In the evaluation of development policies its essential to understand whether the policy makers’ interventions have significant consequences on the realisation of new investments and the creation of additional employment or not. Some evaluation exercisec the main problem is to determinate what would have happened without subsidies defining the conter-factual scenario. Adopting only a counter-factual approach in evaluating the effectiveness of an industrial policy is very risky, althought from a theoretical point of view is undoubted its robustness, in practice this kind of models present both methodological and empirical problems which can greatly influence the estimation. The paper discusses some literature problems on counter-factual analysis, both of empirical and theoretical nature.
Keywords: Industrial policy, impact evaluation, counterfactual methods