Alessandro Maffioli

A Micro‐econometric Analysis of Public Support to Private R&D in Argentina

Abstract This paper investigates the relationship between government interventions to promote investments in innovation and firm‐financed R&D. Merging a unique panel data set on Argentinean firms in the 1990s with a data base on different types of public support received through the FONTAR (Fondo Tecnólogico Argentino) program, we estimate a fixed effects model and find evidence of a significant positive impact of FONTAR on private R&D. A 1 per cent increase in the amount received through FONTAR induces an average increase of 547.6 real pesos in annual R&D expenditures. The result is robust to the use of an instrumental variable estimator that controls for the potential bias induced by changes in the structure of the program. An analysis by type of financial support reveals that the impact is mainly due to targeted and fiscal credit with no evidence that funding received through matching grants has an additionality effect on private investments. This result is in line with the predictions of a simple theoretical model that investigates the impact of different policy interventions to promote investments in R&D. When firms’ preferences are not directly observable, the provision of direct subsidies is more likely to incur the risk of adverse selection attracting firms that would have invested in innovation even in the absence of public support or dismiss some of the non‐financed projects, thus leaving unchanged or decreasing the overall level of expenditures in R&D.

Improving technology adoption in agriculture through extension services: evidence from Uruguay

This article evaluates whether cost-sharing public interventions are successful in promoting agricultural technology uptake by small and medium farmers, and whether these changes can affect yields. Our article contributes to the debate by providing empirical evidence, which is scarce in the literature, from a programme offering extension services to fruit producers in Uruguay. Using a unique panel data set, we estimate a fixed effects model for the impact of extension services on technology adoption and yields. We find evidence that the programme increased density of plantation. Once we address small sample issues, we also find some evidence of impact on the adoption of improved varieties. However, we find no evidence of impact on yields for the period under study. Although this lack of effects on yields could be due to the limited time frame of the evaluation and does not rule out effects on other measures of productivity, it may also indicate that the practices promoted by the programme are insufficient to induce a detectable impact on productivity and, consequently, sustainable benefits for the farmers. The study, therefore, confirms the need of including the design of impact evaluations in the policy design in order to properly consider the timing of all the potential effects and produce conclusive findings and precise recommendations.

Can SME Policies Improve Firm Performance? Evidence from an Impact Evaluation in Argentina

This paper evaluates the impact of the Argentine SME support program PRE on employment, real wages, and exports. The program aimed at increasing the competitiveness of SMEs by co-financing up to fifty percent of expenditures in professional services and technical assistance. We use a unique panel dataset constructed with administrative records. We combine Propensity Score Matching and Difference in Differences methods to control for selection biases in the estimations. We find a positive and quantitatively important impact of the program on employment and a positive although smaller impact on real wages and the probability of exporting. We also find that the effect of the program on wages and the probability of exporting take place one year after beneficiaries receive the program. The effect of the program on employment takes place one, two, and even, three years after beneficiaries receive the program.

The Impact Evaluation of Cluster Development Programs: Methods and Practices

Do cluster development programs work? Do they fundamentally encourage the essential inter-firm linkages and coordination? Do they lead to innovation and productivity, enterprise development, larger employment, and export growth, and if so, after how long? Do other firms benefit from these programs? This book offers insight into quantitative methods that help answer these questions. Cluster development is a form of modern industrial policy that is spreading across the world to help exploit the externalities emerging from geographical agglomeration and inter-firm coordination. Therefore, rigorous impact evaluations are necessary because they help policymakers understand better ways to design future programs and provide accountability for public resources. The chapters argue that enterprise clusters and the programs to support them are diverse and multidimensional processes that require a variety of instruments to be fully understood and assessed. The book as a whole gathers various methodological essays and quantitative tests of complementary tools and approaches, emphasizing their usefulness and effectiveness in coordination with one another. Most importantly, it asserts that policy evaluation is crucial, in particular when it comes to cluster development programs, to ensure the best use of public resources, the accountability of beneficiaries, and most of all to feed the necessary learning to improve the design and implementation of public policies for enterprise development.

Credit constraints and business performance: evidence from public lending in Colombia

Whether public lending to firms effectively eases credit constraints has been widely studied for very small businesses. The evidence documented for larger firms refers to lending that is significantly subsidized and targeted to these businesses, so the estimated positive effects may reflect poor allocation of public credit. This paper investigates the impact on its beneficiaries of a wide, untargeted and unsubsidized, lending program in Colombia. We use data on all non-micro manufacturing firms and all formal credit operations. After correcting for potential selection biases using econometric techniques, we find that Bancoldex loans increase firms’ employment, purchases of inputs, investment, and output for small (but non-micro) firms, while large firms experience increases in variable inputs, but not on investment. While both short-term and long-term Bancoldex loans are found to have positive impacts on output, input demand and employment, only long-term loans increase investment. Moreover, short-term loans have a larger impact on input demand than long-term loans. Our findings also indicate that Bancoldex’ beneficiaries end up with improved overall credit conditions after receiving Bancoldex credit: the amount of credit received goes up, the duration of the loans increases, and beneficiaries are able to establish credit relationships with more financial intermediaries. Though the interest rates go down, in this dimension the effect is small.

Design and Evaluation of Fiscal Incentives for Business Innovation in Latin America: Lessons Learned After 20 years of Experimentation

This chapter presents the most important recent trends with regard to the design and evaluation of fiscal incentives for the support of business innovation in LAC. Several countries in the region have been experimenting with these policies since early 1990s, in many of these cases with technical and financial support from the Inter-American Development Bank. In contrast with the OECD countries, the LAC’s business innovation support framework is clearly biased toward direct transfers to the private sector. Just a few countries have more recently started to experiment with tax incentives. However, in comparison with the international best practices, the fiscal budgets allocated to these programs are rather meager. To some extent, business innovation policy in the region is still in its infancy. Despite this, many of these pilot programs have already been assessed and this chapter takes advantage of the existent wealth of studies in order to provide a qualitative meta-analysis of the most pioneer programs in operation since early 1990s. They main conclusions are rather straightforward: There is clear evidence of a positive impact on investments (input additionality). In other words, fiscal incentives have been effective at the moment of increasing firms’ investment in innovative projects and not only that they have been also effective in leveraging private resources for this investment. However, the studies also found that different financing mechanisms have varying impacts on different group of beneficiaries. Although it seems that the risks of crowding-out private investments are lower in the case of programs based on subsidized loans or tax incentives, matching grants seems to be more effective in the case of new innovators or at the moment of fostering linkages between firms and universities. An important policy recommendation from the different studies is that matching grants programs are a very powerful tool, which impacts might be maximized when they focus in these activities. With regard to output additionality, impacts also seem to be positive whenever enough time has elapsed since the support was approved. Indeed, the different studies that looked at output additionality suggests that positive impacts in labor productivity might be significant—in the range between 5 and 25 %—but that results start to show up only after three to five since the start of an innovation project. The chapter also indicates that the main considerations of design should be taken into consideration at the moment of increasing the efficiency of these programs and at the same time minimizing problems of moral hazard.

Estimating the Impacts of a Fruit Fly Eradication Program in Peru: A Geographical Regression Discontinuity Approach

In this paper, we evaluate the short term impact of a Fruit Fly Eradication Program in the coastal areas of Peru. Exploiting arbitrary variation in the programs intervention borders, as well as precise geographic location data of farmers households, we use a Geographical Regression Discontinuity (GRD) approach to identify the programs effects on agricultural outcomes. For this purpose, baseline and follow up surveys were collected for 615 households -307 treated and 308 controls- . Baseline data shows that producer and farm-level characteristics in treated and control areas are balanced. This confirms that the programs intervention borders were set only as a function of financial and logistic restrictions and independently of the pest incidence levels and/or other producer and/or farm characteristics. The results show that farmers in treated areas improved pest knowledge and are more likely to implement best practices for plague prevention and control. Beneficiary farmers also present increased fruit crops productivity and sales. The robustness of these findings is confirmed using placebo tests.

Extension and Matching Grants for Improved Management: An Evaluation of the Uruguayan Livestock Program

Offering matching grants along with extension services is a common tool of agricultural development policy and has the potential to address some of the shortcomings of purely private or public extension. Yet the evidence for the effectiveness of programs that combine extension with matching grants is quite thin. We add to this evidence by evaluating the Uruguayan Livestock Program (ULP), a program that promoted the adoption of intensive management practices by small and medium-sized cattle producers by offering extension from private providers combined with matching grants for investments. Using inverse probability weighting as applied to an eight-year panel data set of cattle producers, we find that the ULP had large impacts on net sales and production of calves, but that program impacts on production and sales translated into modest net economic impacts overall. We examine the mechanisms that may have driven ULP impacts, and conclude that program impacts were likely caused by improved management practices rather than by loosening liquidity constraints on producers.

Long-Term Productivity Effects of Public Support to Innovation in Colombia

ABSTRACT In this study, we evaluate the effect of innovation promotion programs administrated by the Colombian Innovation Agency (COLCIENCIAS). The evaluation focuses on programs that provide financial incentives for research and development (R&D)—matching grants and contingent loans—and encourage the formation of linkages among firms, universities, and other public research organizations. We use longitudinal firm-level data and adopt a fixed effects identification strategy to control for potential selection biases. The findings show that COLCIENCIAS financial incentives have increased labor productivity as a result of gains in total factor productivity (TFP) due to product diversification and, to a lesser extent, of capital intensification.

Exploring Firm-Level Innovation and Productivity in Developing Countries: The Perspective of Caribbean Small States

This monograph explores productivity, innovation, and firm performance, important issues that affect private sector development in the Caribbean region. Using unique and recently available datasets consisting of more than 4,000 surveys at the firm level, and covering 13 Caribbean countries, it examines a set of variables that affect productivity and innovation in the region. The chapters provide a unique perspective on the barriers to innovation, and on how access to finance, competition, foreign direct investment, gender, access to electricity, and public programs affect productivity and innovation at the firm level. The publication culminates with a review of the policy interventions that could have the most impact in increasing firm performance within the region.