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Assessing the economic impact of public industrial policies: an empirical investigation on subsidies

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Author Info
Roberto Gabriele
Marco Zamarian () (DISA, Faculty of Economics, Trento University)
Enrico Zaninotto () (DISA, Faculty of Economics, Trento University)

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Abstract

Empirical literature findings do not provide a clear-cut interpretation of the effects of public aid on firms’ performances. We contribute to this literature analysing the effects of public regional subsidies on investment using a new dataset covering all the firms in the Italian province of Trento, along with a record of public aid granted in the last 15 years. We find permanent positive effects of aid on firms’ size, but no effect is found on factor substitution, nor on technical change. Moreover, subsidies do not improve either profitability or productivity. These results help better define the scope for local aid.

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Publisher Info
Paper provided by Department of Computer and Management Sciences, University of Trento, Italy in its series ROCK Working Papers with number 039.

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Length: 32 pages
Date of creation: Jan 2006
Date of revision: 12 Jun 2008
Handle: RePEc:trt:rockwp:039

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Postal: DISA Università degli Studi di Trento via Inama, 5 I-38100 Trento TN Italy
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Related research
Keywords: regional policy; public subsidies; propensity score matching;

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Find related papers by JEL classification:
R11 - Urban, Rural, and Regional Economics - - General Regional Economics - - - Analysis of Growth, Development, and Changes
R58 - Urban, Rural, and Regional Economics - - Regional Government Analysis - - - Regional Development Policy
C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Lee, Jong-Wha, 1996. " Government Interventions and Productivity Growth," Journal of Economic Growth, Springer, vol. 1(3), pages 391-414, September.
  2. Michael Lechner, 2002. "Program Heterogeneity And Propensity Score Matching: An Application To The Evaluation Of Active Labor Market Policies," The Review of Economics and Statistics, MIT Press, vol. 84(2), pages 205-220, May. [Downloadable!] (restricted)
  3. Paul A. David & Bronwyn H. Hall & Andrew A. Toole, 2000. "Is Public R&D a Complement or Substitute for Private R&D? A Review of the Econometric Evidence," Development and Comp Systems 9912002, EconWPA. [Downloadable!]
    Other versions:
  4. Bergstrom, Fredrik, 2000. " Capital Subsidies and the Performance of Firms," Small Business Economics, Springer, vol. 14(3), pages 183-93, May. [Downloadable!] (restricted)
  5. Fujita, Masahisa & Krugman, Paul, 1995. "When is the economy monocentric?: von Thunen and Chamberlin unified," Regional Science and Urban Economics, Elsevier, vol. 25(4), pages 505-528, August. [Downloadable!] (restricted)
  6. A. Smith, Jeffrey & E. Todd, Petra, 2005. "Does matching overcome LaLonde's critique of nonexperimental estimators?," Journal of Econometrics, Elsevier, vol. 125(1-2), pages 305-353. [Downloadable!] (restricted)
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  7. Beason, Richard & Weinstein, David E, 1996. "Growth, Economies of Scale, and Targeting in Japan (1955-1990)," The Review of Economics and Statistics, MIT Press, vol. 78(2), pages 286-95, May. [Downloadable!] (restricted)
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  8. Tom Kristian Alex Petersen, 2003. "A propensity score matching method for the link between accessibility and productivity," ERSA conference papers ersa03p18, European Regional Science Association. [Downloadable!]
  9. James Heckman & Hidehiko Ichimura & Jeffrey Smith & Petra Todd, 1998. "Characterizing Selection Bias Using Experimental Data," Econometrica, Econometric Society, vol. 66(5), pages 1017-1098, September.
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  10. Bronzini, Raffaello & de Blasio, Guido, 2006. "Evaluating the impact of investment incentives: The case of Italy's Law 488/1992," Journal of Urban Economics, Elsevier, vol. 60(2), pages 327-349, September. [Downloadable!] (restricted)
  11. 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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  12. Heckman, James J & Ichimura, Hidehiko & Todd, Petra E, 1997. "Matching as an Econometric Evaluation Estimator: Evidence from Evaluating a Job Training Programme," Review of Economic Studies, Blackwell Publishing, vol. 64(4), pages 605-54, October. [Downloadable!] (restricted)
  13. Imbens, Guido W & Rubin, Donald B, 1997. "Estimating Outcome Distributions for Compliers in Instrumental Variables Models," Review of Economic Studies, Blackwell Publishing, vol. 64(4), pages 555-74, October. [Downloadable!] (restricted)
  14. 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. [Downloadable!]
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Nestor Duch Brown & Daniel Montolio Estivill & Mauro Mediavilla, 2007. "Evaluating the Impact of Public Subsidies on a Firms Performance: a Quasi-experimental Approach," Working Papers in Economics 181, Universitat de Barcelona. Espai de Recerca en Economia. [Downloadable!]
    Other versions:
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