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Public support for firms in lagging regions—evaluation of innovation subsidy in Slovakia

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  • Valeria Nemethova
  • Maria Siranova
  • Miroslav Sipikal

Abstract

This article evaluates effectiveness of EU regional policy-promoting innovation and competitiveness aimed at direct support of private companies in less developed EU regions in Slovakia. By using unique set of firm microdata, we test the effectiveness of this measure with panel data fixed estimator within the framework of Cobb–Douglas production function. We found positive and significant impact on labour productivity that disappears shortly after 1 year following subsidy allocation. By specifying the optimal amount of aid, we find that majority of supported firms could benefit from bigger subsidy size, thus justifying a call for ‘more music for more money’ policy.

Suggested Citation

  • Valeria Nemethova & Maria Siranova & Miroslav Sipikal, 2019. "Public support for firms in lagging regions—evaluation of innovation subsidy in Slovakia," Science and Public Policy, Oxford University Press, vol. 46(2), pages 173-183.
    • Handle: RePEc:oup:scippl:v:46:y:2019:i:2:p:173-183.
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    File URL: http://hdl.handle.net/10.1093/scipol/scy046
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    Cited by:

    1. Yanfeng Lou & Yezhuang Tian & Kai Wang, 2020. "The Spillover Effect of US Industrial Subsidies on China’s Exports," Sustainability, MDPI, vol. 12(7), pages 1-12, April.
    2. Pu‐Yan Nie & Xu Xiao & Chan Wang & Ting Cui, 2020. "Innovation subsidy under duopoly," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 41(3), pages 362-370, April.

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