# **VI. Summary and Concluding Remarks**

In this paper, we have evaluated the impacts of SME support programs in Chile using a non-experimental approach, with a treatment group that participated in SME programs and a control group that did not. The unique firm-level panel data used provided an unprecedented opportunity to address several issues that have plagued impact evaluations of SME programs – selectivity bias from observed and unobserved firm heterogeneity, identification of an appropriate control group, and inability to track the treatment group over a long enough period of time for firm performance outcomes to be realized.

Using propensity score matching combined with difference-in-differences models, the paper found evidence that program participation is causally related to improvements in a range of intermediate outcomes (training, adoption of new technology and organizational practices), as well as positive gains in sales, labor productivity, wages and to a lesser extent, employment. Positive treatment effects were also found by type of program, with participation in FAT and PROFO, and to a lesser extent, FONTEC having the most consistent positive impacts on several final outcome measures. No significant treatment effects were found for use of credit and loans programs alone, suggesting that access to finance alone is unlikely to spur firms to make needed organizational and technological changes to improve performance.

These findings provide insights into the mixed results of many previous impact evaluations of SME programs, in Chile as well as in other countries. First, they suggest that negative or insignificant estimates of treatment effects may often be the result of inadequate controls for the self-selection of firms into SME programs. The combination of approaches used in this paper – propensity score matching on the basis of observed pre-treatment attributes, and difference-in-difference methods to account for unobserved heterogeneity – can be quite effective is addressing this issue. Second, the absence of treatment effects may also be the result of a long gestation period for improvements in firm performance to be realized. Our finding of important time effects suggests that a longer time horizon – beyond the one or two years after treatment that is common in many evaluation studies – should be considered in program impact evaluation studies.

The research also suggests areas where the monitoring and evaluation of SME programs could be improved in Chile. There is currently no centralized repository of beneficiary data from all the different programs in Chile despite the government’s commitment to rigorously evaluating program impacts. Absent such a data base, policymakers have little information on specific and/or multiple programs used by different firms; program evaluators are also constrained in identifying an appropriate control group of firms that have never participated in any of these programs. Unless screened out, the inadvertent inclusion in the control group of firms that have participated in other programs could confound estimates of the program impacts of interest. It might also be useful to conduct periodic joint assessments of programs to compare their relative effectiveness and to identify as candidates for closure poorly performing programs or programs that have outlived their usefulness.

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