the competitiveness of micro and small businesses. It mobilizes training and technical services to develop managerial skills, promote networking and technology use among SMEs, often in conjunction with regional agencies. SERCOTEC designs and implements its own programs but also acts as an intermediation agent for some of CORFO’s matching-grant programs.

**_Fondo de Garantía para la Pequeña Empresa_** (Guarantee Fund for Small Enterprises). The principal client of FOGAPE is Banco del Estado, a commerically oriented government retail bank which provides loan guarantees for micro and small businesses. The fund of US$50 million guarantees loans for up to ten times the guarantee amount. The average SME loan guaranteed by FOGAPE is 320 UF or about USD 7,500.

# **B. Impact Evaluations of SME Programs in Chile**

Several of Chile’s enterprise support programs – the export promotion progam of PROCHILE, the business networking program PROFO, and the innovation and technology transfer programs of FONTEC – have been rigorously evaluated. The impact evaluation studies used, in common, a non-experimental approach with a treatment group (program participants) and a control group (non-participants). Difference-in-difference (DID) methods were used to address potential biases from time-invariant unobserved firm heterogeneity and propensity score matching to better select treatment and control groups matched on observable firm attributes (these impact evaluation methods are discussed further in Section IV).

Alvarez and Crespi (2000) evaluated the impacts of PROCHILE using a survey of 365 firms drawn randomly from the universe of exporting firms tracked by the Central Bank of Chile – 178 treatment firms that had participated in PROCHILE and 187 control group firms that had not. The survey, covering the period between 1992 and 1996, elicited qualitative information on changes in firm behavior as well as quantitative information on number of exported products, number of destination markets and value of sales. The evaluation results using DID suggested that participation in PROCHILE programs led to qualitative improvements in several dimensions of firm behavior, but mixed results for quantitative outcome indicators. Relative to the control group, PROCHILE participants experienced technological gains (in products, productive processes and organizational forms), more strategic alliances with other companies, improvements in negotiation and access to commercial information, hiring and training of specialized staff, and increased investments in export promotion activities. In quantitative terms, participation in PROCHILE increased by one the number of destination markets of the treatment group relative to the control group. However, there were no significant impacts of participation on the number of exported products or the value of exports (in fact, the control group may have outperformed the participants).

Benavente and Crespi (2003) studied the effects of participation in a PROFO in the early 1990s. They compared a treatment group of 102 SMEs that had completed a three-year cycle of participation in a PROFO by 1995 to a control group of 148 firms of similar size, industry and region drawn randomly from the annual industry survey for the years 1992 7