Scandinavian Working Papers in Economics

HUI Working Papers,
HUI Research

No 24: Do Regional Investment Grants Improve Firm Performance? - Evidence from Sweden

Mattias Ankarhem , Sven-Olov Daunfeldt , Shahiduzzaman Quoreshi and Niklas Rudholm ()
Additional contact information
Mattias Ankarhem: Ministry of Finance, Postal: SE - 103 33 Stockholm, Sweden
Sven-Olov Daunfeldt: The RATIO Institute, Postal: SE - 103 64, Stockholm, Sweden
Shahiduzzaman Quoreshi: The National Institute of Economic Research, Postal: SE - 103 62 Stockholm, Sweden
Niklas Rudholm: The Swedish Retail Institute, Postal: SE-103 29 Stockholm, Sweden, and Dalarna University, Department of Economics, SE-781 88 Borlänge, 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

19 pages, November 1, 2009

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