subsidy

(redirected from Federal-aid)
Also found in: Dictionary, Thesaurus, Legal, Encyclopedia.

Subsidy

Financial assistance provided by a government to another entity, usually a business or industry. Subsidies are given to keep otherwise unprofitable ventures in business; for example, a family farm unable to compete with agribusiness may receive a subsidy from the government to maintain operations. Subsidies may also exist as a protectionist measure to make domestic goods less expensive than imports. Proponents of subsidies argue that they maintain employment in the domestic economy while critics state that they distort the market and make it less efficient. See also: Bailout.

subsidy

the provision of finance and other resources by the government or a firm to support a business activity or person. Subsidies can be direct (cash grants, interest free LOANS etc.) or indirect (DEPRECIATION write-offs, RENT rebates) and can be used for a variety of purposes. They include:
  1. PRODUCTION subsidies: the subsidization of suppliers by government to encourage them to increase the output of particular products by partially offsetting their production costs or even financing losses. The objective may be to expand production at a low price of some product which is deemed to be ‘essential’ (for example a particular foodstuff thereby also subsidizing consumers); or, for example, to assist in the start-up of a new firm (see ENTERPRISE INVESTMENT SCHEME) or industry (see INDUSTRIAL POLICY), and encourage firms to locate in particular areas (see REGIONAL POLICY). Also such subsidies are used to support failing firms and declining industries to facilitate orderly restructuring. See PROTECTIONISM;
  2. EXPORT subsidies: the subsidization by the government of exports in general or of a particular product which is exported, as a means of assisting the country's balance of payments;
  3. EMPLOYMENT subsidies: the subsidization of wages by the government as an incentive to businesses to provide more job opportunities, thereby reducing the level of unemployment in the economy;
  4. INCOME subsidies: the subsidization of persons through government transfer payment systems (for example, social security benefits) in order to allow them to enjoy some minimum standard of living;
  5. cross-subsidization: businesses themselves regularly practise internal or cross-subsidization as a means of expanding their activities, for example, using the profits generated by established products to finance NEW-PRODUCT DEVELOPMENT and DIVERSIFICATION into new-product markets.

subsidy

the provision of finance and other resources to support a business activity or person by the government. Subsidies can be direct (cash grants, interest-free LOANS, etc.) or indirect (depreciation write-offs, rent rebates) and can be used for a variety of purposes, including:
  1. PRODUCTION subsidies: the subsidization of suppliers by government to encourage them to increase the output of particular products by partially offsetting their production costs or even financing losses. The objective may be to expand production of some product at a low price that is deemed to be ‘essential’ (e.g. a particular foodstuff, thereby also subsidizing consumers); or, for example, to assist in the start-up of a new firm (see ENTERPRISE INVESTMENT SCHEME) or industry (see INDUSTRIAL POLICY) and encourage firms to locate in particular areas (see REGIONAL POLICY). In the first cases, subsidies are used as an instrument of income redistribution by reducing the price of products such as bread and milk that figure prominently in the budget of lower income groups or by directly subsidizing incomes.
  2. EXPORT subsidies: the subsidization of a particular product that is exported, or exports in general, by the government as a means of assisting the country's balance of payments.
  3. EMPLOYMENT subsidies: the subsidization of wages by the government as an incentive to businesses to provide more job opportunities, thereby reducing the level of unemployment in the economy INCOME subsidies: the subsidization of persons through government transfer payment systems (for example, social security benefits) in order to allow them to enjoy some minimum standard of living.

Subsidies encourage increased output of favoured products but distort domestic RESOURCE ALLOCATION processes in general and can adversely affect international trade. See REDISTRIBUTION-OFINCOME PRINCIPLE OF TAXATION, PROTECTIONISM, CROSS-SUBSIDIZATION.

See also BOSTON MATRIX.

subsidy

Benefits granted to persons or groups in order to encourage behavior or outcomes deemed important to society. Rent subsidies encourage construction of adequate affordable housing because the owner can be ensured of an income stream as long as the housing meets government requirements.The same subsidy encourages better consumer choices because of the availability of affordable alternatives. Tax credits to contractors for energy-efficient construction are subsidies to encourage the use of energy-efficient alternatives.

References in periodicals archive ?
Permanent repair projects are reimbursed at the same federal share that would normally apply to the federal-aid highway facility.
State DOTs develop processes meant to help local agencies navigate the Federal-aid program's requirements in areas such as consultant advertisement and selection, rights-of-way, the National Environmental Policy Act, Buy America, and Disadvantaged Business Enterprise goals.
Established in 2012, the Federal-aid Essentials library now encompasses nearly 100 short, plain-language videos that each focus on a single topic.
During the congress, AASHO's Federal-aid supporters were outnumbered by representatives of AAA, the National Automobile Chamber of Commerce, the trucking industry, and urban interests.
Of all Federal-aid funds apportioned to the States for the Federal-aid system, the legislation set aside 0.5 percent for metropolitan agencies responsible for comprehensive transportation planning in urban areas, resulting in the designation or strengthening of metropolitan planning organizations (MPOs) around the country.
FHWA, working closely with its State and local partners, recently launched an initiative called Federal-aid Essentials for Local Public Agencies.
When local public agencies receive Federal-aid funding, they work closely with their respective State departments of transportation (DOTs) to meet all Federal-aid requirements, such as those for environmental reviews, civil rights, right-of-way acquisitions, safety, and construction and contract administration.
In fiscal year 2003, FHWA provided about $27.4 billion in federal-aid highway funds to states.
Many cities and counties, also known as Local Public Agencies (LPAs), receive Federal-aid highway funds to help support their transportation programs and projects.
GAO agreed to (1) identify local jurisdictions that are using photo enforcement devices--red-light cameras or photo radar--on federal-aid highways; (2) identify local jurisdictions that have received federal funding for photo enforcement; and (3) determine, for those jurisdictions that have received federal funding, how much revenue their photo enforcement programs have generated and the amount of that revenue received by private contractors.

Full browser ?