Size Of Subsidy Research Articles

Public support for firms in lagging regions—evaluation of innovation subsidy in Slovakia

This article evaluates effectiveness of EU regional policy-promoting innovation and competitiveness aimed at direct support of private companies in less developed EU regions in Slovakia. By using unique set of firm microdata, we test the effectiveness of this measure with panel data fixed estimator within the framework of CobbA¢Â€Â“Douglas production function. We found positive and significant impact on labour productivity that disappears shortly after 1 year following subsidy allocation. By specifying the optimal amount of aid, we find that majority of supported firms could benefit from bigger subsidy size, thus justifying a call for A¢Â€Â˜more music for more moneyA¢Â€Â™ policy.

Agricultural input subsidies for improving productivity, farm income, consumer welfare and wider growth in low‐ and lower‐middle‐income countries: a systematic review

Agricultural input subsidies for improving productivity, farm income, consumer welfare and wider growth in low‐ and lower‐middle‐income countries: a systematic review

Evaluating the efficiency and productivity change within government subsidy recipients of a national technology innovation research and development program

This study analyzes the efficiency and productivity change within government subsidy recipients of a national technology innovation research and development (R&D) program. We examine 6,990 government‐sponsored, completed R&D projects during the last three performance follow‐up survey years from 2010 to 2012, and present a design of the sample of panel data to cope with the typical R&D performance time lag using a set of massive observations associated with completed R&D projects for the past 7 years from 2005 to 2011. In particular, data envelopment analysis is adopted to measure the efficiency and productivity change, which is measured in the Malmquist index. Parametric and nonparametric statistical tests are carried out to check for statistically significant differences among the characteristics regarding the types of government subsidy recipients. This study's major findings are as follows. First, during the entire period analyzed (2010–2012), there was a similar yearly pattern of statistically significant differences in the government subsidy means among the recipient types. In contrast, there were no obviously equivalent differences in the efficiency and productivity change. Second, the productivity had increased year on year, but the increments were reduced from year to year. Third, the productivity change was induced mainly by the Frontier‐shift, which indicates overall technology innovation progress, compared with the Catch‐up, which only indicates a simple increase in the efficiency. In particular, in this empirical analysis, the recipient types of ‘national laboratory’ and ‘large company’ had relatively larger sizes of government subsidies per project. However, the efficiency and productivity change of these types was not better than the others. This implies, therefore, that the government should control the ratio of the subsidy to the total R&D budget with an appropriate upper limit. I empirically evaluate the productivity change within a national technology innovation R&D program. I design a sample of panel data to cope with the typical R&D performance time lag using massive observations. There is no obvious relationship between the government subsidy size and R&D productivity change. Some particular types of government subsidy recipient are inferior in terms of R&D productivity change. It practically implies that the government should control the ratio of the subsidy to the total R&D budget.

Data on Fiscal Systems of Countries Represented in the ICES Model, with Focus on Fossil Fuel Subsidies and First Test Run

This study details the first experiment conducted to couple the information relative to fossil fuel subsidies with the database and structure of the ICES CGE model developed at the CMCC, and to test the general performance of the model simulating their potential removal. Data for multi country and multi-fuel analysis derive from a “reconstruction process” based upon the price gap method, created by the IEA. The policy exercise consists in an instantaneous phasing out of existing subsidies in 2050. Removals are implemented imposing an ad valorem tax exactly equal to subsidies estimated by IEA (2009). We also compare our results with Burniaux and Chateau (2011) which conducted a similar analysis with the OECD ENV-Linkages model. Both models predict the expected decrease in CO2 emissions which is more pronounced in countries where the subsidy size is larger (Russian Federation, Former Soviet Union Countries and Oil exporting Countries). On the contrary the EU, where subsidies are small, increases its emissions due to a leakage effect. In the next phase of the research fossil fuel subsidies will be introduced explicitly in the price structure of ICES model.

China’s Promoting Energy-Efficient Products for the Benefit of the People Program in 2012: Results and analysis of the consumer impact study

China launched the largest ($4.26 billion) energy-efficient appliances subsidy program in June 2012. This paper investigates the impact of this program on consumers by surveying 2630 consumers in 10 cities with different socioeconomic statuses. The results showed that the Chinese consumers were very conscious about electricity savings and that they considered energy-saving an important factor when selecting appliances. Only 13% of consumers claimed that the subsidy was the primary reason for them to purchase energy-efficient appliances. The study found that the subsidy program raising a moderate level of awareness, with 62% of interviewed consumers being aware of the program. However, the consumers were found to lack an in-depth understanding of the program. More budget allocation for marketing and outreach could potentially improve the public awareness of energy-efficient appliances and facilitate market transformation in the long run. Compared with conventional appliances, most Chinese consumers were only willing to pay less than 10% more for energy-efficient appliances. The consumers’ expectation for the subsidy size varied between cities, but on average, they would become very likely to purchase energy-efficient appliances when the subsidy size was between 20% and 30%. It was suggested that in the future, only Tier 1 appliances (the most efficient) would be subsidized, and the size of the subsidy should be increased so to meet the consumers’ expectations.

Analyzing the efficiency of small and medium-sized enterprises of a national technology innovation research and development program.

This study analyzes the efficiency of small and medium-sized enterprises (SMEs) of a national technology innovation research and development (R&D) program. In particular, an empirical analysis is presented that aims to answer the following question: “Is there a difference in the efficiency between R&D collaboration types and between government R&D subsidy sizes?” Methodologically, the efficiency of a government-sponsored R&D project (i.e., GSP) is measured by Data Envelopment Analysis (DEA), and a nonparametric analysis of variance method, the Kruskal-Wallis (KW) test is adopted to see if the efficiency differences between R&D collaboration types and between government R&D subsidy sizes are statistically significant. This study’s major findings are as follows. First, contrary to our hypothesis, when we controlled the influence of government R&D subsidy size, there was no statistically significant difference in the efficiency between R&D collaboration types. However, the R&D collaboration type, “SME-University-Laboratory” Joint-Venture was superior to the others, achieving the largest median and the smallest interquartile range of DEA efficiency scores. Second, the differences in the efficiency were statistically significant between government R&D subsidy sizes, and the phenomenon of diseconomies of scale was identified on the whole. As the government R&D subsidy size increases, the central measures of DEA efficiency scores were reduced, but the dispersion measures rather tended to get larger.

Input–output modelling of the effect of implicit subsidies on general prices

Implicit subsidies are implemented for different reasons in many countries. These subsidies generally emerge through selling public resources such as gas, oil, and water at a lower price to one or more sectors. They are not considered in government payments and national accounts. Hence, it is expected that any change in the size of these subsidies influences the price of the relative sectors through the intermediate expenditures. This paper aims at developing the Table Adjusting Price (TAP) and Standard Leontief Price (SLP) models to measure the effect of an exogenous change in the size of implicit subsidy on the price indices of all sectors. The proposed models allowed the researcher to analyse a change in the level of implicit subsidy in different cases. In addition, an empirical example illustrates the result of the implementation of these models.

The Use and Abuse of Export Subsidies: Evidence from Colombia

Abstract(12033) Christian Helmers and Natalia TrofimenkoWe evaluate the impact of firm‐specific export subsidies on exports in Colombia. Using a two‐step selection model, we predict firm‐specific subsidy amounts that can be explained by the characteristics that determine firms’ eligibility for government support and its amount. Drawing on the accounts of the discretionary allocation of subsidies in developing countries, we interpret the discrepancy between the predicted and the observed subsidy amounts as a proxy for a firm's ties to government officials. Controlling for observable and unobservable firm characteristics as well as persistence in exporting, we find that although, in general, subsidies exhibit a positive impact on export volumes, this impact is diminishing in subsidy size and in the degree of a firm's connectedness.

Decision Criteria for Climate Projects

Summary This article analyzes commercial decision criteria for climate projects. The latter will normally be executed by private players, for whom decision criteria developed from a commercial perspective are important. But such criteria are also important for the government in calculating the size of subsidies required for various measures. A ranking of different solutions in a socioeconomic context must rest on calculations made from a commercial perspective. Examples of the subjects covered include the calculation of abatement unit costs and cost estimating for climate projects. The carbon-capture project at the Kårstø gas-fired power station in southwest Norway is used as a case throughout the analysis.

Determinants of farmers’ willingness to participate in subsidy schemes for pesticide-free buffer zones—A choice experiment study

Danish farmers have been far less interested in agri-environmental subsidy schemes (AES) than anticipated. In order to examine how to improve the appeal of such schemes, a choice experiment was conducted concerning 444 Danish farmers’ preferences for subsidy schemes for pesticide-free buffer zones. A random parameter logit framework was used to capture heterogeneity among farmers. Our results indicate that 1) the vast majority of farmers are willing to trade off the size of the subsidy for less restrictive scheme requirements and that 2) the amount of the subsidy they are willing to trade off varies with specific scheme requirements, suggesting which features are most important for successful policy design. Our results suggest that farmers value flexible contract terms higher than reduced administrative burdens. Finally, we suggest a practical approach to estimating a monetary value of farmers’ reluctance to participate in AES. While the trade off's that farmers are willing to make between subsidy size and individual scheme requirements are case specific, our results concerning increased use of farm advisors, farmers ability of valuing different types of flexibility, and our attempt to place a monetary value on farmers’ reluctance to engage in regulatory subsidy schemes have a potentially broader application platform.

Land‐to‐sea connectivity: linking human‐derived terrestrial subsidies to subtidal habitat change on open rocky coasts

Spatial subsidies are considered strong where differences in resource availability between donor and recipient systems are greatest. We tested whether human activities on land can increase subsidies of terrigenous nitrogen to open rocky coasts and whether these differences can predict apparent deforestation of kelp forests. We first identified landscape-scale variation in the human-mediated transfer of dissolved inorganic nitrogen (DIN) from natural, agricultural, and urban catchments to temperate coasts after episodes of rainfall. Compared to natural catchments, subsidies of DIN were on average 8-407 times greater in urban catchments, and 1-63 times greater in agricultural catchments. Urban derived nitrogen was attributed to the release of sewage effluent, as delineated by delta15N isotopic values of transplanted algae. Having made this link, we then assessed whether this catchment-scale variation may account for variation in structure of subtidal habitats, particularly as related to theory of nutrient-driven shifts of habitat from perennial (i.e., canopy-forming algae) to opportunistic species (i.e., turf-forming algae). We not only detected patterns consistent with this theory, but also established that the size and total proportion of patches of turf-forming algae were greater where the ratio of donor: recipient nitrogen loads was greater (i.e., size of subsidy). An important realization was that deforestation may be more strongly related to variation in the size of subsidy rather than size of human populations, particularly among urban catchments. These data directly link the type of human activity within catchments to the modification of land-to-sea subsidies and indirectly support theory that predicts terrestrial inputs to have greater ecological effects where the disparity in resource availability between donor and recipient is exacerbated. Our evidence has been used by coastal managers to reconsider their management of coastal systems and has subsequently contributed to new water-recycling policy and initiatives.

An application of the use of safe minimum standards in the conservation of livestock biodiversity

This paper adapts the safe minimum standard (SMS) approach so as to explore its use as a potential policy decision support tool that can be applied to issues related to the conservation and sustainable use of farm animal genetic resource (AnGR) diversity. Empirical SMS cost estimates are obtained using data from three AnGR economics case studies in Mexico and Italy. The findings support our hypothesis that the costs of implementing an SMS are low, both when compared with the size of subsidies currently being provided to the livestock sector (<1 percent of the total subsidy) and with regard to the benefits of conservation (benefit-cost ratio of >2.9).Nevertheless, despite providing a potentially useful AnGR conservation decision support tool, a critical assessment of the application reveals that a much more extensive quantification of the components required to determine SMS costs needs to be undertaken before this tool can be applied in practice.

Field notes

Field notes James Lindemann Nelson This distracted globe. The last Fellows meeting is scarcely a month past as I write these words, though it seems rather longer. Pace of life, perhaps, or maybe it's related to our having gathered in Washington, a city that for me carries a touch of the unreal. The heart of the meeting—a panel presentation with the title "Are We Ready for the Flu Pandemic?"—was certainly substantial enough, the sort of theme fully able to concentrate the mind (there being nothing for doing so like a personal prospect of death, as we're told). A hot topic coupled with extremely effective presenters—savvy, highly placed Beltway insiders, all knowledgeable about and sympathetic to bioethics, with varied close-up sight lines on congressional and administration responses to H5N1 and company—and an arresting take-home message ("Decidedly Not"), generated a keen audience, who asked intense, probing questions. Here's what struck me hardest in the picture the panel sketched out: our national tardiness reflects, in part, ongoing dickering between pharmaceutical companies and the government over the size of subsidies and indemnities to be guaranteed before the corporations are willing to knock out job-sized lots of vaccines and antivirals. One way of luring corporations into this business, according to one of our Beltway insiders, would be to give corporations an extra year of market exclusivity for their ten top selling drugs, by means of a wild card patent extension. The price tag: around $30 billion. A Fellow adopting the pose of a simple country lawyer (in actuality one Alan Meisel) had the temerity to pose an "Emperor's New Clothes" sort of question: why are we even talking about massive subsidies to private industry, when a "Manhattan Project" style public program could likely do the job for about $2 billion, a mere fifteenth of the cost? Asking a question like this of those who for one reason or another are more or less locked in to the current dispensation tends to get the same kind of reaction as asking why we don't take advantage of the hundreds of billions of dollars in economies that would be afforded by shifting to a single payer universal coverage health care system. Some folks have the grace to look rueful. Others look at the questioner as if bringing the matter up is rather rude. Ruefulness was the order of the day among our superb and very graceful panelists. Yet in the absence of better answers to questions like Meisel's, the worry is that we pay hefty premiums, in human lives and human suffering, as well as in dollars, not for the market's pragmatic benefits, the efficiency and quality for which the private sector is so celebrated, but for something else. Spoils for a triumphant ideology, perhaps? Good ethics, as Tom Murray reminded us in concluding the session, depends on good facts. As I walked out into the streets of the nation's capitol reflecting on this sage advice, I was grateful to have had important facts about the possible pandemic so thoughtfully laid out. Yet it hit me harder than usual that good ethics can depend, too, on noting which facts make up states of affairs that are tolerably independent of anyone's desires or schemes, and which reflect fantasies someone has been able to make real. [End Page c1] James Lindemann Nelson Michigan State University Fellow of The Hastings Center Copyright © 2006 The Hastings Center

The political advantage of soft budget constraints

Why do soft budget constraints persist in many post-socialist economies? We submit that the explanation may be to serve the political purpose of hiding the incumbent government's inability to promote job creation. We present a voting model with adverse selection in which politicians who are unable to implement productivity-enhancing reforms resort to firm subsides to decrease the rate of job destruction. We characterize the equilibrium size of subsidies and its composition into explicit and implicit subsidies. The equilibrium size and composition of subsides depend, among other things, on government rents, political transparency, political expectations, and firms' labour unit costs.

For-Profit Higher Education: Godzilla or Chicken Little?

(1999). For-Profit Higher Education: Godzilla or Chicken Little?. Change: The Magazine of Higher Learning: Vol. 31, No. 1, pp. 12-19.

Market failure and the estimation of subsidy size in a regional entrepreneurship programme

Capital subsidy programmes aimed at small businesses attempt to compensate for market failures that exist in the conventional financing markets. The existence of these market failures means that some small firms can be denied access to credit despite the fact that they have viable business projects. This rejection occurs because the ‘risk profile’ of the small business is likely to be weighted by factors other than project viability such as ownership structure, business experience and location of the firm. Information on firms with these characteristics is often limited and thus they are overlooked by otherwise well-functioning credit markets. This paper presents an empirical examination of the subsidy embodied in a capital assistance programme that addresses this situation. Data are analysed pertaining to nearly 500 loans and loan guarantees authorized for small businesses in peripheral regions in Israel over the period 1993–95. The gross size of the subsidy embodied in the programme is calculated and a methodology is presented. Employment impacts of the programme are also presented. On this basis, the magnitude of the subsidy-per-job is estimated and the implications of this kind of programme for increasing regional welfare are discussed.

Carbon sequestration and tree plantations: A case study in Argentina

This study undertakes two tasks. First, it estimates the carbon sequestering potential for two alternative tree plantations programs in two regions of Argentina, which have markedly different carbon sequestering potentials. While it estimates the physical volume of the carbon sequestered, unlike a host of other studies it does not try to estimate the costs of sequestration. Second, the study then develops a method for evaluating the comparative benefits of the carbon sequestered in the two cases based upon the price (value) of the external benefits, the growth of this price over time, and the discount rate. Estimates of the comparative benefits or value provide guidance as to the optimum comparative size of subsidies for the two regions.

Housing starts and subsidized loans

This paper discusses how the total number of housing starts is affected by the presence of a system of subsidized governmental loans. More than 60 per cent of the housing starts in Norway since the Second World War have been financed through The State Housing Bank. The interest on these loans has been subsidized by the State. A cross-section analysis of loans given in 1993 is used to estimate the short-run effect on housing starts. Many households with loans at HB have total debt-to-income ratios in excess of three and loan-to-value ratios exceeding 80 per cent. I find that more than every second household which got a loan from HB in 1993 would not have been granted loans by private banks. The number of housing starts does not seem to be very sensitive to the size of subsidies; accessibility to credit seems to be more important. The paper concludes that the loans provided from a government agency have a substantial effect on the total number of housing starts.

The economics of energy conservation through top-up loft insulation

A social cost-benefit analysis is conducted of retrofit top-up insulation of partly insulated lofts in UK houses. For almost all lofts with less than 100 mm of insulation currently in place, retrofit top-up insulation is socially beneficial. Inefficiencies in the housing market justify a programme of government subsidies of top-up insulation. Estimates are computed of the number of households likely to respond to such a programme of subsidies. The estimated response appears highly sensitive to the size of subsidy and the time horizons of households.

FEDERAL SUBSIDY OF IRRIGATION DEVELOPMENT1

ABSTRACT: The Congress of the United States has been concerned about public lands from the earliest days of this republic. The importance of irrigation on these public lands was explicitly noted with enactment of the Carey Act of 1884. This was reinforced with the passage in 1902 of “An Act appropriating the receipts from the sale and disposal of public lands in certain states and territories to the construction of irrigation works for the reclamation of arid lands.” This Act further specified that land so irrigated would be entered under the provisions of the Homestead Laws and developed in units of not less than 40 nor more than 160 acres. The enforcement of the 160 acre limitation has been reinforced by several recent lawsuits. These have reaffirmed the provisions of the Reclamation Law requiring owners receiving water from Federal projects to sell land in excess of 160 acres. While there have been Federal subsidies involved in the development of irrigation in the western states, the total amount of the subsidies are insignificant compared to the total Federal budget and the size of subsidies under other Federal programs. Thus, the real question in enforcing the 160 acre limitation may well be one of land reform rather than the distribution of Federal subsidies.