Evaluation of Deadweight Spending in Regional Enterprise Financing

Tokila A. and Haapanen M. Evaluation of deadweight spending in regional enterprise financing, Regional Studies. The problem of deadweight spending has been previously studied using diverse methods. However, regional variations in deadweight spending have not yet been considered. An evaluation of regional business subsidies in Finland during 2000–2003 is conducted. The analysis reveals regional differences in deadweight spending in proportional and, particularly, in monetary terms. Deadweight spending is dependent on many firm-, project- and regional-level factors, which also largely account for regional differences. However, there seems to be some regional variation in deadweight spending t…

Innovation expectations and patenting in private and public R&D projects

peer-reviewed In this paper, we investigate how the innovation expectations of public financiers are related to realized patents. The analysis is based on a novel dataset of collaborative R&D projects subsidized by the Finnish Agency of Technology and Innovation (Tekes) and the European Regional Development Fund (ERDF) during the period 2000–2004. Innovation expectations are measured using reports submitted by Tekes experts during ex ante assessments of projects. Our probit model results reveal that Tekes’ patent expectations are positively related to realized patents for projects led by private firms (but not by public organizations). For large organizations, Tekes’ innovation expectations…

When are investment subsidies crucial for investments?

EU enlargement to the less developed countries in Central and Eastern Europe is forcing policy makers to reconsider the role of business subsidies in the EU. For example, to what extent the use of investment subsidies should be allowed in the future? Which regions should be supported? In this paper we study conditions under which investment subsidy is a necessary requirement for project implementation in Finland. Empirical analysis is conducted using micro level data on investment projects of private sector firms. The data set comprises 1,836 projects that received public investment subsidies between 2001 and 2003. Our results show that the necessity of the investment subsidies is strongly …

Regional differences in returns to education for entrepreneurs versus wage earners

Many studies suggest that rates of return to schooling are lower for entrepreneurs than for employees, although the opposite has also been reported. This paper analyses the returns to education for entrepreneurs in urban and rural regions in Finland and compares these to the returns for wage earners. These areas show different rates of self-employment, higher rates being found in rural areas and lower rates in urban areas. The analysis is based on a rich, register-based dataset that includes a 7% random sample of all Finns. To avoid potential sources of bias, Mincer-type income equations are estimated using different estimation procedures. The results show regional variation in returns to e…

Econometric studies of public support to entrepreneurship

Evaluating Project Deadweight Measures: Evidence from Finnish Business Subsidies

An important problem in measuring the impacts of business subsidies is their separation from deadweight, which refers to changes that would have occurred even in the absence of intervention. Both public and private assessments have been used previously to study deadweigh, but so far little is known about how they correspond to each other. To address this issue we conducted a joint evaluation of the private and public assessments of deadweight for Finnish business projects. A unique dataset combines large register data with both public and private information on projects financed in 2000–03. First, our results suggest that the different measures for deadweight are greatly uncorrelated, and …

Evaluation of investment subsidies - When is deadweight effect zero?

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 …

Evaluation of investment subsidies: when is deadweight zero?

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 …