determinants of Foreign Direct Investment in Transition Economies," William Davidson Institute Working Papers Series 342, William Davidson Institute at the University of Michigan.
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    Cited by:

    1. Aneta Hintošová & Terézia Barlašová, 2021. "The Role Of Investment Promotion Policy In Attracting Foreign Direct Investment: The Case Of Slovakia," Public administration issues, Higher School of Economics, issue 5, pages 27-40.
    2. Uros Delevic, . "Employment and state incentives in transition economies: are subsidies for FDI ineffective? The case of Serbia," UNCTAD Transnational Corporations Journal, United Nations Conference on Trade and Development.
    3. Alvaro Cuervo-Cazurra & Bernardo Silva-Rêgo & Ariane Figueira, 2022. "Financial and fiscal incentives and inward foreign direct investment: When quality institutions substitute incentives," Journal of International Business Policy, Palgrave Macmillan, vol. 5(4), pages 417-443, December.

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