Just how effective these SME programs have been in achieving their objectives is unclear. In Mexico, impact evaluations of SME programs are rare—most are qualitative in nature and small in scope, either measuring beneficiary satisfaction with support services or else easily quantified program-coverage indicators. Few measure the net benefits of program participation by comparing the performance of beneficiaries with that of a comparison group made up of similar enterprises that did not participate in the program, and on which costbenefit assessments are made. None take into account the complicated biases from unobserved firm heterogeneity and self-selection that plague efforts to measure the true impacts of program participation. Mexico is not unique in this regard. Most countries, both advanced and developing, are still in the process of increasing rigorously evaluation of their SME programs, as noted in the forthcoming World Bank Regional Study on Impact Evaluation of SME programs.

This paper uses a unique firm panel data to rigorously evaluate the impacts of SME programs in Mexico. The paper makes use of the program module in the ENESTYC 2001 and 2005, which include retrospective questions about firm participation, date-of-participation, and type of support received in, and familiarity with any one or more of SME programs administered by several agencies. The ENESTYC was linked to the EIA to form a panel of firms over 10 years. In this way, pre- and post-program outcomes variables are tracked over time for both the treatment and control groups.

Several approaches are used to assess the impacts of program participation. A generalization of propensity-score matching and DID estimation adapted to the structure of our panel data is used to test for program impacts on intermediate and final outcome measures. This approach allowed for controlling selection biases that have plagued previous impact evaluation studies such as self-selection, unobserved heterogeneity and attrition.

Our results indicate that program participation in certain types of SME programs is associated with higher value added, sales, export, and employment. This is the case for the programs of the Ministry of Economy (PROSEC), PNAA, and CONACyT’s Fiscal Incentive Programs. Why these programs yielded positive effects and programs like CIMO did not? Maybe because these three programs (PROSEC), PNAA, and CONACyT’s Fiscal Incentive tend to reach the crème of SMEs: mid-sized, exporting firms with high technology, clean processes, and more human and physical capital-intensive production techniques. The implication is that this type of firm may have very different characteristics in comparison to those served by other programs—i.e., smaller, local-market oriented, low-tech, less human and physical capital intensive.

Our panel data also identifies the timing of the effects of program participation on outcomes. We found that some of the positive effects take some time after the third or fourth year of exposure into the program. These results remain robust after trimming the bottom 5 percent of our treatment group.

Several research lines emerge from our analysis. One key finding is that the very high number of programs and their constant evolution over time (changing names and structures, closing old programs and opening new ones) makes rigorous impact evaluations a major challenge. Thus one area is to investigate is cohort effects in the panel for those programs 31