Abstract

This paper analyses the impact of subsidies to promote Italian joint ventures (JVs) with firms in LDC and transition economies. The empirical analysis is carried out on a unique dataset of 172 JVs interviewed during 1998 by means of a closed-answer qualitative-quantitative questionnaire. The main finding of the study is that although there is a significant deadweight component in incentive policy, subsidised firms are significantly more likely to grow. Moreover, JVs comprising new firms (which need to grow to survive) also achieve a higherthan- average employment performance, and so too do (labour intensive) JVs motivated by the search for lower labour costs, and JVs in East European countries.