Regional Selective Assistance in Scotland: Does it make a difference to plant productivity?

Abstract

This paper examines whether receipt of a Regional Selective Assistance (RSA) grant has a causal impact on plant total factor productivity (TFP). To tackle the problem of self-selection into the treatment group, propensity score matching is employed. In order to control for the endogeneity of other variables in the model, estimations are performed using the system GMM estimator. The results show that for low technology manufacturing, receipt of an RSA grant leads to a fall in TFP.