1 The effects of incentives to firms’ outward internationalisation on their domestic growth and competitiveness Mariasole Bannò Università degli Studi di Brescia Department of Mechanical and Industrial Engineering Via Branze, 38 - 25123 Brescia (Italy) mariasole.banno@unibs.it Tel. +39.030.371.5563 Fax +39.030.370.2448 Lucia Piscitello Politecnico di Milano Department of Management, Economics and Industrial Engineering P.za L. da Vinci, 32 - 20133 Milano (Italy) lucia.piscitello@polimi.it Tel. +39 02 2399 2740 Fax +39 02 2399 2710 Abstract: While few studies have analysed public incentives to attract inward foreign direct investment (FDI), almost no evidence has been so far provided on public incentives to firms’ internationalisation. The present paper aims at filling this gap, by providing an empirical analysis on their effects on the firm’s growth. Specifically, the analysis is conducted on 237 Italian firms that received an incen- tive in the period 1991-2007 vs. a counterfactual sample of firms that internation- alised their activity in the same period without any incentive. The econometric re- sults, stemming from a two step treatment effect model, reveal that selection for getting the incentive tended to be not a random event, and that incentives to firms’ internationalisation cause domestic growth especially when targeted towards smaller companies. Key words: public policy, ex-post evaluation, incentives, outward FDI.