Industrial policy evaluation in the presence of spillovers

Cerqua, A. and Pellegrini, G. (2017) Industrial policy evaluation in the presence of spillovers. Small Business Economics, 49 (3). pp. 671-686. ISSN 0921-898X

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The shortage of studies on spatial spillovers of capital subsidy policies is rather surprising, considering that such policies are usually designed to generate spatial externalities. We propose a new framework that allows positive agglomeration effects to be contrasted with the negative cross-sectional substitution and the crowding-out effect. The global evaluation of the ATT and the spillover parameters shifts the spotlight from the policy effect on subsidised firms to the global effect of capital subsidy policies on the targeted territory. The empirical evaluation of a policy in Italy mainly directed towards small- and medium-sized firms shows that the impact on investments, turnover and employment is positive and large, but is negative on TFP. However, the employment growth is partially determined to the detriment of the untreated firms.

Item Type: Article
Subjects: University of Westminster > Westminster Business School
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Date Deposited: 03 Apr 2017 09:37
Last Modified: 20 Sep 2017 15:51

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