Subsidies Research Articles

Branch differentiation of financial mechanisms of enterprise restructuring

In the paper, the financial mechanism of enterprise restructuring is interpreted as a complex process, the object of comprehensive analysis, clear planning, effective implementation, the implementation of which allows enterprises to restore financial stability, increase competitiveness and ensure sustainable development in the long term. It has been proven that the general principles of the functioning of the financial restructuring mechanism are: transparent business conduct, openness in communication, mutual benefit, reaching consensus, analysis of all aspects of activity, integration of various measures, realistic goals, financial flexibility, constant monitoring, reporting to stakeholders, innovativeness, proactivity , flexibility and operational adaptation, alternative, optimality, etc. Adherence to the specified principles ensures the successful implementation of financial restructuring, increases trust in the enterprise and contributes to achieving its financial stability. It is shown that the sectoral differentiation of financial mechanisms of enterprise restructuring allows taking into account the specifics of each industry, ensuring effective management of financial risks and optimization of resources. Successful restructuring requires an individual approach that takes into account the unique needs and operating conditions of each enterprise. Based on the results of summarizing the experience of the functioning of financial mechanisms in various branches of the national economy, it was established that they differ in various aspects of restructuring, which can be of the following nature: adaptive, structural, structural-adaptive, integrative, security-oriented, reengineering of business processes. General financial instruments that can be used in all branches of the national economy are substantiated - state financing programs through the use of state grants, subsidies and credit programs to support restructuring measures, as well as public-private partnerships based on the involvement of private investors for joint financing of infrastructure projects.

Bring Out Your Dead: A Review of the Cost Minimisation Approach in Health Technology Assessment Submissions to the Australian Pharmaceutical Benefits Advisory Committee.

Published literature has levied criticism against the cost-minimisation analysis (CMA) approach to economic evaluation over the past two decades, with multiple papers declaring its 'death'. However, since introducing the requirements for economic evaluations as part of health technology (HTA) decision-making in 1992, the cost-minimisation analysis (CMA) approach has been widely used to inform recommendations about the public subsidy of medicines in Australia. This research aimed to highlight the breadth of use of CMA in Australia and assess the influence of preconditions for the approach on subsidy recommendations METHODS: Relevant information was extracted from Public Summary Documents of Pharmaceutical Benefits Advisory Committee (PBAC) meetings in Australia considering submissions for the subsidy of medicines that included a CMA and were assessed between July 2005 and December 2022. A generalised linear model was used to explore the relationship between whether medicines were recommended and variables that reflected the primary preconditions for using CMA set out in the published PBAC Methodology Guidelines. Other control variables were selected through the Bolasso Method. Subgroup analysis was undertaken which replicated this modelling process. While the potential for inferior safety or efficacy reduced the likelihood of recommendation (p<0.01), the effect sizes suggest that the requirements for CMA were not requisite for recommendation. The Australian practice of CMA does not strictly align with the PBAC Methodology Guidelines and the theoretically appropriate application of CMA. However, within the confines of a deliberative HTA decision-making process that balances values and judgement with available evidence, this may be considered acceptable, particularly if stakeholders consider the current approach delivers sufficient clarity of process and enables patients to access medicines at an affordable cost.

The New EU Industrial Policy: Opening Up New Frontiers for Financial Capital

The EU has implemented a whole array of industrial policy programmes over the past decade to bolster the competitiveness of selected knowledge-intensive industries and to induce a digital and green transition. Responding to shifting competitive challenges in global capitalism, and the adoption of industrial strategies by other major economies, the new EU industrial policy seeks to onshore manufacturing capacity in sectors of geoeconomic importance, and simultaneously reduce dependencies on global value chains. Drawing on a historical materialist perspective, this article historizes and contextualises the financing strategies adopted within EU industrial policy. Faced with tight budgetary constraints, and deficit spending not being an option at the EU level, unlocking private investment takes centre stage, such as by tapping into capital markets or using member state aid or EU structural funds as a precursor, as well as by incentivising private investments through risk-absorbing financial instruments that rely on the EU budgetary resources. As will be shown, the EU has been experimenting with such risk-absorbing financial gimmicks for industrial policy purposes since the 1990s; yet, their usage has reached unprecedented levels with the heightened geoeconomic tensions since the 2008 and Covid-19 crises. The article demonstrates moreover that organised factions within financial and industrial capital have actively advocated for public safeguards, and that their deployment thus is not merely a functionalist response to shifting power dynamics or a desperate last resort in the absence of a supranational fiscal policy.

Legal and administrative elements of the construction of tax exemptions and allowances in the context of granting public support

Among the forms of public assistance of a passive nature are tax concessions and exemptions. A given form of aid can be of liquidity support, rescue and restructuring and pro-development nature for the enterprise. This form of assistance is reflected in the reduction of revenues to the state and local government budgets. Tax credits, used as investment incentives for entrepreneurs, can affect the growth of production, and in the case of new investments, the creation of new jobs or the retention of existing ones. The article presents the provisions of the tax law on real estate tax in correlation with the law on state aid, in the context of an assessment of - to what extent on the grounds of real estate tax it is possible to operate reliefs and exemptions that constitute state aid for entrepreneurs. The legal problems of providing state aid and the issues of tax procedures in the field of tax reliefs and exemptions and the calculation of the net value of state aid are presented.

Social Enterprise Under Moral Hazard: Who Gets State Subsidies and Active Financing?

Social Enterprise Under Moral Hazard: Who Gets State Subsidies and Active Financing?

State aid for broadband network deployment: National and subnational governance mechanisms, 2003–2023

This paper examines the governance models of State aid measures for broadband network deployment in European Union Member States. The research is based on 199 decision letters collected from the European Commission's competition cases database, published between 2003 and 2023. Deploying a theory-driven content analysis approach, the analysis reveals and categorises a variety of governance models. These models vary regarding the authority responsible for the decision-making and, in the case of national schemes, the authority responsible for the implementation, including centralised and decentralised arrangements. Different legacies and institutional set-ups explain the governance models, including the typology of state structures, the constitutional powers, the traditions of participation in the telecommunication sector, policy diffusion and regional development. There are several possible pathways to a gradual transition from one model to another. The design of flexible national schemes, which offer subnational authorities the option to implement them in their regions or to rely on central management agencies for specific tasks adapted to their interests, resources and capacities, could be the optimal solution to prevent the launch of ad hoc measures by subnational authorities and to adapt to different institutional arrangements.

On fraud and certification of green production

AbstractWe present a novel model of fraud and certification in green production. We focus on settings where firms decide between a green or a standard version of a product together with an advertising strategy that can include fraud. In addition, green firms can choose to certify their production to guarantee the truthfulness of their claims. This results in four production‐advertising possibilities (standard, genuine green, fraudulent green, and certified green), by which we provide new insights about the prevalence of fraud and certification. We characterize the perfect Bayesian equilibrium of the resulting game for given green production costs, certification costs, and consumers' willingness to pay for standard production, and we perform comparative statics for the main parameters of the resulting game. We find that changes in certification and green production costs affect consumers' beliefs differently, whereby increases in certification and decreases in green production costs can broaden the likelihood of fraud. These novel results are robust to different market structures and question the general desirability of public subsidies for promoting green production without accompanying certification.

On the effects of public subsidies for severe and mild dependency on long-term care insurance

Extant theoretical work on long-term care (LTC) and its insurance has neglected an important fact: Benefits of LTC insurance as well as the amount of public subsidization of LTC can differ between severe and mild dependency. The objective of this paper is to revisit the study of optimal purchase of LTC insurance and its crowding out by public subsidies dissociating coverage for the risk of dependency in nursing home and of dependency at home. This study examines three prevalent models of LTC insurance indemnities commonly encountered in various LTC insurance markets. It also studies the presence of potential intergenerational moral hazard and shows how it drives the crowding out or crowding in of LTC insurance by public subsidization according to the insurance models and risk aversion behaviours.

Paying for School Finance Reforms: How States Raise Revenues to Fund Increases in Elementary-Secondary Education Expenditures

This study investigates how individual states raise revenue to pay for elementary-secondary education spending following school finance reforms (SFRs). We identify states that increased and sustained education expenditures after reform, search for legislative statutes that appropriated more education spending, and assess how policymakers funded the SFRs. Our results show that state legislatures increase investments in education by increasing tax revenue streams, such as sales and excise taxes, and by taking over property tax collections. Considering these results, we discuss that increased state investment in education should be accompanied by a policy mechanism to distribute state aid equitably to districts. Moreover, policymakers should consider local voters’ preferences when implementing SFR policies, as tax increases may reduce local fiscal effort for education.

Comfort, or not comfort, that is the question. The legal status and consequences of comfort letters issued by the European Commission in State aid cases

ABSTRACT The paper discusses issues not touched upon in legal literature, namely the legal status and consequences of comfort letters issued by the European Commission in State aid cases. The European Commission has exclusive competence to examine the compliance of support provided by Member States to domestic undertakings with State aid rules. Under EU law, the Commission's final position on the State aid character of the assessed measure must take the form of a decision. However, sometimes, the proceedings are concluded not by a decision but by a comfort letter. It presents the final position of the European Commission and, in many cases, ends the procedure. However, the legal character of the Commission's comfort letters may raise doubts. The article explains the concept of comfort letters issued in State aid cases, their legal status, and the consequences they bring to interested parties.

Estimating the loss-reduction effects of disaster preparedness and mitigation: An empirical study of US coastal states.

As extreme weather events like floods and storms continue to increase, it is crucial to examine the degree to which various disaster preparedness and mitigation investments can lower these risks. In this research, we empirically examine the effects of multiple federal disaster aid programs on reducing subsequent flood- and storm-related damages across US coastal states. Our analysis distinguishes aid programs and their funded projects targeting different emergency management functions, including preparedness, nonstructural and structural mitigation, emergency response and protective measures, and rehabilitation of public infrastructure. We construct panel data of more than 1800 US counties over the years 2000-2019 and estimate a fixed-effects model with time-varying county-level socioeconomic and demographic characteristics. We find that disaster aid generally helps mitigate property damages, although this loss-reduction effect varies by program. Among all aid programs, the Emergency Management Performance Grant results in the largest reduction of future flood damages. The Public Assistance grants supporting emergency work are also found to exert a strong effect on risk reduction. We also find that the impacts of disaster aid are higher in coastal counties. Our study is one of the first few examining the resilience implication of disaster aid in coastal counties, and our results underscore the importance of investing in capacity building, contingency planning, and consistency in maintenance.

How altruism works during a pandemic: Examining the roles of financial support and degrees of individual altruism on international remittance

AbstractWhile the importance of international remittances has been recognised globally, understanding how public subsidies and the degree of individual altruism affect remittance behaviour remains limited. Although international remittances were predicted to decline drastically in the early stages of the COVID‐19 pandemic, remittance data proved that they were ultimately resilient to the anticipated negative shock of 2020. Potential reasons include altruistic motivations among migrants and economic stimulus programmes in large economies; however, a detailed investigation from a micro‐perspective is lacking and urgently needed. This study examines the impact of financial support in host and home countries and individual altruism on international remittances using unique data from foreign care workers in Japan. Our panel data estimation shows that emergency cash transfers from the host country positively affected migrant remittance amounts; however, no crowding‐out effects were observed due to subsidies from home governments. The heterogeneous analysis also reveals that highly altruistic remitters were more likely to send money home after receiving cash transfers in the host country. The results support the claims of international organisations that the resilience of remittances was supported by altruism and public financial support during the pandemic.

Investigating environmental prioritization: role of financial resources and female entrepreneurship in the Mediterranean region

PurposeIn this study, we aim to define a new ecological financial pecking order. We examine how SMEs' adherence to the environment in the Mediterranean region is impacted by their financial resources and how women Entrepreneurship could play a moderating role in this relationship.Design/methodology/approachOur data are pooled cross-sectional firm level data across 14 Mediterranean countries, with a total of 5,949 observations over the period from 2018 to 2020. We look into the moderating influence of SMEs’ female ownership on the financial sources-environmental engagement link using GLS estimations. To reach our aim we focus on seven funding sources and develop a green engagement construct using JCA. Besides, we distinguish between the least and most environmentally engaged companies in the EU and its neighborhood and compare the different interactions and possible moderations.FindingsResults show that government subsidies foster environmental engagement, followed by supplier credits with a less significant positive impact. The bank credits have the least significant beneficial influence, while non-bank financial institutions have a non-significant effect. We underline that environmental engagements are hindered by the other funds, issued bonds and internal funds.Research limitations/implicationsSMEs in the Mediterranean region, particularly the less environmentally conscious, require strong legal frameworks to enforce environmental responsibility and raise awareness. Integrating less environmentally committed EU SMEs into state subsidy strategies is a chance to improve environmental responsibility in the region.Originality/valueTo our knowledge, there are no prior studies that present a detailed financial structure and environmental management investigation for SMEs within the Mediterranean region while considering the moderating effect of women's entrepreneurship.

Voices of Refugee Families from Ukraine Currently Living in the Czech Republic

Abstract The living situation of Ukrainian refugees in the Czech Republic can be explored from various perspectives. However, the currently available data are not able to provide a sufficient view of the refugee situation. These data are rather economic (related to financial situation, employment, wage disadvantage, use of state aid, etc) and do not provide, for example, information on daily needs. Our goal is therefore to give a voice to refugees from Ukraine to describe their current perception of their life situation and based on this establish implications for social work. The data were created through the perspective of participatory research using the photovoice method (individual and group) interviews (n = 13), online responsive questionnaire survey (n = 41) and a final photo exhibition. According to the available data, the context of life situation was created by economic well-being. But the key theme of life situation of Ukrainian refugees was loneliness. An interesting aspect is the gender dimension of activities coping with loneliness, which especially includes the ‘typically female role’ of childcare.

Can the Promise of Free Education Improve College Attainment? Lessons from the Milwaukee Area Technical College Promise

This study found that the MATC Promise increased college attainment by encouraging Milwaukee high school students to access state and federal aid, and to consider matriculating to their local two-year college. The MATC Promise exemplifies the last-dollar model of college aid. If seniors at Milwaukee area public high schools complete academic milestones, apply for financial aid, qualify based on low family income, and matriculate to Milwaukee Area Technical College (MATC), then the Promise covers any remaining tuition charges. The message promoting free college was the program’s main element, since the funding support for eligible students came primarily from existing state and federal aid. We studied outcomes for the first four graduating classes after the Promise was launched, compared to the trend in Milwaukee for the previous six graduating classes. The rate of matriculation to MATC increased from 10 percent to 15 percent. There was no such increase in matriculation to other technical college districts around the state, suggesting that the increase was caused by the Promise. The increase in enrollment was larger among lower-income students and those in the urban Milwaukee Public Schools. Those students were more likely to apply for financial aid earlier, regardless of whether they ultimately qualified for the Promise, and their rate of matriculation to any college increased from 45 percent to 49 percent. There was no indication that attracting additional students to college led to lower graduation rates, though we were limited to examining credentials earned in two years or less.

EU legislators approve the electricity market reform

The European electricity market is on the brink of transformative regulatory changes designed to reshape its landscape fundamentally. These changes encompass measures aimed at ensuring market stability, enhancing efficiency, promoting investment in clean energy, and safeguarding stakeholders from energy crises. Central to these reforms is the promotion of Power Purchase Agreements (PPAs) and Contracts for Difference (CFDs) to stabilize markets. Considering that existing barriers are impeding PPAs widespread adoption, the new design of the electricity market prompts regulatory adjustments to streamline access while maintaining fair competition. Concurrently, the design of CFDs must navigate competition distortions and ensure long-term viability, posing challenges for the European Commission in aligning them with State aid rules. Efforts to boost market efficiency include the reduction of intraday gate closure times, effective January 2026, and the establishment of minimum bid sizes to optimize resource allocation and pricing mechanisms. Moreover, the regulatory framework prioritizes incentivizing investments in clean energy, underscoring Europe’s commitment to sustainability. Member states will wield the power to implement non-fossil flexibility support schemes, offering payments for available non-fossil flexibility capacity, thereby fostering the transition towards cleaner energy sources. Lastly, protective measures are being instituted to shield consumers and undertakings from energy crises, emphasizing the need for resilience and stability in the sector. As these reforms unfold, policymakers must delicately balance fostering innovation, ensuring competitiveness, and safeguarding stakeholders’ interests. This article delves into the complexities of these reforms, offering insights into their implications and challenges.

Fuel Subsidies in Ecuador: A Computable General Equilibrium Model for Targeting Evaluation

Fuel Subsidies in Ecuador: A Computable General Equilibrium Model for Targeting Evaluation

Estimation of self-funded human papillomavirus vaccine recipients from Japan's previously assumed "unvaccinated generation".

Precise vaccination data is essential to accurately estimate the effectiveness of the human papillomavirus (HPV) vaccine against HPV-related cancers. In Japan, the number of subsidized HPV vaccinations can be tracked through registries, but the number of self-funded vaccinations has not been tracked. The number of individuals who chose to receive the vaccine at their own expense, despite being ineligible for public subsidies due to their age, is unknown and has been nominally considered to be zero. Our aim is to produce a more accurate estimate of this number using recently released proprietary data. First, we estimated the total number of self-funded HPV vaccinations occurring from 2010 to 2012 using public data from the Ministry of Health, Labour and Welfare and our previously reported data on the number of HPV vaccinations eligible for public subsidy. Second, using proprietary data from the vaccine manufacturer, we calculated the distribution of self-funded vaccination shots by age. Finally, we combined these data to estimate the number of self-funded HPV vaccinations by birth fiscal year (FY) relative to a yearly reference population. We found that 78,264 individuals born in FY1993 and 58,190 born in FY1992 self-funded their vaccinations, representing 13.6% and 10.0% of the reference population, respectively. Additionally, we found that 5%-10% of individuals born from FY1986 to FY1991 self-funded their vaccinations. Our study revealed for the first time that a certain number of individuals from the "HPV unvaccinated generation," ineligible for subsidies due to age restrictions, chose to self-fund their vaccinations.

The impact of intergovernmental fiscal tools on local service decision: the Nebraska case for water and wastewater systems

ABSTRACT This study examines the impact of federal funding on local spending for water and wastewater infrastructure (hereafter ‘W&WI’) in Nebraska. The recent deterioration of W&WI creates potential risks to citizens’ lives. The federal government operates several programmes to assist with W&WI improvements. However, funding is limited, while there are substantial demands for funding. To understand the fiscal impact of intergovernmental aid on local expenditures, this study utilised panel data from 2010 to 2018 for 129 Nebraska municipalities with population over 800 that have water and wastewater systems. This study finds some evidence of the stimulating (‘flypaper’) effect of federal aid on local expenditures. However, in disaggregated models, the aid has crowd-out effects on specific types of spending (e.g. operating expenses). The findings can contribute to policymakers’ understanding of the impact of federal funding programmes and suggest directions for improvement of these tools.

A Brief Overview of State Aid Policy in the Republic of Serbia

A Brief Overview of State Aid Policy in the Republic of Serbia