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Effects of grants from EU funds on business performance of nonfinancial corporations in Croatia*
Matej Bule**
Matej Bule
Affiliation: Croatian National Bank, Zagreb, Croatia
Correspondence
matej.bule@hnb.hr
Article  Year: 2021  Pages: 177  207  Volume: 45  Issue: 2 Received: June 1, 2020  Accepted: February 10, 2021  Published online: June 6, 2021

FULL ARTICLE
FIGURES & DATA
REFERENCES
CROSSMARK POLICY
METRICS
LICENCING
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Indicator

Basic pattern

Extended pattern

Borderline effects

Standard error

Borderline effects

Standard error

Labour
productivity

0.076

(0.074)

0.044

(0.032)

TFP

0.009

(0.065)

0.017

(0.030)

Enterprise age

0.013***

(0.003)

0.004***

(0.001)

Employment rate

0.221***

(0.028)

0.186***

(0.014)

Capital
intensity

0.024**

(0.011)

0.022**

(0.003)

Indebtedness
rate

0.046***

(0.016)

0.045***

(0.007)

Average salary

0.093*

(0.057)

0.011

(0.016)

Profitability

0.078***

(0.022)

0.052***

(0.009)

Export
intensity

0.047***

(0.016)

0.023***

(0.007)

Import
intensity

0.002

(0.019)

0.033***

(0.008)

Control
variables
year

Yes

Yes

NACE sector

Yes

Yes

region

Yes

Yes

Number of
corporate beneficiaries

227

1,643

Number of
observations

476,682

482,503

McFadden Pseudo
R^{2}

0.3251

0.2665

Note: *, ** and *** mark statistical significance levels of 10%, 5% and 1% respectively. The basic pattern pertains to 227 corporate beneficiaries that received their first EU grant no later than 2016. These enterprises were used throughout the analysis. On the other hand, the extended pattern pertains to all corporate beneficiaries after sample adjustments, including those that received their first grant after 2016. Source: Authors’ own calculation based on data by the Ministry of Finance, Financial Agency and Court Registry.
Indicator

Period

Number of nearest neighbours

No caliper

Caliper (0.05)

1

5

1

5

Operating
income

t

0.213***

0.163**

0.319**

0.138***

t+1

0.173*

0.257**

0.290***

0.270***

t+2

0.286***

0.295***

0.236*

0.317***

Added value

t

0.167***

0.126***

0.141**

0.102***

t+1

0.213***

0.240***

0.311***

0.244***

t+2

0.332***

0.353***

0.388***

0.321***

Fixed assets

t

0.513***

0.502***

0.488***

0.516***

t+1

0.610***

0.659***

0.721***

0.679***

t+2

0.580***

0.658***

0.868***

0.636***

Employment rate

t

0.076***

0.069***

0.103***

0.080***

t+1

0.106***

0.129***

0.235***

0.167***

t+2

0.141***

0.180***

0.270***

0.201***

Labour
productivity

t

0.080*

0.050

0.031

0.014

t+1

0.094*

0.100**

0.054

0.061

t+2

0.175***

0.158***

0.098

0.103**

TFP

t

0.062

0.033

0.018

0.002

t+1

0.059

0.084

0.092

0.072

t+2

0.160**

0.171***

0.161**

0.139***

Number of
treated observations

226

226

219

215

Number of
control observations

218

985

212

933

Note: *, ** and *** mark statistical reliability levels of 10%, 5% and 1% respectively. Statistical reliability was determined by means of a bootstrapping procedure with 500 repetitions. Source: authors’ own calculation based on data by the Ministry of Finance, Financial Agency and Court Registry.
Indicator

Period

Number of nearest neighbours

No caliper

Caliper (0.05)

1

5

1

5

Indebtedness
rate

t

0.156*

0.176***

0.179*

0.171**

t+1

0.267**

0.274***

0.324***

0.264***

t+2

0.334**

0.294***

0.300**

0.296***

Average salary

t

0.005

0.008

0.008

0.006

t+1

0.026

0.007

0.022

0.003

t+2

0.035

0.021

0.044*

0.029

Capital
intensity

t

0.539***

0.503***

0.444**

0.510***

t+1

0.567***

0.577***

0.547**

0.551***

t+2

0.476**

0.507***

0.657***

0.453**

Profitability

t

0.034

0.057

0.081

0.098

t+1

0.143

0.115

0.197**

0.214***

t+2

0.136

0.169*

0.320***

0.255***

Export
intensity

t

0.084

0.011

0.015

0.004

t+1

0.166*

0.083

0.037

0.045

t+2

0.161

0.058

0.027

0.007

Import
intensity

t

0.021

0.005

0.113

0.066

t+1

0.005

0.003

0.168

0.074

t+2

0.094

0.131

0.191

0.159*

Number of
treated observations

226

226

219

215

Number of
control observations

218

985

212

933

Note: *, ** and *** mark statistical reliability levels of 10%, 5% and 1% respectively. Statistical reliability was determined by means of a bootstrapping procedure with 500 repetitions. Additional calculations with control samples comprising 2 and 10 nearest neighbours are provided in Appendix 4 below. Source: authors’ own calculation based on data by the Ministry of Finance, Financial Agency and Court Registry.
Note: *, ** and *** mark statistical reliability levels of 10%, 5% and 1% respectively. Statistical reliability was determined by means of a bootstrapping procedure with 500 repetitions. Additional calculations with control samples comprising 2 and 10 nearest neighbours are provided in Appendix 4 below. Source: authors’ own calculation based on data by the Ministry of Finance, Financial Agency and Court Registry.
Note: The solid black curve depicts the conditional expectation of growth rates of the indicator under observation with the provided relative intensity of treatment and estimated generalised propensity score. The shadowed sections represent the ceiling and floor values of the 95% confidence interval calculated through the bootstrapping method with 500 repetitions. Source: Authors’ own calculation based on data by the Ministry of Finance, Financial Agency and Court Registry.
Note: The solid black curve depicts the conditional expectation of growth rates of the indicator under observation with the provided relative intensity of treatment and estimated generalised propensity score. The shadowed sections represent the ceiling and floor values of the 95% confidence interval calculated through the bootstrapping method with 500 repetitions. Source: Authors’ own calculation based on data by the Ministry of Finance, Financial Agency and Court Registry.
Variable
name

Description

Note

Revenue

Real value of
operating income

Deflated by GDP
deflator

Employment rate

Total number of
employees based on hours of labour



Fixed assets

Real value of
fixed assets

Deflated by GDP
deflator

Age

Number of years
passed since the establishment of the enterprise



Added value

Difference
between operating income and value of intermediary inputs and other costs of
sold products

Deflated by
implicit added value deflators to the second digit level of the National
Classification of Activities (NKD) Energy costs have been deflated by the
implicit added value deflator for the electricity, gas, steam and air
conditioning supply sector.

Labour
productivity

Ratio between
added value and number of employees



Total factor
productivity

Residual of the
CobbDouglas production function

See Appendix 2
for more details on calculation methodology.

Capital
intensity

Ratio between
fixed assets and number of employees



Profitability

Ratio between
period profit and total assets



Indebtedness
rate

Ratio between
noncurrent liabilities and total commitments



Average salary

Ratio between
total gross employee costs and number of employees

Deflated by
implicit added value deflators to the second digit level of the National
Classification of Activities (NKD)

Export
intensity

Ratio between
revenue from sales abroad and operating income



Import
intensity

Ratio between
import value and operating income



Regional
affiliation

Divided into
five regions: Eastern Croatia, Central Croatia, Northern Croatia, Adriatic
Croatia and the City of Zagreb.

An enterprise’s
geographic affiliation is classified into regions, which have been defined on
the basis of the first version of the new NUTS2 classification in Croatia
(Institute for Development and International Relations, 2018). This
classification is used here solely for analytical purposes.

uijzuh
Indicator

Before adjustments

Before merger

Number of nearest neighbours

No caliper

Caliper (0.05)

1

2

5

10

1

2

5

10

Labour
productivity

0.580***

0.729***

0.042

0.000

0.032

0.036

0.032

0.047

0.014

0.010

Enterprise age

4.431***

6.573***

0.430

0.560

0.459

0.295

1.157

0.513

0.783

1.147*

Employment rate

1.530***

1.791***

0.145

0.075

0.020

0.040

0.023

0.050

0.084

0.209**

TFP

1.066***

1.168***

0.053

0.005

0.030

0.023

0.130

0.027

0.008

0.032

Capital
intensity

3.022***

3.790***

0.123

0.005

0.013

0.016

0.086

0.017

0.019

0.032

Export
intensity

0.970***

1.515***

0.091

0.093

0.116

0.126

0.101

0.174

0.154

0.220*

Indebtedness
rate

0.648***

0.955***

0.063

0.027

0.044

0.018

0.007

0.095

0.068

0.036

Number of
treated observations

1.921

226

226

226

226

226

219

219

215

213

Number of
control observations

772,528

441,846

218

417

985

1,787

212

411

933

1,694

Note: *, ** and *** mark statistical reliability levels of 10%, 5% and 1% respectively. Source: authors’ own calculation based on data by the Ministry of Finance, Financial Agency and Court Registry.
Indicator

Period

Number of nearest neighbours

No caliper

Caliper (0.05)

2

10

2

10

Operating
income

t

0.200***

0.182***

0.219**

0.210**

t+1

0.300**

0.309***

0.288***

0.292***

t+2

0.328***

0.324***

0.308***

0.346***

Added value

t

0.148***

0.134***

0.125**

0.129***

t+1

0.248***

0.256***

0.227***

0.256***

t+2

0.328***

0.375***

0.326***

0.364***

Fixed assets

t

0.506***

0.482***

0.470***

0.465***

t+1

0.632***

0.695***

0.735***

0.748***

t+2

0.582***

0.709***

0.709***

0.722***

Employment rate

t

0.073***

0.071***

0.080***

0.081***

t+1

0.123***

0.142***

0.166***

0.160***

t+2

0.187***

0.184***

0.220***

0.202***

Labour
productivity

t

0.067

0.055

0.032

0.041

t+1

0.113*

0.100**

0.045

0.083*

t+2

0.123**

0.175***

0.087*

0.149***

TFP

t

0.057

0.039

0.026

0.024

t+1

0.109*

0.089*

0.046

0.081*

t+2

0.147***

0.189***

0.112**

0.169***

Indebtedness
rate

t

0.189**

0.200***

0.165**

0.200***

t+1

0.348***

0.287***

0.317***

0.301***

t+2

0.336***

0.289***

0.277**

0.297***

Average salary

t

0.003

0.005

0.002

0.009

t+1

0.016

0.003

0.019

0.001

t+2

0.014

0.029

0.023

0.042

Capital
intensity

t

0.511***

0.474***

0.432***

0.457***

t+1

0.557***

0.603***

0.620***

0.660***

t+2

0.416***

0.571***

0.541***

0.585***

Profitability

t

0.028

0.052

0.083

0.105

t+1

0.101

0.130*

0.145*

0.183**

t+2

0.178*

0.192**

0.214**

0.259***

Export
intensity

t

0.024

0.010

0.018

0.013

t+1

0.079

0.079

0.096

0.055

t+2

0.102

0.071

0.089

0.001

Import
intensity

t

0.025

0.026

0.052

0.022

t+1

0.021

0.052

0.001

0.034

t+2

0.163

0.121

0.075

0.128

Number of
treated observations

226

226

219

213

Number of
control observations

417

1,787

411

1,694

Note: *, ** and *** mark statistical reliability levels of 10%, 5% and 1% respectively. Statistical reliability was determined by means of a bootstrapping procedure with 500 repetitions. Source: authors’ own calculation based on data by the Ministry of Finance, Financial Agency and Court Registry.
Indicator

Coefficient

Standard error

Employment rate

0.495***

0.085

Capital
intensity

0.074**

0.031

Labour
productivity

0.191**

0.085

TFP

7.69E10

5.38E10

Age

0.095

0.121

Export
intensity

0.016

0.054

Indebtedness
rate

0.148***

0.052

Number of
observations

217

Note: *, ** and *** mark statistical reliability levels of 10%, 5% and 1% respectively. Statistical reliability was determined by means of a bootstrapping procedure with 500 repetitions. Source: authors’ own calculation based on data by the Ministry of Finance, Financial Agency and Court Registry.


June, 2021 II/2021 