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Economic Impact Assessment Of Public–Private Matching Fund Programs Using Firm-Level Data

Author

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  • YOUNGKYU KIM

    (Korea Electronics Technology Institute, 68 Yatap-dong, Bundang-gu Seongnam, Kyonggi-do 463-816, Republic of Korea)

  • INHA OH

    (Department of Advanced Industry Fusion (AIF), Konkuk University, 120 Neungdong-ro, Gwangjin-gu, Seoul 143-701, Republic of Korea)

  • JEONG-DONG LEE

    (Technology, Management, Economics and Policy Program, Seoul National University, San 56-1, Shillim9-Dong, Kwanak-Gu, Seoul 151-742, Republic of Korea)

Abstract

In the intermediate goods industry, largely made up of small and medium enterprises (SMEs), a government can use a matching fund to execute policies that, for example, provide funds to promote and support firms' innovative activities. This study performs an empirical analysis to investigate the additional effects when a government uses a matching fund in this way and, in particular, to analyze the growth of firms. Methodologically, to deal with the selectivity issue, we adopt a propensity score matching (PSM) estimator. We also investigate the performance of the matching fund according to changes in private shares. Our findings show that supported firms invested larger amounts in R&D and procured external financing through an overall improvement in their level of reliability. However, the results also show that this was not connected to further improvements in business performance. Moreover, although our results show some positive impact on assets and R&D expenditure from private investment in the matching fund, the relationship between sales and fixed assets was non-significant.

Suggested Citation

  • Youngkyu Kim & Inha Oh & Jeong-Dong Lee, 2015. "Economic Impact Assessment Of Public–Private Matching Fund Programs Using Firm-Level Data," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 60(04), pages 1-25.
    • Handle: RePEc:wsi:serxxx:v:60:y:2015:i:04:n:s0217590815500605
    DOI: 10.1142/S0217590815500605
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    References listed on IDEAS

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    1. Lööf, Hans & Heshmati, Almas, 2004. "The Impact of Public Funding on Private R&D investment: New Evidence from a Firm Level Innovation Study," Working Paper Series in Economics and Institutions of Innovation 6, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies, revised 01 Mar 2005.
    2. Günseli Baygan, 2003. "Venture Capital Policies in Korea," OECD Science, Technology and Industry Working Papers 2003/2, OECD Publishing.
    3. Heshmati, Almas & Loof, Hans, 2005. "The Impact of Public Funds on Private R&D Investment: New Evidence from a Firm Level Innovation Study," Discussion Papers 11862, MTT Agrifood Research Finland.
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    Cited by:

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    2. Amina Ika Micah, 2022. "Three essays on access to credit and financial shock in Nigeria," Economics PhD Theses 0422, Department of Economics, University of Sussex Business School.

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    More about this item

    Keywords

    Government support; intermediate goods industry; matching fund; selection bias; propensity score matching; venture capital; C40; G20; H20; H81; L60; O38;
    All these keywords.

    JEL classification:

    • C40 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - General
    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H81 - Public Economics - - Miscellaneous Issues - - - Governmental Loans; Loan Guarantees; Credits; Grants; Bailouts
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy

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