Local Subsidies Research Articles

When market access gains do not spur urban growth

Abstract We revisit the natural experiments of division and unification of Germany. The negative shock to local market access following the division of Germany led to a fast and strong downward adjustment of the size of West German cities near the new border. In contrast, the positive shock of reunification did not lead to any change in their relative size. Even three decades after reunification, no convergence can be observed. We show that local subsidies to East Germany could have contributed to this asymmetry in time.

Synergizing stakeholder collaboration for value co-creation in China's prefabricated decoration diffusion: A tripartite evolutionary game perspective

The emerging prefabricated decoration (PD) sector in China offers a compelling avenue for revolutionizing the construction industry, aligning with the imperatives of sustainability and industrialization. However, the outlook for the diffusion of PD in China's construction industry is less than promising. The development of PD is closely related to its value creation and the intricate interplay of stakeholder strategies and their ramifications on PD's value co-creation necessitates thorough exploration. Based on evolutionary game theory, this study elucidates the dynamic interactions among local governments, developers, and decoration contractors in China's evolving PD landscape. A tripartite evolutionary game model was established, investigating the evolutionary stable equilibriums and the corresponding strategies. Then, an empirical analysis in Chongqing City validates the game models and primary conclusions. Scrutinizing subsidy thresholds, local subsidy biases, PD proportion in prefabrication, and binary innovation allocation, the research unveils nuanced insights pertinent to boosting PD's value co-creation. Findings advocate an assembly rate threshold of subsidy (65%–70 %) and a shift towards incentivizing decoration contractors to catalyze PD adoption. Additionally, excessive PD proportion and immature product investments may hinder industry development, prompting stakeholders to recalibrate strategies dynamically. These findings characterize the mechanisms of stakeholder value co-creation during the PD diffusion, enriching the implications of value co-creation theory in the emerging industry of the construction sector. They also furnish stakeholders committed to promoting the diffusion of PD in the domestic and international construction sectors with practical strategic guidance, particularly tailored for cities in the early stages of PD development.

A study of the evolutionary game of carbon offset involving tourism stakeholders under incentive and constraint mechanisms

Tourism carbon offsetting is a crucial pathway to achieving peak carbon and carbon neutrality in the tourism industry. Accurately grasping the collaborative evolutionary mechanisms among local governments, tourism enterprises, and tourists is key to promoting the implementation of tourism carbon offsetting. By constructing an evolutionary game model involving local governments, tourism enterprises, and tourists in carbon offsetting, this study uses MATLAB to simulate the evolutionary stable strategies under various conditions. Additionally, it dynamically simulates the collaborative strategies of the three parties under the influence of local government incentive and constraint mechanisms. The results indicate that under strong governmental constraint mechanisms, there is a promotion of active participation in carbon offsetting by local governments, tourism enterprises, and tourists. Incentive policies at certain levels also play a positive guiding role. As incentives increase, local subsidies and intervention costs also rise, leading to an evolution towards less enthusiastic participation among the three parties. Appropriately balanced government incentives and penalties are beneficial in achieving an equilibrium of benefits among multiple stakeholders involved in carbon offsetting, thus helping to attain carbon neutrality goals.

Effectiveness of electric vehicle subsidies in China: A three-dimensional panel study

Electric vehicles (EVs) are likely to emerge as the main means of zero-emission road transport. China has used a variety of policy approaches to encourage EV adoption, including vehicle purchase subsidies. This study uses a three-dimensional dataset to estimate the effect of purchase subsidies for domestic EVs on adoption in 316 cities in China over January 2016–December 2019. An instrumental variable approach that utilizes the timing of the cancellation of local subsidies by the central government is pursued. The findings suggest that purchase subsidies for domestic EVs have led to a sizeable increase in uptake, but have discouraged uptake of imported EVs. Higher consumer awareness of the subsidies is associated with a larger proportional effect on uptake of domestically-produced vehicles. We estimate that increases in the per-vehicle subsidy rate have on average reduced carbon dioxide (CO2) emissions at a marginal subsidy cost of about 4,453 CNY (US$712) per tonne, which is high. However other benefits, including long-run benefits from the emergence of a new clean technology sector, may be substantial.

지방자치단체의 비효율적 재정 운용과 도덕적 해이

Previous studies analyzing the causes and consequences of inefficient fiscal management have mainly focused on the politics of the budget process and fiscal prudence, often overlooking the relationship between inefficiency in budget execution and moral hazard, which represents inefficient fiscal management.
 This study aims to examine the relationship between inefficient fiscal management and moral hazard at the local government level, focusing on unused budget and local subsidies. It does so by collecting financial statements from local governments across the country spanning from 2017 to 2021. The increase in unused budget at the local government level can be attributed to the expansion of local governments' authority and fiscal size, which has not been met with corresponding efficient and responsible expenditure.
 Local subsidies have the positive aspect of leveraging private sector capabilities to improve business performance, but they also have a negative impact on local government integrity by leading to unproductive appropriation structures, such as unreasonable budgeting and the expansion of expenses.
 Budget wastage, including excessive unused budget and increased local subsidies, has been cited as a cause of corruption and moral hazard for many years. Therefore, for efficient resource allocation, it is essential to ensure rigor in budget formulation and budget deliberation, improve the financial expenditure structure during the budget execution stage, and maintain objectivity in the budget settlement stage.

Investor Confidence Issues in China's Green Bond Market --The example of China's primary and secondary green bond markets

Literatures on green marketing suggests that consumers want to buy green products and companies respond to this desire by investing in the development and promotion of eco-friendly products (Lenidou and Skarmeans, 2004). Lenidou and Skarmeans, 2017). However, There is an attitudinal-behavioral gap in terms of consumers' green consumption (Ross and Kapitan,2018), i.e., consumers do not translate environmental awareness into the purchase of green products. This paper transfers this consumer psychology to the green bond market, and attempts to investigate whether the environmental awareness of investors in the primary and secondary markets is successfully translated into green premiums, whether the green premiums reflect the "environmental effects" of the green bonds. This paper refers to the proportion of green bond proceeds invested in green projects as the "environmental effect".
 The regression results prove that the green premium in the primary market mainly comes from local government subsidies and the contribution of the local economy. Besides, the green bonds are generally overpriced in the primary market mainly due to the existence of local subsidy policies. In the secondary market, environmental benefits are an important influencing factor of green premium, and investors' environmental awareness is fully translated into green premium. In the secondary market, according to the PVAR model, the green premium, provinces and third-party certification agencies are strongly correlated with environmental effects and give a shock that the environmental effects first rise and then fall and finally tend to zero under the shock of IIGF enactment.

The Heterogeneous Effects of Central and Local Subsidies on Firms’ Innovation

Four decades of rapid economic growth have enabled the Chinese government to dedicate more resources to research and development. China is the world’s second largest spender on food and agricultural research in terms of absolute expenditures and the largest investor on a purchasing power parity basis. Using a unique panel dataset collected in 2019 in China’s seed company and fixed effect models, this study analyzes the heterogeneous effects of central subsidies and local subsidies. Specifically, this study first tests whether government subsidies have a positive impact on firms’ innovation. Then, this study answers whether the impact of local subsidies differs from that of central subsidies. The estimation results show that the central subsidies positively contribute to firm’s innovation, while the impact of local subsidies on firms’ innovation has not been confirmed. Further analysis shows that local subsidies positively affect firms’ economic performance. That is, rather than focusing on research capacity, local governments are more concerned about firms’ current economic performance due to the performance-based promotion scheme in China. Based on this study, local governments should implement similar methods to those of the central government in research project funding and criteria for selecting research projects to promote firms’ innovation.

Evaluation and suggestion on the subsidy policies for rural clean heating in winter in the Beijing-Tianjin-Hebei region

The central and local policies have played an important role in the implementation of rural clean heating, and have also accelerated the improvement of air quality in Northern China. Among these policies, the subsidy policies have the most significant impact on rural clean heating. However, due to some inappropriate subsidy policies, they have also caused many problems, such as the reburning of scattered coal. To effectively solve the current problems and further optimize the subsidy policies, the Beijing-Tianjin-Hebei region is selected as the research object in the present paper to evaluate the subsidy policies of rural clean heating, and analyze the insufficiency of central policies as well as the burden of subsidy on local finance. The results show that there is an issue of inequality on the central subsidy policies of rural clean heating, and a huge difference in the central government's subsidy amount per household more than 8 times between different cities. In terms of the local subsidy policies, the ratio of clean heating subsidy to local fiscal expenditure fluctuate more and more from the province, city to county level, and some counties have been at a high fiscal pressure level. Based on the current situation of rural clean heating in the Beijing-Tianjin-Hebei region, it is suggested to optimize the subsidy policies systematically from the optimization of work goals, the adjustment of central policies, the improvement of local policies and the enhancement of policy assessment. This study is aimed to provide references for the policy optimization of rural clean heating in Northern China.

Terminated local subsidy on electric vehicle adoption during the COVID-19 pandemic: The case of Chongqing City

Chongqing, one of the four municipalities directly under the Central Government in China, terminated local subsidies for electric vehicles (EVs) on June 26, 2019. Shortly after the termination, EV adoption in China was affected by the coronavirus disease (COVID-19) pandemic. However, little research studies on whether the terminated local subsidy has a lasting impact on EV adoption, especially during the pandemic. Using EV adoption data from Chongqing and 44 other cities in China, this study aims to fill this gap by first proposing a new method to estimate the unobservable data of the treated unit in the preintervention periods to obtain accurate results. This study then also estimates unobservable data for more conservative results. The findings show that the terminated subsidy has had a significant positive impact on EV adoption during the COVID-19 pandemic compared to the situation where a local subsidy was never provided. The results show that in Chongqing, during the first five months of the pandemic, terminated local subsidy helped reduce the loss of EV adoption by approximately 3141 units when accurately estimated, and approximately 1696 units when more conservatively estimated. These findings help to understand the role of subsidies both during implementation and after their termination.

Do Shallow Rental Subsidies Promote Housing Stability? Evidence on Costs and Effects from DC’s Flexible Program

Residents of cities face housing instability due to high housing costs. We conduct a randomized experiment evaluating the impacts of a flexible “shallow subsidy” among 668 qualified renters with recent housing instability. This local subsidy provides $7,200 a year directly to families earning less than 30 percent of the median family income, who choose how much assistance to use each month. Using administrative data, we track outcomes for the first year of program administration. After one year, the program has no statistically significant effect on homelessness, cash benefit receipt, or emergency rental assistance utilization, demonstrating no harm when compared to alternatives. However, the program leads to a 29 percentage point decrease in participants’ use of other types of local government housing services, which they must weigh against the shallow subsidy. We show that the program can be administratively cost-saving, but is not always beneficial for a very low-income subset of applicants.

지방교육재정교부금 재원과 규모의 변화가 교부금 제도 개편에 주는 시사점 분석

This study explored the background of the introduction of the local education subsidy system, examined the change in the size of local education finance according to changes in local education financial resources, and analyzed the impact of the revised Local Education Subsidy Act at the end of 2004. The results of the analysis are as follows. Until 2016, there was a significant erosion of operating and facility costs due to the salaries of teachers. The abolition of the extra grant was a result of the abolition of the policy measures to preserve financial resources, and when there was a deficit in the internal tax grant, it had to be resolved by issuing local education bonds. In addition, since 2005, the education tax has not contributed much to the expansion of educational resources. The implication of the reorganization of the grant system is that the simplification of grant resources caused problems in securing the stability of the grant, therefore, it is necessary to diversify financial resources through the revival of salary grant and additional grant, and it is necessary to reorganize the role and function of education tax grant. The suggestions for reorganizing the grant system are as follows. First, it is necessary to diversify the financial resources of local education financial grants. Second, the national education policy should, in principle, be implemented with state subsidies. Third, a structure for issuing and repaying local education bonds should be established only in accordance with the needs of metropolitan/provincial offices of education. Fourth, the Education Tax Act should be replaced with the Higher Education Tax Act. Fifth, grants excluding labor costs should be converted from the internal tax-linked method to the method of the standard education cost per class.

Sustainable energy and development of renewable energy sources in Żywiec District (Silesian Voivodeship)

Climate change and human activity are the main threats to rural areas and surrounding cities. The effects of climate change are mainly an increasing temperature, but also the intensity and frequency of extreme events. Climate change and its consequences are a growing problem. One of the ways to mitigate climate change, improve the quality of the natural environment and meet international obligations is sustainable energy management and the use of renewable energy sources (the RES). The aim of the study was to evaluate the energy economy, in particular the use of the RES in the Żywiec district in 2015–2020. In the rural areas of the Żywiec district, the preferred RES are solar energy (for all communities), energy from biomass and biogas from agricultural biogas plants. It has been assumed that the increase in the use of renewable energy (in this case PV installations) in the areas in question was mainly caused by the economic incentives. After the initial period (2015–2018) of lack of interest, there was a significant increase in the number of RES installations installed. PV installations prevailed. After the analysis, it seems that the increase in interest and installation of PV installations was mainly due to attractive, local subsidy programs, which significantly improved operational efficiency and shortened the payback time on investments in photovoltaic micro-installations. The adopted hypothesis was confirmed.

Research on the Impact of the Cancellation of State Subsidies on Stakeholders of Offshore Wind Power

Public subsidies for offshore wind power will be eliminated in 2022. At present, offshore wind power still depends on subsidies. In this new situation, it is necessary to study the influence on the stakeholders and how the offshore wind power industry achieves healthy and sustainable development. Firstly, this paper qualitatively analyzes the impact of the cancellation of state subsidies on offshore wind turbine manufacturers and developers and finds that if there is no subsidy to relay offshore wind power, the development of offshore wind power will stagnate, and the wind turbine manufacturers will face great challenges. Then, by constructing the subsidy demand calculation model and the transmission and distribution price cross subsidy calculation model according to China’s electricity price-related policies, the results show that the local subsidy is basically feasible to continue the national subsidy, and the burden is decreasing year by year, so the relay subsidy should be continued. Based on the cloud model, an evaluation model for the development of offshore wind power benefits from the cancellation of national subsidies is constructed to quantify the impact of the cancellation of overseas subsidies on local governments and power grid enterprises. According to the example analysis, under the background of the cancellation of national subsidies, Guangdong has the best development of offshore wind power benefits, which verifies the feasibility of the proposed model.

R&D subsidies and productivity in eastern European countries

This paper shows that R&D subsidy policies at the European Union (EU) and national levels stimulated labor productivity in Central and Eastern European countries (CEEC) in the years after their entry to the EU. However, the average impact of national funding on labor productivity was higher for countries in the Western control group than in the CEEC sample. EU R&D subsidies compensated the CEEC in part for the greater innovation impact of Western economies. Although they crowded out some R&D subsidies by local governments at the country level, the EU subsidies crowded in many national and local subsidies at the firm level. Local/regional state innovation aid to enterprises encouraged no increase in labor productivity in all but one of the sample CEEC countries. These impacts are assessed in a sequential structural econometric model estimated using Eurostat’s collection of Community Innovation Surveys covering the years 2006–2014.

Residential Demand Response-Based Load-Shifting Scheme to Increase Hosting Capacity in Distribution System

Increasing the use of solar photovoltaic (PV) generation in order to decarbonize the electric energy system results in many challenges. Overvoltage is one of the most common problems in distribution systems with high penetration of solar PV. Utilizing demand-side resources such as residential demand response (RDR) have the potential to alleviate this problem. To increase the solar PV hosting capacity, we propose an RDR based load-shifting scheme that utilizes the interaction between the distribution system operator (DSO) and demand-side resources. We first model a customer utility that consists of the cost of purchasing power, revenue from the subsidy, and discomfort due to load shifting. When an overvoltage problem is expected, DSO issues a local subsidy, and customers in the distribution system move their load in response. An optimization framework that minimizes the additional cost due to the subsidy while keeping the voltages in a prescribed range is proposed. Because of the non-linearity of the power flow analysis, we propose a sub-optimal algorithm to obtain a subsidy, prove the performance gap between the optimal subsidy and the subsidy obtained by the algorithm. A case study shows that the proposed RDR scheme increases the hosting capacity to almost its theoretical limit at a lower cost than the curtailment method.

Analisis Take-Home Pay dan Perencanaan Anggaran terhadap Sustainabilitas Program Jaminan Kesehatan Nasional

Abstract: Dynamic regulation changes in JKN Program are made by the government to maintain the program’s financial health and sustainability by increasing the contributions, but the local government budget weakening during the Covid-19 pandemic is resulting in contribution receivable increasing. This study aims to compare the contributions from the collection of Civil Servant salaries and local government subsidies based on take-home pay compared to the previous calculation and the effect on the civil servants to analyze the compliance of local government budget planning and the obstacles on the budget insufficiency. This study uses a case study through the qualitative method with a descriptive analysis approach, this research uses secondary data in the form of documents and primary data in the form of interviews. The samples are conducted by purposive sampling as many as 127,341 civil servants in Aceh Province. The results showed the potential for an increase in income of 140.81 billion rupiahs, which was an increase of 47.52%. In total, the payment of contributions by deductions from the salaries of civil servants decreased by 281%. On the other hand, the contribution paid by the local government increased by 203%. In terms of budget, 5 of the 24 local governments have provided their budget availability for a 4% contribution. The regulation changes have positive impacts on the sustainability of the JKN program by increasing the program’s income and realizing mutual cooperation with equitable contribution and the involvement of local governments through a larger portion of the contribution budget. Coordination and guidance improvement between the central government and local government to monitor the implementation of Presidential Regulation Number 75 of 2019 as a national priority program and sanction enforcement for local governments which are in contribution arrears and insufficient budget. Keywords: take-home pay; budgeting; sustainability; JKN Program

Supply and Demand Matching of Financial Support Policies for Private Enterprises Based on Text Measurement

The degree of matching between supply and demand for financial support policies is a key factor for policy effectiveness. In this paper, we use policy text computing method that integrates topic mining, text classification, and training set predictions to study the supply and demand matching of China’s financial support policies for private enterprises. We find that supply and demand match for policies on diversified financing channels. However, there is mismatch in financial service facilitation policies and local subsidy policies. Our research implies that China’s development of a multiple-layer financial market has promoted the diversification of financing channels, which has improved the financing conditions for private enterprises. However, financial service network is still not convenient to facilitate private enterprises.

Mother's hesitancy of vaccinating their children in Japan – Text analysis survey

Backgroundthe world is facing a novel coronavirus pandemic, and the role of vaccination and vaccination acceptance is playing an important role under current vaccination deployment. Japan's vaccination system has progressed these days greatly; however, the non-mandatory vaccination rate for children such as mumps, influenza is still low due to mothers' hesitancy. Given this circumstance, we conducted a qualitative analysis using text analysis methods for Japanese mothers with children about their hesitancy to vaccinate their children in Japan.MethodsWe used the data of a questionnaire survey first conducted in 2012, where two hundred and twenty-six mothers participated with an average age of 44.7 years (SD ± 5.02). The questionnaire included open-ended questions, where mothers wrote their opinion freely about vaccination about their children. We conducted text analysis focusing on the keywords of ‘hesitancy' (IBM SPSS Text Analytics for Surveys 4.0).ResultsThe keywords that extracted frequently included; vaccination (n = 160), hesitancy (n = 66), difficulty in access to vaccination (n = 57), knowledge/information scarcity (n = 31), fear for side effect (n = 30), complexity of vaccination schedule (n = 23) and government subsidies (n = 20). The most related keyword with hesitancy was; side effect (n = 20), expensive cost (n = 12), and non-mandatory (n = 10). A keyword of having natural immunity was also closely connected (n = 8).Discussion and ConclusionsTo ameliorate hesitancy among mothers against vaccination of their children, local government notification and subsidy as mandatory vaccination, providing the correct information about diseases and side effects of vaccinations would work as plus factors.Key messages For pandemic preparedness, it is necessary to research vaccine acceptance among children.This research is to explore vaccine hesitancy among mothers and factors related to their unwillingness.

General issues of forensic characteristics of fraud connected with subsidy payments in the sphere of small and medium entrepreneurship

One of the strategic guidelines for sustainable socio-economic development is the creation of favorable conditions for small and medium entrepreneurship. According to article 6 of the Federal Law “On the development of small and medium entrepreneurship in Russia” of July 24, 2007 #209, government policy in this sphere is a part of socio-economic policy, and includes political, economic, social, informational, legal, organizational, educational and other activities performed by Russia’s public and local authorities. The research subject is the mechanism of fraud connected with subsidy payments in the sphere of small and medium entrepreneurship, and the patterns of organizational and methodological support of the work of law enforcement agencies aimed at the detection, investigation and solution of such crimes. According to the above-mentioned law, the implementation of regional programs with financial support from the federal centre is meant to facilitate the achievement of these goals, since small and medium entrepreneurship has a prominent regional aspect, and is a strategic resource of spatial development. At the same time, in the last few years, the facts of illegal receipt of budgetary funds by business entities in the form of federal, regional and local subsidies have been registered more and more often. Law enforcement agencies failed to effectively detect and investigate these crimes, which can be explained by the lack of methodological support of their work and modern tools based on information technologies. The scientific novelty of the research is determined by its tasks, and consists in the substantiation of conclusions about the organic interrelation of the organization and methodology of investigation fraud-related crimes in the sphere of small and medium entrepreneurship, and the development of ways of their improvement.   

전라북도의 지방보조금 성과평가체계 개선방안

전라북도의 지방보조금 성과평가체계 개선방안