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Incentives and Investment Decisions: The Effectiveness of Regional Policy

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  • Faini, Riccardo
  • Schiantarelli, Fabio

Abstract

The purpose of this paper is to illustrate how specific regional aspects can be incorporated into a simple investment model of a multiplant firm. The model has been used to ex plain investment in manufacturing in Scotland for the period 1961-79. The econometric findings suggest that factor prices are crucial in d etermining the regional allocation of investment. Empirical support h as not been found, instead, for the importance of administrative cont rols on investment in the more prosperous regions. Finally, the model has been simulated to assess the overall impact of regional policy i n Scotland during the 1960s and 1970s. Copyright 1987 by Royal Economic Society.

Suggested Citation

  • Faini, Riccardo & Schiantarelli, Fabio, 1987. "Incentives and Investment Decisions: The Effectiveness of Regional Policy," Oxford Economic Papers, Oxford University Press, vol. 39(3), pages 516-533, September.
    • Handle: RePEc:oup:oxecpp:v:39:y:1987:i:3:p:516-33
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    Cited by:

    1. Atzeni, Gianfranco E. & Carboni, Oliviero A., 2008. "The effects of grant policy on technology investment in Italy," Journal of Policy Modeling, Elsevier, vol. 30(3), pages 381-399.
    2. Antonio Affuso & Guido Nannariello, 2014. "Riforma degli incentivi e aziende di servizi: una quantificazione delle risorse," ECONOMIA PUBBLICA, FrancoAngeli Editore, vol. 2014(1), pages 7-27.
    3. Alessandra Amendola & Marinella Boccia & Gianluca Mele & Luca Sensini, 2023. "Do fiscal policies affect the firms’ growth and performance? Urban versus rural area," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 13(1), pages 1-33, March.
    4. Peter Bolcha & Alena Zemplinerová, 2012. "Dopad investičních pobídek na objem investic v České republice [The Effect of Investment Incentives on Investment in Czech Republic]," Politická ekonomie, Prague University of Economics and Business, vol. 2012(1), pages 81-100.
    5. Juan David Barón & Gerson Javier pérez & Peter Rowland, 2004. "A Regional Economic Policy for Colombia," Revista de Economía del Rosario, Universidad del Rosario, December.
    6. Bernini, Cristina & Pellegrini, Guido, 2013. "Is subsidising tourism firms an effective use of public funds?," Tourism Management, Elsevier, vol. 35(C), pages 156-167.
    7. Reiner Martin, 1998. "Regional Incentive Spending for European Regions," Regional Studies, Taylor & Francis Journals, vol. 32(6), pages 527-536, August.
    8. Peter Mayerhofer, 2016. "Unternehmensinvestitionen in den österreichischen Bundesländern. Entwicklung – Struktur – Funktion regionaler Förderung," WIFO Studies, WIFO, number 58936, March.
    9. Simone Chinetti, 2023. "Investment Subsidies Effectiveness: Evidence from a Regional Program," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 9(2), pages 723-759, July.
    10. Bernini, Cristina & Pellegrini, Guido, 2011. "How are growth and productivity in private firms affected by public subsidy? Evidence from a regional policy," Regional Science and Urban Economics, Elsevier, vol. 41(3), pages 253-265, May.
    11. Sungur Onur, 2019. "Spatial Distribution of Investment Incentives and the Impact of New Incentive System for Less Developed Regions in Turkey," Review of Economic Perspectives, Sciendo, vol. 19(1), pages 25-48, March.
    12. Cerqua, Augusto & Pellegrini, Guido, 2014. "Do subsidies to private capital boost firms' growth? A multiple regression discontinuity design approach," Journal of Public Economics, Elsevier, vol. 109(C), pages 114-126.
    13. Bronzini, Raffaello & de Blasio, Guido, 2006. "Evaluating the impact of investment incentives: The case of Italy's Law 488/1992," Journal of Urban Economics, Elsevier, vol. 60(2), pages 327-349, September.
    14. Mika Haapanen & Anu Tokila & Jari Ritsilä, 2005. "When are investment subsidies crucial for investments?," ERSA conference papers ersa05p466, European Regional Science Association.
    15. Martina Cioni & Davide Conforti, 2007. "The effectiveness of regional policies for innovation: an empirical investigation," Department of Economics University of Siena 508, Department of Economics, University of Siena.

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