Search

Responds to criticisms of the author's theory that greater employment effects of industrial subsidies in small firms arise from the poorer access that these firms have to private funds. Impact of financial constraints on the effectiveness of subsidies; Increase in the effectiveness of assistance with the marginal cost of private funds.

Investigates the build-up and duration of subsidy-induced employment. Analysis of regional policy instruments and other financial assistance payments to industry in the United Kingdom; Firm's access to private funds; Nature of the coefficients on the assistance terms; Substitution of public for private funds.

Presents annual figures for gross expenditure on British central government assistance to industry over the period 1960-1990. Determinants and effects of UK industrial assistance; Breakdown of figures between various components of policy, comprising national assistance, industrial and firm specific assistance, technology support, civil aircraft aid, shipbuilding assistance and others.

The purpose of this paper is to construct a consistent series for annual expenditure by UK central government on the totality of industrial subsidies over the period 1946-90. We desegregate spending according to assistance available on a national, regional and sectoral or firm specific basis, and as a second exercise undertake a time series analysis of these data to explain spending in terms of unemployment and output. Assistance may be given in many different forms -- including grants (allowable and non-allowable against tax), cheap loans, equity finance, interest relief grants, levies, loan guarantees, tax refunds and tax allowances in the form of initial and investment allowances and free depreciation -- so that our approach to measuring the subsidy element of these is to reduce each incentive to a grant equivalent. This is the grant amount which if offered to the firm has equivalent value as the assistance payment, and we measure these grant equivalents under the assumption that the firm uses a discounted cash flow method of investment appraisal. [ABSTRACT FROM AUTHOR]