Evaluation and Monitoring of Business Aid in Finland. Applicant Enterprises Projects and Distributors of Aid in Industrially Declining Regions. A Quantitative Approach
The study examines comprehensively the three entities involved when state aid is distributed to enterprises in Finland, namely the applicant enterprises, the projects financed and the distributors of funds. It demonstrates how quantitative methods can be used to monitor and evaluate state aid to enterprises. In the study the distributor is the Ministry of Trade and Industry (KTM). The material is gathered from data found in state aid applications from enterprises located in industrially declining (Objective 2) areas in the prefectures of Varsinais-Suomi and Päijät-Häme during 1995-96. The study lists certain characteristics of the applicant enterprises, the projects financed and it measures the performance of different financing operations by KTM. Furthermore, it examines the factors which influence KTM in deciding whether to finance or not a state aid application by building logistic regression models. Results indicate that (a) there are no clear differences between enterprises which receive aid and those that do not and (b) each KTM office applies to some extent its own financing procedures. Recommendations include (1) standardization of selection methods, (2) on-going utilization of the databases, (3) creation of a flexible and targeted system of state aid where final beneficiaries are clearly defined, (4) creation a follow-up system to measure and evaluate the impact of the state aid, (5) imposing restrictions as to how often the same enterprises are to be granted aid, (6) an introduction of an alternative type of aid in the form of forgivable loans.
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Paper provided by Government Institute for Economic Research Finland (VATT) in its series Discussion Papers with number
169.
Length: Date of creation: 01 Jan 1998 Date of revision: Handle: RePEc:fer:dpaper:169
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Find related papers by JEL classification: G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data) C10 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: General - - - General M20 - Business Administration and Business Economics; Marketing; Accounting - - Business Economics - - - General R00 - Urban, Rural, and Regional Economics - - General - - - General H10 - Public Economics - - Structure and Scope of Government - - - General G30 - Financial Economics - - Corporate Finance and Governance - - - General