The Additionality Impact of a Matching Grant Program for Small Firms [electronic resource] Experimental Evidence from Yemen. McKenzie, David.

McKenzie, David
Other Title:
World Bank working papers.
Washington, D.C. : The World Bank, 2015.
Policy research working papers.
World Bank e-Library.
Government document
1 online resource (23 p.)
Local subjects:
Finance and financial sector development
Private sector development
Information and communication technologies
ICT policy and strategies
Small scale enterprise
Business in development
Matching grant
Firm subsidy
Fragile states
Spurring innovation
System Details:
Mode of Access: World Wide Web.
Matching grants are one of the most common types of private sector development programs used in developing countries. But government subsidies to private firms can be controversial. A key question is that of additionality: do these programs get firms to undertake innovative activities that they would not otherwise do, or merely subsidize activities that would take place anyway? Randomized controlled trials can provide the counterfactual needed to answer this question, but efforts to experiment with matching grant programs have often failed. This paper uses a randomized controlled trial of a matching grant program for firms in the Republic of Yemen to demonstrate the feasibility of conducting experiments with well-designed programs, and to measure the additionality impact. In the first year, the matching grant is found to have led to more product innovation, firms upgrading their accounting systems, marketing more, making more capital investments, and being more likely to report their sales grew.
McKenzie, David
Assaf, Nabila
Cusolito, Ana Paula
Other format:
Print Version: McKenzie, David The Additionality Impact of a Matching Grant Program for Small Firms: Experimental Evidence from Yemen
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Restricted for use by site license.
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