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The Role of A Public Venture Capital Program in State Economic Development: The Case of Kansas Venture Capital, Inc

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  • Barkley, David L.
  • DiFurio, Ferdinand
  • Leatherman, John C.

Abstract

State-assisted venture capital programs are a popular strategy to stimulate entrepreneurship and small business development. This study estimated the number of job-years created from 1988 to 2000 by the publicly- assisted program Kansas Venture Capital, Inc. (KVCI). The impact of KVCI in job-years generated was measured net of hypothetical job growth under three alternative scenarios: portfolio firms failed without KVCI fundings, firms followed their national industry employment patterns without KVCI funding, or firms followed the employment change patterns of a comparison set of Kansas businesses. Duration model estimation results indicated that KVCI portfolio firms had significantly higher survival rates than comparison Kansas firms. The number of jobyears created and saved credited to KVCI investments varied from 391 to 13,576 and the cost per job year created and saved ranged from $296 to $10,281 depending on assumptions of firm employment change in the absence of KVCI investments. The findings indicate that impact assessment results are highly sensitive to underlying assumptions.

Suggested Citation

  • Barkley, David L. & DiFurio, Ferdinand & Leatherman, John C., 2004. "The Role of A Public Venture Capital Program in State Economic Development: The Case of Kansas Venture Capital, Inc," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 34(2).
  • Handle: RePEc:ags:jrapmc:132296
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    References listed on IDEAS

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    1. Daniel Felsenstein & Joseph Persky, 1999. "When is a Cost Really a Benefit? Local Welfare Effects and Employment Creation in the Evaluation of Economic Development Programs," Economic Development Quarterly, , vol. 13(1), pages 46-54, February.
    2. Edgar Parker & Phillip Todd Parker, 1998. "Venture capital investment: Emerging force in the Southeast," Economic Review, Federal Reserve Bank of Atlanta, issue Q 4, pages 36-47.
    3. John R. Baldwin & Paul K. Gorecki, 1991. "Firm Entry and Exit in the Canadian Manufacturing Sector, 1970-1982," Canadian Journal of Economics, Canadian Economics Association, vol. 24(2), pages 300-323, May.
    4. Kevin T. Leicht & J. Craig Jenkins, 1994. "Three Strategies of State Economic Development: Entrepreneurial, Industrial Recruitment, and Deregulation Policies in the American States," Economic Development Quarterly, , vol. 8(3), pages 256-269, August.
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    Keywords

    Financial Economics;

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