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Evaluation of investment subsidies: when is deadweight zero?


  • Anu Tokila
  • Mika Haapanen
  • Jari Ritsila


In the evaluation of investment subsidies one of the critical issues concerns the assessment of deadweight, that is, the degree to which projects would have been carried out without grant assistance. With the increasing restrictions on and cuts in subsidies for investment projects in the EU countries maximisation of the impact of the public resources that remain can be achieved through their allocation for projects with minimum deadweight. This paper studies the profile of subsidised zero deadweight investment projects - projects that would be abandoned without public subsidies - in Finland. The empirical analysis is conducted using micro level data on investment projects by private sector firms. The data set comprises 3,423 projects that were granted public investment subsidies between 2001 and 2003. Our results show that the likelihood of zero deadweight is significantly dependent on the characteristics of the subsidised firm, the characteristics of the investment project and the location of the subsidised firm.

Suggested Citation

  • Anu Tokila & Mika Haapanen & Jari Ritsila, 2008. "Evaluation of investment subsidies: when is deadweight zero?," International Review of Applied Economics, Taylor & Francis Journals, vol. 22(5), pages 585-600.
  • Handle: RePEc:taf:irapec:v:22:y:2008:i:5:p:585-600
    DOI: 10.1080/02692170802287631

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    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    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. Caliendo, Marco & Künn, Steffen & Weißenberger, Martin, 2016. "Personality traits and the evaluation of start-up subsidies," European Economic Review, Elsevier, vol. 86(C), pages 87-108.
    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. Carboni, Oliviero A., 2017. "The effect of public support on investment and R&D: An empirical evaluation on European manufacturing firms," Technological Forecasting and Social Change, Elsevier, vol. 117(C), pages 282-295.
    5. José Luis Crespo-Espert & Antonio García-Tabuenca & Federico Pablo-Martí, 2012. "Women, entrepreneurial activity and territory: differences or myths?," Chapters,in: Entrepreneurship, Social Capital and Governance, chapter 6, pages 115-159 Edward Elgar Publishing.
    6. Frantisek TURNOVEC, "undated". "Council, Commission and European Parliament Influence in European Union Decision Making," EcoMod2009 21500089, EcoMod.
    7. Reiljan, Janno & Paltser, Ingra, 2013. "The implementation of research and development policy in European and Asian countries," Discourses in Social Market Economy 2013-03, OrdnungsPolitisches Portal (OPO).
    8. repec:kap:sbusec:v:49:y:2017:i:4:d:10.1007_s11187-017-9857-7 is not listed on IDEAS
    9. Antonio Garcia-Tabuenca & Jose Crespo-Espert, 2010. "Credit guarantees and SME efficiency," Small Business Economics, Springer, vol. 35(1), pages 113-128, July.
    10. Berumen, Sergio A., 2012. "Evaluación del impacto de la política de incentivos sectoriales en el desarrollo de los municipios mineros de Castilla y León," Journal of Economics, Finance and Administrative Science, Universidad ESAN, vol. 17(33), pages 15-30.


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