Support payments made by public authorities to certain sectors, economic areas or individual companies without any consideration in return, sometimes also referred to as subsidization. A distinction is made between direct subsidies, which are direct payments by the state, and indirect subsidies, which confer an advantage on the beneficiaries as a result of the state measure, as in the case of favorable tax treatment or the assumption of guarantees. – Subsidies are monitored and regularly objected to by central banks. This is because subsidies – tie up considerable financial resources – in Germany, about EUR 165 billion in 2009 – – distort the use of production factors: scarce resources are thus hardly directed to the “best host” (to the point of most favorable allocation of resources), – therefore inhibit the most cost-effective production and – thus also depress the value of money sooner or later. – In a group of companies (corporation), subsidies from the parent company to operations that do not cover their costs. – By setting a time limit or phasing out payments in advance by means of a sunset provision, incentives can be created at the level of the state or a corporate group to become independent of subsidies as soon as possible. – See bank, systemic, cheese money, primary income, cross-financing, tax financing, tax credit, structural upheaval, structural change, subsidies, sunset proviso, subsidy.
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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
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