Estimating the Impact of Government Subsidies on the Economic Development and the Employment Conditions in the Province of Reggio Calabria
1 July 2005
Dr. Francesco Lo Passo
The Italian province of Reggio Calabria, jointly with the local association of small and medium enterprises (Confartigianato), asked NERA to provide a survey of the economic, environmental, and employment conditions characterizing the province to determine the effectiveness of the government subsidies used by firms in the region.
This study describes the productivity of firms, as well as employment conditions, credit market, infrastructural endowment, and environmental risks of the province. It also quantifies the impact of government subsidies on the per capita value added and employment rates of 17 sub-provincial areas of the Reggio Calabria province. The NERA study confirms that the province of Reggio Calabria is characterized by a number of criticalities:
- The infrastructural endowment is poor
- The credit market shows a high cost of debt due mainly to credit rationing
- The area is characterized by a low degree of competitiveness
- Environmental and firms' default risks are high
The results show that the provision of subsidies by the Italian government generates only a small, although statistically significant, increase in productivity and the number employees in the local workforce.
