Area based initiatives (ABIs) are policy initiatives aimed at improving growth in specific, tightly defined geographic areas. Examples include Enterprise Zones and some interventions made via EU Structural Funds. ABIs aim to improve local economic growth by incentivising firms to locate in the area, thereby increasing the availability of jobs. ABIs typically aim to improve growth in the defined area with some combination of: tax breaks to firms; wage subsidies; reduced planning regulation; improvements to physical and transport infrastructure and improvements to communications infrastructure

Key findings from this report:

1. Area based initiatives can have positive impacts on employment and regional GDP, but displacement can be a concern when it comes to Enterprise Zone policy.

2. Even if displacement effects are strong, EZs may play a role in helping to concentrate local employment from a number of dispersed sites.

3. Objectives of any area-based policy must be very clearly defined, and the more specifically they can be targeted in terms of outcomes the better

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While Broadband and information and communications technologies can have wide ranging impacts, the WWCLEG evidence review is particularly interested in their impact on the local economy via their effect on productivity, employment and wages. Governments may support Broadband provision because it could increase firm and work efficiency by lowering costs and enabling innovation and may improve productivity, leading to higher wages and employment. Connectivity allows for flexible working and may increase labour market participation and it may also lower barriers to starting a business. In terms of local economic performance , broadband is likely to have different effects on different places, such as in rural and urban areas.

Key findings from this report:

1. The majority of evaluations reviewed found that broadband has positive impacts on the local economy, however, effects are likely to vary across types of firms, workers and areas, and may not be large in the aggregate

2. Extending broadband to an area can positively affect firm productivity, the number of businesses, and local labour market outcomes (such as employment, income and wages). Service industries and skilled workers may benefit more than manufacturing industries and unskilled workers.

3. The economic effects of broadband tend to be larger in urban areas (or close to urban areas) than in rural areas

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WWCLEG has focused on one of three areas: physical interventions which expand or improve transport infrastructure; service enhancement relating to the quality or frequency of transportation; or interventions which change the way transport is supplied or used, either by providing subsidies or changing the ownership and operation of services.

From a local economic growth prospective, transport spending has two main aims:

• To reduce transport costs to businesses and commuters (for example by reducing congestion – and thus saving time – or by reducing fares).

• To stimulate the economy, for example, by raising the productivity of existing firms and workers, or by attracting new firms and private sector investment

Key findings from this report:

1. Overall, the impact of transport investment on employment is mixed (for road) or unknown (for rail, bus, tram, and cycling). However, there are also good reasons to invest in transport infrastructure beyond the impact on local growth which strengthen the rationale.

2. Road projects can positively impact local employment, although some investments don’t generate measurable effects. They may also increase firm entry – both through new firms starting up or existing ones relocating – although the overall number of firms tends to stay the same (which suggests that new firms displace existing firms).

3. Road and rail projects tend to have a positive effect on property prices, but in both cases the effects can vary over time.

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WWCLEG has concentrated on major events and facilities, such as large international sporting events, arts events or permanent facilities such as arenas. The review of evaluations carried out by WWCLEG excluded conferences and conference centres, trade events, and expos. Major events and facilities may play a significant role in promoting health and wellbeing or in cultural enrichment. However, WWCLEG specifically looks only at the economic impacts. From an economic point of view, local areas may wish to invest in hosting major sport and cultural events or facilities to create jobs and support regeneration.

Key findings from this report:

1. Sport and cultural events have little or no lasting effect on the local economy. Effects on wages and income tend to be small and limited to the very immediate locality, or to particular types of workers.
2. When events have been associated with increased trade or tourism, the effects appear to be short- lived.
3. From a regeneration perspective, policymakers should consider how these facilities fit into a broader strategy, and they should not be relied on alone for job-creation

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This WWCLEG briefing presents evidence-based findings and conclusions about local growth, high streets and town centres. WWCLEG use impact evaluation evidence, where it’s available, to address issues for which there is not yet high-quality evidence about real-world impact, they also draw on recent data trends, and economic theory. The briefing is designed to support people making decisions about which investments and interventions are most likely to be effective.

Key reflections from this briefing:

1. Investments in ‘supply-side’ measures, such as renovating shop fronts, are unlikely on their own to increase economic activity for a struggling high street. They need to be accompanied by investments and policies designed to increase demand.
2. Improving the skills of residents can help to address consumer demand. Higher-skilled residents have higher wages on average, which will increase local demand for goods and services.
3. There is surprisingly little evidence that ‘anchor stores’ are more important than other shops. Overall, the available evidence does not support the idea that public sector intervention is more justified to prevent closure of anchor stores than other types of shops.

The WWCLEG acknowledge that other outcomes may provide a stronger rationale for these types of investments including well being.

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Innovation involves the invention, diffusion and exploitation of new ideas. The WWCLEG has been particularly interested in innovation programmes where governments support private sector research and development (R&D) with the aim of generating or commercialising new ideas, products or processes. Governments can support innovation by doing their own research or can provide direct and indirect support to R&D in many different ways, including providing direct R&D funding, funding universities and providing firms with tax credits. Innovation is not a linear process, and the path from R&D to innovation to improved productivity and increased employment is not predictable, so evaluating and understanding the direct cause of R&D expenditure on innovative activity and local economic growth is difficult.

Key findings include:

1. R&D grants, loans and subsidies can positively impact productivity, employment or firm performance (profit, sales or turnover). There is some evidence that support is more likely to increase employment than productivity.
2. R&D grants, loans and subsidies are more likely to improve outcomes for small to medium-size companies than for larger ones. In part this may be because for larger firms, public support makes up a relatively small amount of overall R&D spend, so positive effects are harder to detect.
3. Programmes that emphasise collaboration perform better than those that just support private firms (as well as those where the programme focus is unclear). Encouraging collaboration might have an additional positive effect on the likelihood that an R&D support programme generates positive effects on outcomes of interest including place based development.

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The WWCLEG evidence review is focused on programmes that are funded by government and that provide information, structured advice or longer-term mentoring to firms. These schemes aim to increase rates of firm creation, to improve business survival, and to promote business productivity and employment growth – thereby improving economic growth. There are a number of reasons why government might support business advice. Most of these reflect market failure in the provision of private sector business support. Schemes can support firms through providing mentors, offering public grants or offering training courses.

Key findings from this report:

1. Business advice programmes show somewhat better results for sales than they do for employment and productivity, but results are generally mixed.
2. In the short-term, business advice leads to consistent gains in productivity, rather than employment.
3. In most cases, programmes had vague or multiple objectives, which makes measuring success difficult and it is also difficult to reach any conclusions about the effectiveness of public-led vs. private-led delivery.

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Accelerators and incubators are business support programmes that provide packages of support to young firms to help them grow. Widely used in the tech sector, they are now increasingly applied in other industries. Accelerators provide short term, intensive packages of support to startups. Programme entry is highly competitive and only a select few firms are accepted into each accelerator cohort. During their time in the accelerator, firms are typically provided with co-working space. Additionally, founders receive business skills training in the form of seminars, as well as intensive mentorship from members of established firms. The WWCLEG toolkit summarises the available evidence on the effect of accelerator policies for firms that have spent time in an accelerator (i.e. ex-post impact studies). WWCLEG looked for evidence on the effect of accelerators on a range of outcomes including survival, revenue, employment, and funding.

Key findings from this report:

1. The available evidence suggests that accelerators may increase participating firm employment.
2. Five studies consider the impact of accelerators on firms receiving subsequent external funding (e.g. from angel investors or venture capital firms). Four find positive effects, while one finds no effect.
3. One study which compares the effectiveness of different types of incubator and accelerator support on firm survival, finds that more specialised programmes (focusing on a single sector) are more conducive to firm survival than generalist programmes.

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Accelerators and incubators are business support programmes that provide packages of support to young firms to help them grow. Widely used in the tech sector, they are now increasingly applied in other industries. Incubators provide co-working plus business support to startups. Firms typically pay to join. Incubators typically use non-competitive entry and comparatively ‘light-touch’ support, typically targeting start-ups aged 1-5 years. Typically, incubators are either non-profit or run as managed workspaces where firms have rolling contracts and pay rent, usually staying for between one and five years. The WWCLEG toolkit summarises the available evidence on the effect of incubator policies for firms that have spent time in an incubator (i.e. ex- post impact studies). WWCLEG looked for evidence on the effect of incubators on a range of outcomes including survival, revenue, employment, and funding.

Key findings from this report:

1. There is some evidence that incubator support may increase participating firm employment and sales.
2. There is some evidence that incubators may decrease firm survival.
3. University / academic involvement may help improve firm outcomes; affiliation seems more useful than involvement of individual academics

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Access to finance programmes are business-focused interventions that can help improve firm performance. In the WWCLEG evidence review, access to finance is defined as programmes which directly lend all or part of money to firms (for example public loans or subsidised loans); Guarantee or partly guarantee loans; Provide financial education or information to firms (for instance about financial services available); Facilitate alternative forms of lending (for example business angels, micro-finance, venture capital and group lending), by creating networks, incentivising or matchmaking lenders and firms.

Key findings from this report:

1. Programmes have a positive effect on firm access to debt finance either in terms of the availability of credit or the cost of borrowing (or both). The impact on access to equity finance is mixed (and available evidence limited).
2. Access to finance had a positive impact on at least one aspect of firm performance (e.g. employment and sales) in 14 out of 17 evaluations.
3. Most programmes do appear to improve access to finance, although the evidence is weak that this in turn leads to improved firm performance.

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Export promotion agencies (EPAs) provide services that aim to help firms sell their products overseas. EPA services fall into four broad categories. EPAs may provide market information regarding export markets; undertake image promotion of the country or region; provide consultancy services to firms such as employee training and technical assistance; provide marketing services such as exposure in trade fairs and missions.

Key findings from this report:

1. Five of eleven studies find a positive relationship between EPA support and exports, four studies find mixed effects (positive only for some sectors, types of support, or type of firm) and two find no effect.
2. The evidence suggests that EPA support may sometimes improve other aspects of firm performance, but the majority of schemes do not.
3. There is less evidence of increased firm employment (one study positive, three no effect), improved productivity (one study positive, two no effect) or higher wages, value added, or investment (no effect in the one study that considers all three outcomes).

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Export Credit Agencies (ECAs) help finance exports by providing direct credit, credit guarantees, or credit insurances. Direct credit may be provided either to the exporting firm (allowing them to supply goods on credit) or to the importing firm (allowing them to buy goods with cash). Credit guarantees facilitate exporter or importer borrowing from commercial banks. Finally, insurance underwrites the value of exports provided on credit. In all cases, the ECA bears the risk of default by the firms involved. As ECAs tend to support lending or guarantees that would be unprofitable for private sector firms, they are usually either public sector, or a combination of public and private sector. ECA support tends to cover all sectors but take up is greater in exporting industries.

Key findings from this report:

1. Five of eight studies find a positive relationship between ECA support and increased exports. Two studies find mixed effects, with one finding positive effects only after excluding the aerospace industry, and another finding positive effects for insurance but not direct lending or credit guarantees. Another study finds no effect.
2. Only one study looks at the impact of ECA support on other aspects of firm performance finding a positive effect on employment and sales
3. There is some evidence that insurance provision may be more cost-effective than credit provision.

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This paper reviews 42 impact evaluations that cover programmes offering R&D grants and loans. The study found three main types of interventions, finance to universities and public research labs to fund R&D; direct support to firms; and finance through intermediary agencies such as Venture Capital (VC) businesses. The study looks at the effects of grants, loads and subsidies on R&D expenditure, Innovation activity, and economic outcomes.

Key findings from this report:

1. Programmes that emphasise public-private collaboration tend to perform better than those that just support private firms. Encouraging collaboration might have an additional positive effect on the likelihood that an R&D support programme generates positive effects on outcomes of interest.
2. R&D activities are more likely to improve outcomes for small and medium size companies than for larger ones
3. Some programmes crowd out private sector R&D. The largest grants were most likely to be linked to displacement of private sector R&D, but the extent of crowding out remains an open question
4. For most programmes there is at least some evidence of positive effects on patents, product or process innovation, but there is only strong evidence of positive effect in around half of the evaluations
5. Programmes that target specific sectors appear to do slightly worse in terms of increasing R&D expenditure and innovation, compared to those that are ‘sector neutral’
6. The effects of grants, loans and subsidies are different for different measures of innovation. The programmes have weaker reported impact on the number of patents registered, than for self- reported measures of process or product innovation

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This paper reviews 21 impact evaluations of tax credit schemes that aim to support innovation, where innovation is defined as the development and diffusion of new products and processes. Most of the shortlisted studies focus on the R&D effects of tax credits, while there are a limited number of papers that evaluate R&D tax credits on innovation (measured by patents or self-reported innovative activity). There are broadly two tax credit scheme types: incremental-based (based on a firm’s eligibility for the credit, which considers current spending that exceed historic figures) and volume-based (based on current R&D expenditures).

Key findings from this report:

1. Smaller firms are slightly more likely to experience positive benefits. This may be a result of the greater financial constraints they face, making them more responsive to changes in tax credits
2. The available studies (although limited) that focus on the impact of tax credits on innovation suggest that  tax credits have a positive impact on innovation at a firm and area level
3. A study looking at the US biotech sector across the US found that R&D tax credits had a positive effect on area-level patenting (specifically biotech patenting). As a result, it can be inferred that innovative activity, specifically in a sector that is physically clustered (which leads to patenting by researchers and firms), can show up at area level
4. A paper focusing on the US, bio-tech related sectors and looking at a broad range of wider economic impacts at State level found that tax credits have a significant, positive impact on the number of new firms doing R&D in physical, engineering or life sciences

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This final section provides a broader examination of successful business support initiatives from the What Works Centre evidence reviews - non-innovation specific interventions. This focusses in particular on the types of support most commonly available to scaling firms: finance, internationalisation assistance, leadership development, skills development and R&D support.
Key findings from this report:

1. Access to Finance (improving firms’ ability to attract and locate funding) is generally found to be positively related to firm performance and survival rates . Angel Investment in particular is related to firm success, whereas Government sponsored Venture Capital, although valuable, can lead to less market-viable firms being supported.
2. Skills development (through training programmes) : In-firm/on-the-job training programmes tend to outperform those which are classroom-based. Employer co-design and activities that closely mirror actual jobs appear to be key design elements for effective training programmes.
3. Subsidised consultancy/advisory services (for example offering business advisory services at a discounted price) tends to have a bigger impact on business performance than business survival. Customised consulting services can improve managerial skills and lead to significant increases in firm productivity. In many cases, firms would not access these services without financial support.

Find out more here.