Scandinavian Working Papers in Economics

Working Papers in Economics,
University of Bergen, Department of Economics

No 04/09: Do Regional Investment Grants Improve Firm Performance? Evidence from Sweden

Mattias Ankarheim (), Sven-Olov Daunfeldt (), Shahiduzzaman Quoreshi () and Niklas Rudholm ()
Additional contact information
Mattias Ankarheim: Ministry of Finance, Postal: Ministry of Finance, , SE - 103 33 Stockholm, , Sweden
Sven-Olov Daunfeldt: Akademin Industri och Samhälle, Postal: Akademin Industri och Samhälle (Academy of Economics, Business Administration and Social Studies, Box 3203, 103 , 64 STOCKHOLM,
Shahiduzzaman Quoreshi: University of Bergen, Postal: Department of Economics, Fosswinckelsgt. 14, 5007 Bergen, Norway
Niklas Rudholm: The Swedish Retail Institute, Postal: The Swedish Retail Institute, SE-103 29 Stockholm, , Sweden

Abstract: The effect of Swedish regional investment grants during 1990-1999 on firm performance, in terms of returns on equity and number of employees, were studied using a propensity-score matching-method to control for sample selection. Firms that received grants did not perform better in terms of returns on equity when compared to matched firms in the control group. In most years, recipient firms also did not hire more employees. The results thus cast doubt on the use of regional investment grants as a general policy instrument to improve firm performance.

Keywords: Economic efficiency; propensity score matching; sample selection; logit regression; panel data

JEL-codes: R11; R58

21 pages, April 1, 2009

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