No. 42



EU Business and Innovation Support Instruments Contribute to Increased Productivity and Employment

09 December 2020


RiTo No. 42, 2020

  • Jaan Masso

    University of Tartu, School of Economics and Business Administration, Senior Research Fellow in Applied Econometrics

  • Kadri Männasoo

    Professor of School of Business and Governance, Department of Economics and Finance, Tallinn University of Technology

  • Helery Tasane

    Tallinn University of Technology, Department of Economics and Finance, PhD student and Junior Researcher

This article analyses the effects of the European Union Cohesion Policy Structural Funds on the performance of Estonian companies in terms of productivity, job creation, and exports. In the period of 2014–2020, a total of EUR 4.4. billion was granted to Estonia, which was the highest support allocation per capita in Europe; a significant share of that support was granted to activities that promoted the growth and competitiveness of small and medium sized enterprises (SMEs).

The study employed a rich dataset on the sum total of Estonian companies as well as detailed records on support allocations. The results over the years of 2015–2018, which were characterised by strong economic growth, showed that the grants increased the productivity of the supported businesses by nearly 50%. Although the COVID-19-induced crisis has dramatically changed the economic environment, it will not completely nullify what has already been achieved in business productivity and competitiveness, and that will help the companies to cope with the challenges of economic discomfort.