How does public investment support change the capital structure and productivity of small enterprises? An empirical study of the food industry

Jindrich Spicka

International Food and Agribusiness Management Review, 2018, vol. 21, issue 8

Abstract: The impact evaluations of public investments are essential for policymakers to evaluate the effectiveness of public resource allocation. European public investment subsidies target small companies to enhance their competitiveness and viability in the market. This article uses the average treatment effect and the differencein- difference approach to evaluate the impacts of investment support from the Rural Development Programme and the Operational Programme Enterprise and Innovation on structural and economic indicators of small enterprises. This representative case study of 550 supported small companies from the Czech food and beverage industry during 2007-2015 clearly shows that investment subsidies increase the fixed assets, the credit-to-debt ratio and the labour productivity of supported companies versus nonparticipants. However, the discussion with recent studies indicates that this is not always positive for participants since high growth versus nonparticipants could result in crowding-out effects and increasing long-term and short-term debt that negatively impact technical efficiency.

Keywords: Industrial; Organization (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:ags:ifaamr:284918

DOI: 10.22004/ag.econ.284918

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