Published 02 January 2013

The Regional Transport Grant

- An impact assessment with a focus on the sawmill sector

The regional transport grant has been part of the regional support programme for entrepreneurship since 1971. The main objective of the transport grant is to compensate for cost disadvantages arising out of long transportation distances and to stimulate an increase in value added in the trade and industry support area. The support area comprises the counties of Norrbotten, Västerbotten, Jämtland and Västernorrland. Over the past fifteen years, the amount paid out in the form of transport grants has been between SEK 300 and 400 million.

Even if the transport grant has been paid for some 40 years, and its magnitude makes it one of the biggest kinds of company support, few microdata-based evaluations have been made of its effects. The aim of the present report is to analyse the impact of the transport grant on the recipients’ value added, turnover and profits.

The empirical analysis is based on support paid between 1997 and 2009 and focuses primarily on workplaces in the sawmill sector. In addition to the sawmills being the predominant recipients of transport grants, delimitation to this particular sector was necessary to be able to compare recipient and non-recipient workplaces with otherwise similar characteristics (market structure, production technology, etc). The empirical analysis in the report is based on a regression discontinuity approach. Slightly simplified, this means that we have compared the outcomes for workplaces located on either side of the support area’s boundary. The starting point for the comparison is an assumption that workplaces located close to but on either side of the boundary do not differ in any systematic fashion as regards either observable or non-observable characteristics.

Our initial findings indicate a positive correlation between transport grant and the recipient workplaces’ turnover and value added. But when we take into account the fact that workplaces at different distances from the eligibility limit differ as regards both observable and non-observable characteristics, we can see no evidence that that transport grant affects the recipients’ value added or turnover. Our conclusion from the analysis is that the positive correlations that nonetheless exist can not be interpreted as causal effects of the transport grant. As regards the effects of the transport grant on the recipient workplace’s profits, our findings show no unambiguous positive correlation.

The report also discusses some of the methodological problems that arise when evaluating forms of support like the transport grant. One of these is that the transport grant is a general form of support that has existed for over forty years. For interventions that have been in operation for such a long time no usable information is available about the situation before the reform. Information that in this specific case could have been used to better handle the problem of non-observable differences on between workplaces either side of the support area’s boundary. The report also touches upon the problem of weak linkages between objectives and funds as regards the transport grant.

The Swedish Agency for Growth Policy Analysis has been commissioned to evaluate the resources that the Government and authorities/agencies have allocated to entrepreneurship support policy and the policy for small to medium size companies (Appropriation directions for fiscal year 2011, commission 4). Within the framework of the commission, a total assessment is made of regional support for enterprise. The present report focuses on effects of the regional transport grant.

The regional transport grant has been part of the regional support programme for entrepreneurship since 1971. The main objective of the transport grant is to compensate for cost disadvantages arising out of long transportation distances and to stimulate an increase in value added in the trade and industry support area. The support area comprises the counties of Norrbotten, Västerbotten, Jämtland and Västernorrland. Over the past fifteen years, the amount paid out in the form of transport grants has been between SEK 300 and 400 million.

Even if the transport grant has been paid for some 40 years, and its magnitude makes it one of the biggest kinds of company support, few microdata-based evaluations have been made of its effects. The aim of the present report is to analyse the impact of the transport grant on the recipients’ value added, turnover and profits.

The empirical analysis is based on support paid between 1997 and 2009 and focuses primarily on workplaces in the sawmill sector. In addition to the sawmills being the predominant recipients of transport grants, delimitation to this particular sector was necessary to be able to compare recipient and non-recipient workplaces with otherwise similar characteristics (market structure, production technology, etc). The empirical analysis in the report is based on a regression discontinuity approach. Slightly simplified, this means that we have compared the outcomes for workplaces located on either side of the support area’s boundary. The starting point for the comparison is an assumption that workplaces located close to but on either side of the boundary do not differ in any systematic fashion as regards either observable or non-observable characteristics.

Our initial findings indicate a positive correlation between transport grant and the recipient workplaces’ turnover and value added. But when we take into account the fact that workplaces at different distances from the eligibility limit differ as regards both observable and non-observable characteristics, we can see no evidence that that transport grant affects the recipients’ value added or turnover. Our conclusion from the analysis is that the positive correlations that nonetheless exist can not be interpreted as causal effects of the transport grant. As regards the effects of the transport grant on the recipient workplace’s profits, our findings show no unambiguous positive correlation.

The report also discusses some of the methodological problems that arise when evaluating forms of support like the transport grant. One of these is that the transport grant is a general form of support that has existed for over forty years. For interventions that have been in operation for such a long time no usable information is available about the situation before the reform. Information that in this specific case could have been used to better handle the problem of non-observable differences on between workplaces either side of the support area’s boundary. The report also touches upon the problem of weak linkages between objectives and funds as regards the transport grant.

The Swedish Agency for Growth Policy Analysis has been commissioned to evaluate the resources that the Government and authorities/agencies have allocated to entrepreneurship support policy and the policy for small to medium size companies (Appropriation directions for fiscal year 2011, commission 4). Within the framework of the commission, a total assessment is made of regional support for enterprise. The present report focuses on effects of the regional transport grant.

The regional transport grant has been part of the regional support programme for entrepreneurship since 1971. The main objective of the transport grant is to compensate for cost disadvantages arising out of long transportation distances and to stimulate an increase in value added in the trade and industry support area. The support area comprises the counties of Norrbotten, Västerbotten, Jämtland and Västernorrland. Over the past fifteen years, the amount paid out in the form of transport grants has been between SEK 300 and 400 million.

Even if the transport grant has been paid for some 40 years, and its magnitude makes it one of the biggest kinds of company support, few microdata-based evaluations have been made of its effects. The aim of the present report is to analyse the impact of the transport grant on the recipients’ value added, turnover and profits.

The empirical analysis is based on support paid between 1997 and 2009 and focuses primarily on workplaces in the sawmill sector. In addition to the sawmills being the predominant recipients of transport grants, delimitation to this particular sector was necessary to be able to compare recipient and non-recipient workplaces with otherwise similar characteristics (market structure, production technology, etc). The empirical analysis in the report is based on a regression discontinuity approach. Slightly simplified, this means that we have compared the outcomes for workplaces located on either side of the support area’s boundary. The starting point for the comparison is an assumption that workplaces located close to but on either side of the boundary do not differ in any systematic fashion as regards either observable or non-observable characteristics.

Our initial findings indicate a positive correlation between transport grant and the recipient workplaces’ turnover and value added. But when we take into account the fact that workplaces at different distances from the eligibility limit differ as regards both observable and non-observable characteristics, we can see no evidence that that transport grant affects the recipients’ value added or turnover. Our conclusion from the analysis is that the positive correlations that nonetheless exist can not be interpreted as causal effects of the transport grant. As regards the effects of the transport grant on the recipient workplace’s profits, our findings show no unambiguous positive correlation.

The report also discusses some of the methodological problems that arise when evaluating forms of support like the transport grant. One of these is that the transport grant is a general form of support that has existed for over forty years. For interventions that have been in operation for such a long time no usable information is available about the situation before the reform. Information that in this specific case could have been used to better handle the problem of non-observable differences on between workplaces either side of the support area’s boundary. The report also touches upon the problem of weak linkages between objectives and funds as regards the transport grant.

The Swedish Agency for Growth Policy Analysis has been commissioned to evaluate the resources that the Government and authorities/agencies have allocated to entrepreneurship support policy and the policy for small to medium size companies (Appropriation directions for fiscal year 2011, commission 4). Within the framework of the commission, a total assessment is made of regional support for enterprise. The present report focuses on effects of the regional transport grant.

The regional transport grant has been part of the regional support programme for entrepreneurship since 1971. The main objective of the transport grant is to compensate for cost disadvantages arising out of long transportation distances and to stimulate an increase in value added in the trade and industry support area. The support area comprises the counties of Norrbotten, Västerbotten, Jämtland and Västernorrland. Over the past fifteen years, the amount paid out in the form of transport grants has been between SEK 300 and 400 million.

Even if the transport grant has been paid for some 40 years, and its magnitude makes it one of the biggest kinds of company support, few microdata-based evaluations have been made of its effects. The aim of the present report is to analyse the impact of the transport grant on the recipients’ value added, turnover and profits.

The empirical analysis is based on support paid between 1997 and 2009 and focuses primarily on workplaces in the sawmill sector. In addition to the sawmills being the predominant recipients of transport grants, delimitation to this particular sector was necessary to be able to compare recipient and non-recipient workplaces with otherwise similar characteristics (market structure, production technology, etc). The empirical analysis in the report is based on a regression discontinuity approach. Slightly simplified, this means that we have compared the outcomes for workplaces located on either side of the support area’s boundary. The starting point for the comparison is an assumption that workplaces located close to but on either side of the boundary do not differ in any systematic fashion as regards either observable or non-observable characteristics.

Our initial findings indicate a positive correlation between transport grant and the recipient workplaces’ turnover and value added. But when we take into account the fact that workplaces at different distances from the eligibility limit differ as regards both observable and non-observable characteristics, we can see no evidence that that transport grant affects the recipients’ value added or turnover. Our conclusion from the analysis is that the positive correlations that nonetheless exist can not be interpreted as causal effects of the transport grant. As regards the effects of the transport grant on the recipient workplace’s profits, our findings show no unambiguous positive correlation.

The report also discusses some of the methodological problems that arise when evaluating forms of support like the transport grant. One of these is that the transport grant is a general form of support that has existed for over forty years. For interventions that have been in operation for such a long time no usable information is available about the situation before the reform. Information that in this specific case could have been used to better handle the problem of non-observable differences on between workplaces either side of the support area’s boundary. The report also touches upon the problem of weak linkages between objectives and funds as regards the transport grant.

The Swedish Agency for Growth Policy Analysis has been commissioned to evaluate the resources that the Government and authorities/agencies have allocated to entrepreneurship support policy and the policy for small to medium size companies (Appropriation directions for fiscal year 2011, commission 4). Within the framework of the commission, a total assessment is made of regional support for enterprise. The present report focuses on effects of the regional transport grant.

The regional transport grant has been part of the regional support programme for entrepreneurship since 1971. The main objective of the transport grant is to compensate for cost disadvantages arising out of long transportation distances and to stimulate an increase in value added in the trade and industry support area. The support area comprises the counties of Norrbotten, Västerbotten, Jämtland and Västernorrland. Over the past fifteen years, the amount paid out in the form of transport grants has been between SEK 300 and 400 million.

Even if the transport grant has been paid for some 40 years, and its magnitude makes it one of the biggest kinds of company support, few microdata-based evaluations have been made of its effects. The aim of the present report is to analyse the impact of the transport grant on the recipients’ value added, turnover and profits.

The empirical analysis is based on support paid between 1997 and 2009 and focuses primarily on workplaces in the sawmill sector. In addition to the sawmills being the predominant recipients of transport grants, delimitation to this particular sector was necessary to be able to compare recipient and non-recipient workplaces with otherwise similar characteristics (market structure, production technology, etc). The empirical analysis in the report is based on a regression discontinuity approach. Slightly simplified, this means that we have compared the outcomes for workplaces located on either side of the support area’s boundary. The starting point for the comparison is an assumption that workplaces located close to but on either side of the boundary do not differ in any systematic fashion as regards either observable or non-observable characteristics.

Our initial findings indicate a positive correlation between transport grant and the recipient workplaces’ turnover and value added. But when we take into account the fact that workplaces at different distances from the eligibility limit differ as regards both observable and non-observable characteristics, we can see no evidence that that transport grant affects the recipients’ value added or turnover. Our conclusion from the analysis is that the positive correlations that nonetheless exist can not be interpreted as causal effects of the transport grant. As regards the effects of the transport grant on the recipient workplace’s profits, our findings show no unambiguous positive correlation.

The report also discusses some of the methodological problems that arise when evaluating forms of support like the transport grant. One of these is that the transport grant is a general form of support that has existed for over forty years. For interventions that have been in operation for such a long time no usable information is available about the situation before the reform. Information that in this specific case could have been used to better handle the problem of non-observable differences on between workplaces either side of the support area’s boundary. The report also touches upon the problem of weak linkages between objectives and funds as regards the transport grant.


Title
The Regional Transport Grant - An impact assessment with a focus on the sawmill sector

Serial number
WP/PM 2012:17

Reference number
2011/050

Download report (Swedish)PDF