Leverage Without Additionality: What Co-Funding Ratios Identify in Public Technology Programmes¶

Stefane Fermigier (Abilian) · sf@abilian.com

Draft working paper v0.2, 2026-08-04. Four propositions, each with a proof and a numeric cross-check against brute force; the ranking claim carries a Monte-Carlo report. The application is an accounting exercise on published programme data; no causal effect is estimated and none is claimed.

Download the PDF

Abstract¶

European technology programmes report a "leverage factor": the co-funding declared by grant beneficiaries per euro of public contribution. The statistic is presented as evidence that public money mobilizes private money.

We show what it identifies. Under a published co-funding schedule, the ratio is a deterministic function of that schedule, so a programme funding half of each project reports a leverage of exactly one however its beneficiaries behave. The reported ratio bounds the crowding-in ratio from above, with equality only under the assumption that no beneficiary would have invested anything absent the grant, which reverses the direction of the caveat funders usually attach to it. Compliance with the schedule cannot produce a ratio above a computable ceiling, so only observations above that ceiling carry behavioural information. Because declared co-funding pools public and private sources, a rationale resting on private capital-market frictions is addressed only by the private component, which must be reported separately or the statistic is silent on the stated market failure.

We apply the results to the Digital Europe Programme's published figures. Its headline leverage of 0.79 lies below the ceiling its own schedule implies, so it identifies the share of the envelope disbursed at full funding rates (0.21) and nothing about behaviour; one technology area of thirteen exceeds the ceiling. The private component is a minority of reported leverage in nine of the twelve areas where both are published, standing at 9.1% in artificial intelligence and 0.0% in advanced connectivity. In Monte-Carlo, ordering programmes by the reported ratio inverts the ordering by true additionality on 25.2% of sampled pairs. Programmes sharing one schedule report an identical ratio while true additionality spans the whole admissible range.

Keywords: additionality, crowding in, state aid, subsidy design, programme evaluation, technology policy.

JEL: H50, O38, D04, L52.

About this paper¶

Cite this paper¶

Fermigier, S. (2026). Leverage Without Additionality: What Co-Funding Ratios Identify in Public Technology Programmes.
Draft working paper v0.2, Abilian Econ Lab.
https://econ.lab.abilian.com/papers/leverage-without-additionality/