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Are they worth it? An Impact Evaluation of 10 Years of Investment Subsidies to Italian Firms


Despite billions of euro spent in recent years by EU Member States to support the investment of private firms, there are very few rigorous evaluations assessing their impact on investment decisions and on the performance of the subsidized firms.  The purpose of this study is to conduct a rigorous evaluation of the impact of grants and loans co-financed by Cohesion Policy in Italy. State of the art counterfactual non-experimental methods have been applied to estimate the impact on employment creation, growth in sales, level of investment and changes in labour productivity and average payroll costs. Impact estimates are retrieved for two distinct geographic levels.  At the national level we focus on “Law 488/92”, a large-scale very generous programme targeting industrial firms: it supported investments in physical capital through generous non-repayable grants assigned through open competitions implemented on a regional basis. At the regional level we focus on a single Italian region (Piemonte) for which we were able to build a unique database on the entire spectrum of 25 different investment support measures available to small and medium firms. The results of the analysis provide evidence on the differential impact of the different types of subsidies, monetary values of the incentives and characteristics of the assisted SMEs, increasing the policy relevance of the findings. Large non-repayable grants, particularly when given to large firms, represent an ineffective way to stimulate additional private investment and to improve the performance of the subsidized firms.  Small grants given to small firms have small impacts, but when all the dimensions are taken into account, they are more cost-effective. For small and medium firms, non-repayable grants are outperformed by repayable soft loans and interest rate subsidies.

This study has been supported by the European Commission grant  “Counterfactual Impact Evaluation of Cohesion Policy. Work Package 1: Examples from Enterprise Support. Contract n° 2010.CE.16.B.AT.042”.  The full text of the research report can be downloaded from EC (DG-Regional Policy) web site.

Daniele Bondonio
Short bio: 

Daniele Bondonio (Ph.D. Carnegie Mellon University) is Associate Professor at the Università Piemonte Orientale (Italy), where he teaches econometrics and statistics for program evaluation.  He served as a member of the Academic Panel appointed by the European Commission for discussing an EU evaluation report on the 2000-2006 European cohesion policy programs. He taught quantitative methods for impact evaluations to EU member state government officials and he has held visiting positions at the University of California at Irvine. He is the author of a number of publications on impact evaluations of local/regional economic development policies and, in the same field, he has served as the main investigator for various research projects commissioned by national and international research institutes and organizations.

17 December 2012 - 17:00

IRVAPP/Fondazione Bruno Kessler - Via Santa Croce 77 - Trento


The presentation will be in English.