Balázs Muraközy (RCERS Fass)
EU Corporate Subsidies in Hungary. Selection and Performance Effects
in: Lectures "WIFO-Extern"
Vortrag, Österreichisches Institut für Wirtschaftsforschung, Wien, 15.09.2017
Online since: 15.09.2017 0:00
Structural and Cohesion Funds are one of the key policy instruments of the European Union, aimed at fostering growth in the less developed regions of the EU. Despite the magnitude of these funds in new member countries (equivalent to about 3 percent of GDP in Hungary) not much is known about their effects. Our paper uses firm-level balance sheet and subsidy data from Hungary to study the effects of business subsidies financed from Structural and Cohesion Funds between 2004 and 2014. We find strong selection both into applying and winning the grants: firms which are larger, more productive and had grown faster in the past are more likely to apply and win. We also find that many firms apply multiple times. We estimate the effect of subsidies with matching winners with non-winners to find that winning grants was associated with somewhat faster growth but was not correlated with an increase in productivity. Our results are in line with a picture that grants provide a way of financing which has a low marginal cost but requires a relatively high fixed application cost.
Research group:Industrial Economics, Innovation and International Competition