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Importance of EU Regional Support Programmes for Firm Performance

Konstantins Benkovskis (), Olegs Tkacevs () and Naomitsu Yashiro

No 2018/01, Working Papers from Latvijas Banka

Abstract: This paper investigates the effects of EU regional support on firms' productivity, the number of employees and other firm performance indicators. For this purpose, a rich firmlevel dataset for Latvia, a country where investment activities are affected by the availability of EU funding, is used. The paper finds that participation in activities cofunded by the ERDF raises firms' input and output soon after they embark on them, while the effect on labour productivity and TFP appears only with a time lag of three years. However, this positive productivity premium is not homogenous across firms and is more likely to materialise in the case of initially less productive and medium-sized/large firms. Furthermore, statistical significance of positive productivity gains is not particularly robust across different estimation procedures. The study also shows that after controlling for investment expenditures, EU sponsored projects are as efficient as the privately financed ones, irrespective of where private financing comes from.

Keywords: EU funds; productivity; firm-level data; propensity score matching (search for similar items in EconPapers)
JEL-codes: C14 D22 R11 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eff, nep-eur, nep-sbm, nep-tra and nep-ure
Date: 2018-02-23
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Related works:
Working Paper: Do EU Funds boost productivity and employment?: Firm level analysis for Latvia (2018) Downloads
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