The effectiveness of local development programs in Southern Italy. A global counterfactual analysis

The objective of the thesis is to realize an empirical evaluation of the effectiveness of Territorial Integrated Projects. The policy was designed to implement the 2000-2006 EU Regional Operational Plans and was based upon the combination and integration of different interventions concerning infrastructures, aid schemes and other networking and system actions. Our objective is to realize a global analysis that aims at determining the policy effectiveness both at a territorial and at a firm level with the respect to Sicily. After an introductory chapter in which we present the characteristics of the policy under investigation, we devote the second chapter to the discussion of the methodological techniques mostly used in literature including some of the forefront methods recently developed in the Econometrics of program evaluation. In chapter 3 we realize an empirical analysis at a firm level on the effectiveness of the aid schemes provided by the program. Through the use of the Matching difference in differences methodology we provide evidence of the policy effectiveness with respect to employment and sales while a weak or null effect is found with respect to other profitability and productivity measures. In chapter 4 we investigate whether the better performance of treated firms depends on the success of the policy or is influenced by the selection process which has favoured the firms being ex-ante in better conditions (basically picking the winners). The study is carried out by considering a subsample of firms, operating in Sicily, which in a first stage of the program had been selected as beneficiaries of the subsidies provided by TIPs, but that at a second stage have not been financed. We implement an empirical analysis in which we aim at identifying the effect of the selection process on the economic performance of firms. We find evidence of a selection bias effect and we propose different interpretations of this phenomenon. In chapter 5 we realize an empirical evaluation on the effectiveness of the policy at a territorial level by looking at the municipalities that were selected as beneficiaries of the infrastructural interventions provided by the program. The focus is in a first stage of the analysis on the effectiveness of the whole set of infrastructural interventions. In a second stage, considering that many interventions intended to increase the touristic attractiveness of the areas involved, we look at the effects of the program on specific outcome measures directly related to the touristic sector. We find a weak effect of the touristic interventions while the policy looks strongly effective when the analysis is extended to the whole set of infrastructural interventions. In addition we estimate a dose-response function that aims to link the amount of public aids received by the involved municipalities with their economic performance. We find an inverse U-shaped dose-response function that highlights how, in terms of financial dimension, the intermediate projects seem to be the most appropriate. To the best of our knowledge this work constitutes the first attempt of a quantitative ex-post evaluation of the success of TIPs. In addition this program gives us the possibility of referring to different units of analysis. Since literature has showed that contrasting results can be obtained by analyzing the effects of a program at different levels, our contribution at this extent looks quite useful. Finally we aim to include our work within the most recent literature that tries to go over the binary division between treated and control units through the estimation of a dose-response function that takes into account the different amounts of public funds received by the beneficiaries.