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Evaluating Irish industrial policy in terms of deadweight and displacement: a quantitative methodological approach

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  • Helena Lenihan

Abstract

Evaluation should consider what would have happened in the absence of assistance. To produce an assessment of this counter-factual scenario involves considering the twin concepts of deadweight and displacement. An evaluative framework is developed for measuring the impact of grant assistance to individual firms. Logit regression analysis is used to estimate predictive models for deadweight and displacement. The data were gathered during face-to-face interviews with the managing directors of firms that received grants from Shannon Development in the Shannon region of Ireland (self-assessment approach). The objective was to establish whether certain characteristics of grant-assisted firms can predict probable deadweight and displacement effects. In the case of deadweight, it was found that grant type, size of firm, whether investment appraisal carried out by firm included grant received and whether firm was a first-time or repeat grant recipient all impact on the level of deadweight. Regarding displacement, it was found that size of firm and type of ownership impact on displacement. While the evaluative framework has been 'tested' in an Irish regional context, the logic of the approach is clear and has a much wider international applicability regarding the evaluation of industrial policy interventions.

Suggested Citation

  • Helena Lenihan, 2004. "Evaluating Irish industrial policy in terms of deadweight and displacement: a quantitative methodological approach," Applied Economics, Taylor & Francis Journals, vol. 36(3), pages 229-252.
  • Handle: RePEc:taf:applec:v:36:y:2004:i:3:p:229-252
    DOI: 10.1080/0003684042000175343
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    References listed on IDEAS

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    1. Holden, Darryl R & Swales, J K, 1995. "The Additionality, Displacement and Substitution Effects of Factor Subsidies," Scottish Journal of Political Economy, Scottish Economic Society, vol. 42(2), pages 113-126, May.
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    Cited by:

    1. Marco Caliendo & Jens Hogenacker & Steffen Künn & Frank Wießner, 2015. "Subsidized start-ups out of unemployment: a comparison to regular business start-ups," Small Business Economics, Springer, vol. 45(1), pages 165-190, June.
    2. Néstor Duch & Daniel Montolio & Mauro Mediavilla, 2007. "Evaluating the impact of public subsidies on a firm's performance: A quasi-experimental approach," Working Papers XREAP2007-07, Xarxa de Referència en Economia Aplicada (XREAP), revised Jul 2007.
    3. Mamedov, Arseny & Hudko, Hudko & Belev, Sergei & Moguchev, Nikita Sergeevich, 2016. "Comparative Analysis of the Effectiveness of Individual Instruments of State Investment Policy," Working Papers 3052, Russian Presidential Academy of National Economy and Public Administration.
    4. Duch, Néstor & Montolio, Daniel & Mediavilla , Mauro, 2009. "Evaluating the impact of public subsidies on a firm’s performance: a two-stage quasi-experimental approach," INVESTIGACIONES REGIONALES - Journal of REGIONAL RESEARCH, Asociación Española de Ciencia Regional, issue 16, pages 143-165.
    5. Brancati, Raffaele & Ciferri, Davide, 2007. "The demand side of Industrial Policies: Evidence and Methodology for Italian firms," MPRA Paper 5282, University Library of Munich, Germany.
    6. David Bailey & Helena Lenihan & Ajit Singh, 2009. "Lessons for African Economies from Irish and East Asian Industrial Policy," Journal of Industry, Competition and Trade, Springer, vol. 9(4), pages 357-382, December.
    7. Frantisek TURNOVEC, "undated". "Council, Commission and European Parliament Influence in European Union Decision Making," EcoMod2009 21500089, EcoMod.
    8. Girma, Sourafel & Görg, Holger & Strobl, Eric & Walsh, Frank, 2008. "Creating jobs through public subsidies: An empirical analysis," Labour Economics, Elsevier, vol. 15(6), pages 1179-1199, December.
    9. David Bailey & Helena Lenihan & Ajit Singh, 2008. "Tiger, Tiger, Burning Bright? Industrial Policy Lessons from Ireland and East Asia for Small African Economies," Working Papers wp374, Centre for Business Research, University of Cambridge.
    10. repec:kap:sbusec:v:49:y:2017:i:4:d:10.1007_s11187-017-9857-7 is not listed on IDEAS
    11. Lenihan, Helena, 2011. "Enterprise policy evaluation: Is there a 'new' way of doing it?," Evaluation and Program Planning, Elsevier, vol. 34(4), pages 323-332, November.
    12. Bannò, Mariasole & Sgobbi, Francesca, 2010. "Firm participation in financial incentive programmes: The case of subsidies for outward internationalisation," Journal of Policy Modeling, Elsevier, vol. 32(6), pages 792-803, November.

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