The Selection Process of Applications to the Portuguese Innovation Incentive System: Who Gets Financial Support?

Public policies to support entrepreneurship and innovation play a vital role when firms have difficulties in accessing external finance. However, some authors have found evidence of long-term inefficiency in subsidized firms (Bernini and Pelligrini, 2011; Cerqua and Pelligrini, 2014) and ineffectiveness of public funds (Jorge and Suárez, 2011). The aim of the paper is to assess the effectiveness in the selection process of applications to public financial support for stimulating innovation. Using a binary choice model, we investigate which factors influence the probability of obtaining public support for an innovative investment. The explanatory variables are connected to firm profile, the characteristics of the project and the macroeconomic environment. The analysis is based on the case study of the Portuguese Innovation.Incentive System (PIIS) and on the applications managed by the Alentejo Regional Operational Program in the period 2007 – 2013. The results show that the selection process is more focused on the expected impact of the project than on the firm’s past performance. Factors that influence the credit risk and the decision to grant a bank loan do not seem to influence the government evaluator regarding the funding of some projects. Past activities in R&D do not significantly affect the probability of having an application approved under the PIIS, whereas an increase in the number of patents and the number of skilled jobs are both relevant factors. Nevertheless, some evidence of firms’ short-term inefficiency was found, in that receiving public financial support is linked to a smaller increase in productivity compared to non-approved firm applications. At the macroeconomic level, periods with a higher cost of capital in financial markets are linked to a greater probability of getting an application for public support approved, which could be associated with the effectiveness of public support in correcting market failings.

Emergy analysis of a silvo-pastoral system, a case study in southern Portugal

The Mediterranean silvo-pastoral system known as Montado, in Portugal, is a complex land use system composed of an open tree stratum in various densities and an herbaceous layer, used for livestock grazing. Livestock also profit from the acorns, and the grazing contributes to avoid shrub encroachment. In the last 20 years, subsidies from the European Union have greatly promoted cattle rearing in this system and the introduction of heavy breeds, at the expense of sheep, goats or the native cattle breeds. The balance of the traditional system is thus threatened, and a precise assessment of the balance between the different components of the system, therefore is highly needed. The goal of this study was to gain a better under- standing of a Montado farm system with cattle rearing as the major economic activity by applying the emergy evaluation method to calculate indices of yield, investment, environmental loading and sustainability. By integrating different ecosystem components, the emergy evaluation method allows a comprehensive evaluation of this complex and multifunctional system at the scale of an individual farm. This method provides a set of indices that can help us understand the system and design management strategies that maximize emergy flow in the farm. In this paper, we apply the emergy evaluation method to a Montado farm with cattle rearing, as a way to gain a better understanding of this system at the farm scale. The value for the transformity of veal (2.66E?06 sej J-1) is slightly higher, when compared to other systems producing protein. That means that the investment of nature and man in this product was higher and it requires a premium price on the market. The renewa- bility for Holm Oaks Farm (49 %), lower than for other similar systems, supports the assumption that this is a farm in which, comparing with others, the number of purchased inputs in relation to renewable inputs provided by nature, is higher. The Emergy Investment Ratio is 0.91 for cattle rearing compared to a value of 0.49 for cork and 0.43 for firewood harvesting, making it clear that cattle rearing is a more labor demanding activity comparing with extractive activities as cork and firewood harvesting.