An Evaluation of a Regional Development Agency's Grants in Terms of Deadweight and Displacement

For a number of decades considerable resources have been devoted to supporting Irish industrial policies. There has, however, been a distinct lack of evaluation of these policies. This is particularly pertinent to the Irish small and medium-sized enterprise (SME) sector given its employment potential and importance to the domestic economy. The Small Business Task Force reports that 98% of businesses in Ireland employ fewer than 50 persons and that these provide around half of the total employment in the private sector. There has, however, been a distinct lack of research into the additional impact of SME policy, and particularly the measurement of the twin concepts of deadweight and displacement. To help bridge this gap in Irish SME policy research, the author evaluates grants awarded to indigenous firms (91% of which are SMEs) by a regional development agency in the Shannon region of Ireland. Two components of additionality—deadweight and displacement—are used to aid this evaluation process. The prime methodological approach is that of the self-assessment approach, involving in-depth face-to-face interviews with the managing directors of 77 firms that received grants from the regional development agency in 1995. Data emanating from interviews are then used to obtain estimates of deadweight and displacement in the Shannon region of Ireland.