Effects of the investment support in the Czech meat processing industry

Abstract

The goal of the paper is to quantify and evaluate the effects of investment subsidies in the Czech meat processing industry. The investment subsidies should enhance the economic results of the supported companies and increase their competitiveness. The analysis is based on the fixed-effect modelling of balanced panel data of 130 meat processors in the period 2008–2013. It quantifies the impact of investment subsidies from the Rural Development Programme (RDP) and the national support programme (Decree of MoA) on profitability, labour productivity, credit debt ratio and the efficiency of production consumption. The conclusions can be generalized for medium-sized and large companies. The results show that investment subsidies from the RDP had not such a significant effect as expected. Investment subsidies from the RDP affected only the labour productivity of large meat processors and the ROA of non-family companies. However, they should preferably help small and medium-sized companies to be more competitive. Subsidies from the national programme increased the profitability of family-owned and medium-sized companies and changed the capital structure of the supported companies which used more bank loans for upgrading the technology.