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Importance of EU regional support programmes for firm performance

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  • 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.

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  • 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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    Cited by:

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    2. 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.
    3. 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.
    4. 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).
    5. Konstantins Benkovskis & Peter Jarrett & Ze'ev Krill & Olegs Tkacevs & Naomitsu Yashiro, 2022. "The Survival of Latvian Products and Firms in Export Markets," Working Papers 2022/02, Latvijas Banka.
    6. 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.
    7. 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.

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    More about this item

    Keywords

    C14; D22; R11;
    All these keywords.

    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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