subventions

Subventions, also known as subsidies, are financial assistance provided by governments to individuals, organizations, or sectors to influence economic and social outcomes. They take various forms, including direct cash grants, tax credits or exemptions, below-market loans, guarantees, price supports, and in-kind transfers. They can be targeted to specific industries, regions, or activities, or distributed more broadly.

They serve purposes such as promoting economic development, maintaining employment, supporting research and innovation, encouraging energy transition and environmental protection, stabilizing prices, or preserving culture and national heritage.

Subventions are typically conditional, requiring compliance with rules (performance targets, employment, environmental standards), reporting, or co-financing. They can be repayable (soft loans, guarantees) or non-repayable (grants). They may be financed from state budgets or special funds.

Economic and policy considerations include correcting market failures, fostering strategic or spillover benefits, and supporting welfare objectives, but they may distort competition, burden public finances, and invite rent-seeking. International rules, such as WTO subsidies disciplines, regulate prohibited or actionable subsidies. Evaluation often focuses on effectiveness, efficiency, and unintended effects; many programs include sunset clauses or periodic reviews.

Examples include agricultural subsidies to farmers; subsidies for renewable energy or electric vehicles; research and development grants; culture or film subsidies; regional development funds; and price supports for basic commodities.

The term subvention originates from Latin subsidium and is used in several languages as a counterpart to subsidy.