State and local governments regularly offer large discretionary subsidies to attract firms, and the accompanying jobs, to their jurisdictions. In fact, this deployment of subsidies is estimated to be one of the largest economic development tools used in the United States (Bartik 2017). The incentives can be staggering—for example, in 2006 Honda received a package […]
subsidies
China’s hidden shipbuilding subsidies and their impact on its industrial dominance
The impact of industrial policy on China’s economic growth has been difficult to assess, in part due to the lack of direct evidence on government support measures, which remain secret. This research uncovers hidden subsidies provided to the Chinese shipbuilding industry, which has more than doubled its global market share in recent years. The subsidies decreased shipyard costs in China by 13-20% between 2006 and 2012, policy interventions that have led to substantial misallocation of global production with no significant gains for consumers. Japan, in particular, has lost market share.
