Public Funding of Entrepreneurship: a Case Study on Start-ups in Romania

Bogdan Glavan, Flavia Anghel and Karl-Friedrich Israel ()
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Karl-Friedrich Israel: GRANEM - Groupe de Recherche Angevin en Economie et Management - UA - Université d'Angers - Institut Agro Rennes Angers - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement, UCO - Université Catholique de l'Ouest, COGI - Comportements, Organisations et Gouvernance des Institutions - UCO - Université Catholique de l'Ouest

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Abstract: Governments attempt to stimulate entrepreneurship and innovation in various ways and with different results. In 2015 the Romanian government began to subsidize the creation of start-ups, following a general policy of the European Union. We evaluate the effects of the Romania Start-up Program, which offered subsidies for hundreds of entrepreneurs in a large variety of economic sectors. We statistically compare subsidized and unsubsidized start-ups, by calculating the Kaplan-Meier estimators of survival rates in both groups over a 5-year period. We show that subsidized start-ups have a significantly lower survival rate than non-subsidized start-ups after 4 to 5 years. Moreover, the level of employment in subsidized start-ups decreased drastically compared to their non-subsidized counterparts. Examining the survival rates of subsidized start-ups created with/without additional private investment, we find that start-ups with "skin in the game" have a higher survival rate, although we cannot draw statistically significant conclusions.

Date: 2025-11-01
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Published in Zagreb international review of economics and business, 2025, 28 (2), pp.67-88. ⟨10.2478/zireb-2025-0016⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05778456

DOI: 10.2478/zireb-2025-0016

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