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The Additionality Impact of a Matching Grant Program for Small Firms : Experimental Evidence from Yemen

NEW MARKET EMPLOYMENT INTANGIBLE ASSET E-MAIL EQUIPMENT ENTERPRISE DEVELOPMENT ACCOUNTING MATERIALS PRIVATE ENTERPRISES SALES INDUSTRY MEDIUM ENTERPRISES INFORMATION SERVICES SELLING MEDIUM ENTERPRISE COPYRIGHT CONSULTANTS IMPACTS NEW PRODUCTS LOAN PROJECTS FIRM SIZE COMPUTER TRAINING PLANNING PILOT PROJECT QUALITY REPORTING COMPUTER ACCOUNTING SERVICES TELEVISION DATA ADVERTISING IMPACT EVALUATION PRODUCTIVITY EXTERNALITIES GRANT PROGRAMS CRITERIA BUSINESS SERVICES PROCUREMENT PROCESS MARKETING MARKETS FIRM LIMITED ACCESS CONSULTANT PRIVATE SECTOR DEVELOPMENT MATERIAL ENTERPRISES MATCHING GRANTS CAPITAL INVESTMENTS SUBSIDIES RADIO ACCOUNT FINANCE CAPABILITIES GRANTS VENDORS ACCESS TO THE INTERNET TELEVISION CHANNEL TELEPHONE SMALL ENTERPRISE BANKS RESOURCES MANUFACTURING PROJECT MANAGEMENT PHONE TECHNOLOGY ENTERPRISE SUPPORT GRANT R&D FIRMS PROCUREMENT WAGES BUSINESS DEVELOPMENT SERVICES BUSINESS PLAN SMALL ENTERPRISES RESULTS BUSINESS DEVELOPMENT VALUE ELECTRICITY BANK CREDIT FAX RETAIL SALES ENTERPRISE COST PRIVATE SECTOR MARKET TRANSPARENT WAY COMPANY TECHNOLOGY DIFFUSION NEW MARKETS QUERIES SUBSIDIARY ACCOUNTING SYSTEMS RESULT INNOVATION POLICY EXPANSION SECURITY LICENSES BUSINESS BUSINESSES RISK HUMAN RESOURCES PERFORMANCE BUSINESS ENVIRONMENT TELECOM PRODUCT INNOVATION COMPANY INFORMATION INNOVATION SMALL FIRMS ENTREPRENEURSHIP CAPITAL INVESTMENT PROFITS GOVERNMENTS SEE ADVERTISEMENTS IMPLEMENTATION TARGET GUARANTEE PRICES USES ECONOMIC CONDITIONS MISSING DATA BUSINESS TRAINING
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World Bank, Washington, DC
Middle East and North Africa | Yemen, Republic of
2016-02-25T21:17:28Z | 2016-02-25T21:17:28Z | 2016-02-05

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 will 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.

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