Do state-aid instruments granted to Slovenian firms distort competition? The authors answer this question using Slovenian Ministry of Finance data on state-aid recipients between 1998 and 2008 and firm-level accounting data from the same period. Results show that state-aid recipients increase their market share and productivity growth in subsequent periods. Despite these findings, the overall effect on allocative efficiency appears to be neutral. The study also investigates the effect of state aid on firm exit rates and finds that government interventions delay the exit of firms receiving aid. In this manner, state-aid grants introduce market distortions and hinder competition.
COBISS.SI-ID: 30662493
State aid for rescuing and restructuring belongs among the most theoretically contentious forms of assistance, as it represents aid to old industries that have experienced difficulties. The aid is only justified in terms of eliminating the negative market consequences of companies’ exiting the market and saving a large number of jobs. An analysis of the efficiency of state aid granted in 1998–2006 in Slovenia showed that 23.6% of aid recipients did not survive. Furthermore, in companies which did survive, aid proved ineffective in promoting sales, increasing productivity and creating new jobs.
COBISS.SI-ID: 9768988
Training (state) aid has very favourable effects not only for aid recipients, but also for society as a whole; by its nature, it is very similar to R&D aid. Companies are frequently underinvested as far as knowledge is concerned, especially in specific knowledge which is not provided by the educational system. Based on individual company data for Slovenia in 1998-2006 and by using the matching method, we analyse the impact of training aid on wage and productivity growth in the recipient firms. We find that the aid contributed to the increase of average wages in the recipient firms, but it only has a low impact on their productivity growth. The reasons for the latter range from inadequately structured state aid programmes and a poor choice of recipients to an insufficient amount of aid per recipient. It also seems that recipient firms are not very successful in exploiting the new knowledge and skills of workers being trained.
COBISS.SI-ID: 27734365
We study the dynamic effects of R&D subsidies on private R&D spending in Slovenia and examine the changes in corporate R&D spending behavior due to R&D subsidies by applying propensity score matching methodology. Taking the difference-in-differences approach, we evaluate how much the supported firm would have spent on R&D had it not received the subsidy. The results confirm the complementary effect of public subsidies to private R&D spending and prove R&D subsidies as an influential variable for private R&D spending increase. The results also point to three sources of subsidized firms’ heterogeneity which have significant impact on the scope of R&D subsidies: (i) the larger the previous private R&D spending of firms, the smaller the increase in current R&D spending of subsidized firms; (ii) the larger the sales, the higher the increase in private R&D spending of subsidized firms; (iii) the effect of public R&D decreases with persistency of subsidizing. Firms that received public subsidies more than twice in the past, increased their R&D expenditures slower than nonsubsidized and less frequently subsidized firms.
Paper analyses the effectiveness of the main instrument of Slovenian FDI policy 'FDI Co-financing Grant Scheme'. We look at the post grant performance of foreign subsidiaries that received grants in the period 2000-2009 by using a double track approach – calculation of performance premia of subsidised foreign subsidiaries, based on financial statements data, as suggested by Bernard and Jensen (1999), and questionnaire survey to tackle those qualitative aspects of subsidiaries' operations which are used in official evaluation of grant applications – and find that they on average show better performance than comparable local companies and better qualitative characteristics than non-subsidised foreign subsidiaries. The main objectives of the Scheme, i.e. creation of new capacities, jobs in export-oriented activities, has been realised. The 'quality' of this quantitative increase is more of a question; the data do not indicate any real breakthroughs in technological intensity, human resource development and productivity. Subsidised FDI projects technology- and skill-wise remain more or less on the level of average Slovenian firms.