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Sectors and Instruments

In: State Subsidies in the Global Economy

Author

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  • Nikolaos Zahariadis

Abstract

The empirical record has so far stopped with the various objectives of subsidies. That is not the only way subsidies may be differentiated. I extend the treatment of subsidies in two ways. First, there is good reason to suspect that subsidies to different sectors may be given for different reasons. The most significant differences are found in subsidies to manufacturing versus agriculture. Much of the stalemate in the Doha Round of world trade negotiations, and the rancor behind the Uruguay Round, is attributed to the problem of agricultural subsidies (Bagwell and Staiger, 2002, chapter 10). Is agriculture a special case? Second, I explore the calculus of instrument choice by looking at four policy tools: grants, tax incentives, soft loans, and capital guarantees. Different instruments have different rationales and expectations. To ascertain the robustness of the model, I examine the model’s ability to explain the choice of policy tools. How well does the model fare?

Suggested Citation

  • Nikolaos Zahariadis, 2008. "Sectors and Instruments," Palgrave Macmillan Books, in: State Subsidies in the Global Economy, chapter 0, pages 133-158, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-0-230-61051-4_7
    DOI: 10.1057/9780230610514_7
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