How the EU Cohesion Policy targeted at R&D and innovation impacts the productivity, employment and exports of SMEs in Estonia

Abstract

The aim of this empirical investigation is to assess how the support targeted at R&D and innovation in the European Union Cohesion Policy Programme 2014–2020 affects the labour productivity, employment and exports of small and medium-sized companies. We estimate the treatment effects of two R&D financial support activities using a semiparametric efficient estimator with over-identified moment conditions and inverse probability weighting. The impact assessment uses population data on small and medium-sized enterprises in Estonia, the European Union member state that benefits most per capita from Cohesion Fund allocations. We found that support for R&D and innovation from the Cohesion Policy had a positive short-term effect on labour productivity and employment over the estimation period 2014–2018, and that the size and robustness of the effect were strongest for labour productivity. The short-term effect on exporting was ambiguous.