Firm subsidies in Central and Eastern Europe and Central Asia: is there urban bias?

Figures & data

Table 1. Variables and mean estimates.

Variable	Description	Mean
Innovation	= 1 if the firm introduced new to firm or market product innovations in the previous three years; 0 otherwise	37.19
Productivity growth	= 1 if the firm experienced productivity growth between 2009 and 2012; 0 otherwise	44.22
Employment growth	= 1 if the firm experienced employment growth between 2009 and 2012; 0 otherwise	74.39
Subsidies	= 1 if the firm received a subsidy in the previous three years; 0 otherwise	11.78
Research and development active	= 1 if the firm spends on research and development (R&D) activity; 0 otherwise	14.12
Firm size	Number of employees (log)	3.10
University	Proportion of the workforce in the firm with a third-level qualification	30.92
Services	= 1 if the firm is categorized as a service firm; 0 otherwise	58.86
Manufacturing	= 1 if the firm is categorized as a service firm; 0 otherwise	41.14
Age of the firm	Since first opened (years)	15.36
Training	= 1 if the firm invests in training for workers; 0 otherwise	43.45
Domestic	= 1 if the firm is a domestic firm; 0 otherwise	93.50
Multiplant	= 1 if the firm is a multiplant firm; 0 otherwise	8.35
Capital or city greater than 1 million	= 1 if the firm is located in an area with a population greater than 1 million; 0 otherwise	27.81
City 250,000–1 million	= 1 if the firm is located in an area with a population between 250,000 and 1 million; 0 otherwise	25.94
City 50,000–250,000	= 1 if the firm is located in an area with a population between 50,000 and 250,000; 0 otherwise	13.81
City under 50,000	= 1 if the firm is located in an area with a population less than 50,000; 0 otherwise	32.44
EU firm	= 1 if firm located in the European Union; 0 otherwise	36.40
Main market local	= 1 if the main market of the firm is local; 0 otherwise	53.50
Main market domestic	= 1 if the main market of the firm is domestic; 0 otherwise	38.13
Main market international	= 1 if the main market of the firm is international; 0 otherwise	8.37

Source: Business Environment and Enterprise Performance Survey (BEEPS), 2014.

Table 2. What types of firms are more likely to receive subsidies (equation 3(3) )?

Variable	Effect
Research and development active (high-tech bias indicator)	0.298***
	(0.056)
Firm size	0.166***
	(0.018)
University	0.001
	(0.001)
Services	–0.245***
	(0.049)
Age of the firm (infant industry bias)	0.008*
	(0.004)
Domestic	0.195
	(0.123)
Domestic*Age (domestic and infant industry bias indicator)	–0.005
	(0.004)
Training (partial – appropriability bias indicator)	0.173***
	(0.046)
Multiplant	0.051
	(0.076)
City 250,000–1 million (urban bias indicator)	0.230***
	(0.075)
City 50,000–250,000 (urban bias indicator)	0.206***
	(0.076)
City under 50,000 (urban bias indicator)	0.159***
	(0.065)
Main market local (exporting firm bias)	–0.242***
	(0.077)
Main market domestic	–0.089
	(0.071)

Notes: Reference categories are manufacturing firms, capital city and cities with a population over 1 million and the main market is international.

Country effects are controlled for in the models, but not reported.

^*** Significant at the 1% level;

^** significant at the 5%;

^* significant at the 10% level.

Table 3. Firm performance average treatment effects (ATE) and potential outcome means (POMs).

Treatment effect	Innovation	Employment	Productivity
Subsidies (1) ATE	0.633***	0.283***	0.125
Subsidies (0) POMs	0.310***	0.679***	0.417***

^*** Significant at the 1% level;

^** significant at the 5% level;

^* significant at the 10% level.

Table 4. Performance returns for subsidized firms in less urbanized locations.

Urban classification	Innovation	Employment	Productivity
City 250,000–1 million	–0.796***	0.008	0.077
	0.203	0.192	0.171
City 50,000–250,000	–0.658***	–0.358**	0.462***
	0.197	0.185	0.168
City under 50,000	–0.454***	–0.041	0.273**
	0.159	0.155	0.137

Notes:

Reference category is capital city and cities with a population over 1 million.

All other variables are controlled for as identified in method section, but not reported.

Country effects are also controlled for in the models.

^*** Significant at the 1% level;

^** significant at the 5% level;

^* significant at the 10% level.