The effects of financial and technical assistance on employment growth in Bulgaria and Macedonia

Using survey data on Bulgarian and Macedonian firms that participated in USAID programs providing technical and financial assistance for small and medium-sized enterprises (SMEs) and on firms that did not, we estimate the effectiveness of such assistance in increasing the growth of employment in the assisted firms. We control for firm characteristics, as well as for the business environment using a difference-in-differences methodology. We find that USAID assistance enabled firms in Bulgaria and in Macedonia to increase employment more rapidly, than firms that did not receive assistance did. In both countries this effect was evident over a two-year period following assistance, and in Macedonia the evidence suggests that the effect lasted for longer than this two-year period.