Firm cooperation policies: the impact of territorial spillovers

Abstract

AbstractResearch on program evaluation, and in particular on firm cooperation policies, has been scant on the impact of space-specific characteristics on program impacts. Few studies have analyzed how spatial features, that are sticky and non-mobile, may affect the intensity of a program’s effect on the targeted economic outcome. This paper uses a regional program (ERGON1) aimed at fostering the creation of Network Contracts to shed light on the contribution of spatial features to policy effectiveness. Network Contracts have been introduced in Italy with Law 9 April 2009, N. 33 to stimulate the formation of firm aggregations and to increase economic efficiency for network members. Empirical results, using Propensity Score Matching Estimates, suggest a positive and causative relation between membership in a Network Contract and firm productivity. Furthermore, evidence suggests that matching for urban characteristics significantly improves matching quality. Evidence is thus provided on the relevance of spatial features in shaping the returns to policies, thereby suggesting that ignoring such features may provide a biased picture of the true effect of a program.