Dynamic Effects of Public Investment Support in the Food and Beverage Industries

Jindřich Špička

DOI 10.7160/aol.2018.100108
No 1/2018, March
pp. 91-110

Špička, J. (2018) “Dynamic Effects of Public Investment Support in the Food and Beverage Industries", AGRIS on-line Papers in Economics and Informatics, Vol. 10, No. 1, pp. 91-110. ISSN 1804-1930. DOI 10.7160/aol.2018.100108.

Abstract

Impact evaluation of public investment is essential for policy makers to evaluate the effectiveness of public resource allocation and for company management from various industries to determine whether to participate in grant programmes. This article aims to use statistical and econometrical methods (such as propensity score matching, average treatment effect on treated, difference-in-difference approach and pooled regression with time lags) to evaluate the impacts of investment support from the Rural Development Programme, national sources and the Operational Programme Enterprise and Innovation on selected key economic indicators. This representative case study of 412 companies from the Czech food and beverage industry during the period from 2007-2015 noted some interesting findings, many of which go against previous findings. The food and beverage industry is an important beneficiary of public investment subsidies. Investment support increases investment activity and the size of supported companies. This investment support could lead to a crowdingout effect, which has been revealed in recent studies. Simultaneously, investment support changes the capital structure of participants towards higher use of bank loans and positively affects long-term profitability. However, there were not any significant, positive effects on the intensity of the use of fixed assets and labour productivity, which has been a key impact indicator for programme evaluations. However, research revealed positive dynamic effects of investment support on improving resource efficiency.

Keywords

Treatment effects, impact evaluation, lagged effects, food and beverage industry.

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