Establishing Evidence-based Evaluation Methods for Subsidy Programmes in Germany

The project aims at expanding the Centre for Evidence-based Policy Advice at the Halle Institute for Economic Research (IWH-CEP). The IWH-CEP is a platform that combines high quality research and policy advice with teaching. Its overarching objective is to improve the foundation of causal impact analysis of policy intervention in Germany. The IWH-CEP directly addresses shortcomings regarding the current practice of evaluations of policy intervention. Currently, systematic evaluation of policy is underdeveloped in Germany relative to that in other highly developed countries such as the US, UK or Italy. However, impact analysis of labour market policies represents a field where evaluation practice is already well established in Germany. We transform these ideas to other fields of policy intervention. According to the Institute’s research profile, the scope of the work is on the evaluation of subsidy programmes and financial market interventions. This project will develop sustainable evaluation practices for researchers and policymakers and act as a data source for the scientific community. In doing so, we contribute to better informed policy-making in the Federal State of Saxony-Anhalt as we provide evidence into “what works” and “what works best”.

Contents of the project

To strengthen evaluation culture in the areas of corporate subsidies and financial market interventions permanently, convincing pilot studies are required to demonstrate the feasibility of such projects. The proposed project comprehensively evaluates the impact of investment support programmes, i.e. at the level of the regions and establishments as well as in interaction with other subsidy programmes (particularly research and development programmes). The project is organised into 5 work packages:

  1. Systematic description of subsidy programmes
  2. Impact analysis of investment grants at the firm level
  3. Evaluation of the interaction between different forms of subsidy programmes
  4. Impact analysis at the macro level
  5. Knowledge transfer with the scientific community, administrative staff, policy-makers and a broader public

Description of the innovativeness

The discussion on good practices in evidence-based policy evaluations highlights three interacting dimensions: i) the application of causal impact analysis; ii) the provision of data and information on administrative funding processes; and iii) intensive knowledge transfer between policy-makers, the scientific community and the public. Actual evaluation practice in the field of subsidy programmes reveals that the degree of professionalisation is underdeveloped in all of these dimensions. The IWH-CEP contributes to overcome these shortcomings. It combines activities of high quality research and policy advice with teaching efforts. The innovativeness of our project follows Schumpeter’s (1942) idea of recombining existing resources. By bringing together the implementation of methods for causal impact analysis, the provision of full data on funding processes and an intensive knowledge transfer between policymakers, the scientific community, and the public, we produce credible policy advice that lays the ground for reproducibility, replicability, and generalisability of results.

Target groups

Target groups of the work of the IWH-CEP are members of the scientific community, policymakers/administrative staff, students and the general public. First, members of the IWH-CEP will present and discuss their findings in the scientific community. Assessing causal impact of subsidy programmes provides not only insights into “what works” and “what works best,” but also reveals impact channels of policy interventions. Second, the IWH-CEP produces evidence-based policy reports that serve as input for good policy-making and for improving administrative processes. The IWH-CEP is involved in different evaluation projects. Moreover, members of the IWH-CEP were invited to expert hearings to the European Commission, the German Federal Chancellery, the German Federal Ministry of Economic Affairs and Energy and ministries at the level of the Federal States. Third, the members of the IWH-CEP will also engage in teaching efforts, thus familiarising students, policy-makers/administrative staff, and journalists with techniques of causal impact analysis and interpretation of evaluation reports.

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