Investment grants and firms’ productivity: how effective is a grant booster shot?

Fernando Alexandre (), Miguel Chaves () and Miguel Portela ()
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Fernando Alexandre: NIPE/Universidade do Minho
Miguel Chaves: NIPE/Universidade do Minho
Miguel Portela: NIPE/Universidade do Minho

Small Business Economics, 2025, vol. 64, issue 4, No 3, 1641 pages

Abstract: Abstract This paper evaluates the impact of awarding a second investment grant to the same firm. We implement a Regression Discontinuity Design strategy using a rich firm-level administrative database, which allows us to link applications to grants and their scores to firms’ performance. Our results show that while a single grant has a positive impact on firms’ labour productivity, a second investment grant produces an even stronger effect. A more granular analysis suggests that only micro- and small-sized firms benefit from a single grant, whereas the overall effect of an investment grant booster shot is confirmed for the micro- and small-sized firms. No effects were found on total factor productivity for either the single or the second grant.

Keywords: Industrial policy; Investment grants; Multiple grants; Productivity (search for similar items in EconPapers)
JEL-codes: D22 H25 L25 L52 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s11187-024-00955-7

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