Public investment in business incubators, is it better than doing nothing?

Abstract

The objective of the article is to measure the impact caused by business incubators on the region of Galicia (Spain) in relation with the birth of new companies, the generation of new job posts and the payment of taxes derived from that activity and, particularly, the net creation of businesses attributable to the incubators. To analyse the profitability of the public investment made in business incubators, two methods are applied: the 'fiscal balance' method and the 'integral model of profitability of public resources'. The first measures what has been invested by public administrations and compares it to the fiscal income obtained from the business activity generated in business incubators. The second method, based on structural equations, correlates the public resources invested with the creation of companies, the generation of employment and tax collection. In both cases, the period under study is from 2009 until 2013.