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Importance of EU regional support programmes for firm performance

Author

Listed:
  • Konstantins Benkovskis
  • Oļegs Tkačevs
  • Naomitsu Yashiro
  • Beata Javorcik

Abstract

SummaryThis paper investigates the effects of EU regional support on firm productivity, the number of employees and other performance indicators. We use a rich firm-level dataset for Latvia – the country, where investment activities are largely affected by the availability of EU funding. After controlling for the fact that more productive and larger firms are more likely to acquire EU finds, we find that participation in projects co-financed by the European Regional Development Fund (ERDF) increases firms' employment, turnover and capital stock per employee immediately, while it raises their productivity only two years after the launch of the projects. ERDF beneficiaries that are initially less productive, larger, less capital intensive and more financially leveraged enjoy larger productivity gains.

Suggested Citation

  • Konstantins Benkovskis & Oļegs Tkačevs & Naomitsu Yashiro & Beata Javorcik, 2019. "Importance of EU regional support programmes for firm performance," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 34(98), pages 267-313.
    • Handle: RePEc:oup:ecpoli:v:34:y:2019:i:98:p:267-313.
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    File URL: http://hdl.handle.net/10.1093/epolic/eiz003
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    Cited by:

    1. Ichev, Riste & Valentinčič, Aljoša, 2025. "The effect of impact investing on performance of private firms," Research in International Business and Finance, Elsevier, vol. 73(PA).
    2. Maximilian v. Ehrlich & Henry G. Overman, 2020. "Place-Based Policies and Spatial Disparities across European Cities," Journal of Economic Perspectives, American Economic Association, vol. 34(3), pages 128-149, Summer.
    3. Oleg Sidorkin & Martin Srholec, 2022. "Do Direct Subsidies Stimulate New R&D Outputs in Firms? Evidence from the Czech Republic," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 13(3), pages 2203-2229, September.
    4. Yuzuka Kashiwagi & Yasuyuki Todo, 2021. "Propagation Of Positive Effects Of Post‐Disaster Policies Through Supply Chains," Contemporary Economic Policy, Western Economic Association International, vol. 39(2), pages 348-364, April.
    5. Diego Sande Veiga, 2025. "Analysis of the results of the regional innovation policies of the structural funds on business innovation indicators: does size and role matter in Andalusian business performance indicators?," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 74(1), pages 1-29, March.
    6. Diego Sande Veiga, 2025. "Is there an impact of the Structural Funds in innovation on business performance? Analysis through the ERDF-Innterconecta programme in Andalusia," Review of Regional Research: Jahrbuch für Regionalwissenschaft, Springer;Gesellschaft für Regionalforschung (GfR), vol. 45(2), pages 221-245, June.
    7. Mesquita, José & Pereira dos Santos, João & Tavares, José, 2023. "European Funds and Firm Performance: Evidence from a Natural Experiment," IZA Discussion Papers 16526, Institute of Labor Economics (IZA).
    8. De Sanctis, Alessandro & Kapp, Daniel & Vinci, Francesca & Wojciechowski, Robert, 2025. "Unlocking growth? EU investment programmes and firm performance," Working Paper Series 3099, European Central Bank.
    9. Julia Bachtrögler & Harald Oberhofer, 2018. "Euroscepticism and EU Cohesion Policy: The Impact of Micro-Level Policy Effectiveness on Voting Behavior," Department of Economics Working Papers wuwp273, Vienna University of Economics and Business, Department of Economics.
    10. Domagoj Selebaj & Matej Bule, 2021. "Effects of grants from EU funds on business performance of non-financial corporations in Croatia," Public Sector Economics, Institute of Public Finance, vol. 45(2), pages 177-207.
    11. Konstantins Benkovskis & Peter Jarrett & Zeev Krill & Olegs Tkacevs & Naomitsu Yashiro, 2022. "The survival of Latvian products and firms in export markets," OECD Economics Department Working Papers 1712, OECD Publishing.
    12. Goel, Tirupam & Telegdy, Álmos & Banai, Ádám & Takáts, Előd, 2024. "Subsidy-driven firm growth: Does loan history matter? Evidence from a European Union subsidy program," Journal of Corporate Finance, Elsevier, vol. 87(C).

    More about this item

    Keywords

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    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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