Technical Report
Effect of public subsidies on firm performance: evidence from Chile
Autor
UdeC Centro de Estudios de Sistemas de Innovación
Institución
Resumen
This paper studies the effect of public subsidies on firm performance for emerging economies. Focused on public programs implemented in Chile between 2006 and 2018 by the Production Development Corporation in Chile (CORFO)
and measures performance by focusing on ve different outcomes: sales, employment, labor productivity, sales-funding ration and capitalfunding ration. This paper studies the effect of public subsidies, implemented to promote entrepreneurship and innovation, have on firm performance. We focus on the funding provided by the Chilean Development Corporation CORFO between the years 2006 and 2018. Contributing to the literature that studies the effect of public subsidies on firm performance, we find that receiving any source of funding from the Chilean development agency increases sales by almost 45% with respect to firms that did not receive funding. We find no global effects on employment, labor productivity, and own capital. When studying specific programs, we find mixed effects depending on the objective of each subsided received. Programs that help with the execution of innovative entrepreneurship projects have substantial positive effects on employment and productivity, while programs that have specific markets as scope have smaller effects. Our results suggest that programs related to technological innovation generate better employment results that projects with sales as a nal objective. We find that the effect of receiving any treatment depends on the rm experience of managing these programs.