Measuring the International Effect of Subsidies

  • Seamus O’cleireacain


Several contributors to this volume have pointed to the difficulties in finding methods which might provide generally agreed upon estimates of the extent and effects of government subsidies. This chapter discusses some of the methods which have been developed in recent years to provide empirical estimates of both the ex ante and ex post effects of subsidies. The former involves prior evaluation of the potential implications of national legislation, and the latter is concerned with the actual effects of specific instances where a subsidy has been granted. While there is a growing flow of information on the extent to which governments subsidize the private sector, the national reporting systems need an oversight mechanism capable of identifying potential sources of conflict. Two such present sources of conflict are the inadequacies of the GATT Articles VI and XVI and the disparities between the GATT and the national legislation of contracting parties shielded by the grandfather clause.


Industrial Policy Trade Flow Flexible Exchange Rate Indirect Taxis Subsidy Program 
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Notes and References

  1. 1.
    Jagdish Bhagwati, ‘The Generalized Theory of Distortions and Welfare’, in Bhagwati etal. (eds.) Trade, Balance of Payments and Growth: Essays in Honor of C. P. Kindleberger ( Amsterdam: North-Holland, 1971 ).Google Scholar
  2. 2.
    Alan Prest, How Much Subsidy? ( London: Institute for Economic Affairs, 1975 ), p. 11.Google Scholar
  3. 3.
    Ibid., and Joint Economic Committee The Economics of Federal Subsidy Programs, parts 1–7 ( Washington: U.S. Government Printing Office, 1972, 1973 ).Google Scholar
  4. 4.
    Robert E. Baldwin, Nontariff Distortions of International Trade ( Washington: Brookings Institution, 1970 ).Google Scholar
  5. 5.
    Nicholas Oulton, Tariffs, Taxes and Trade in the UK: The Effective Protection Approach. Government Economic Service Occasional Paper No. 6. ( London: HMSO, 1973 ).Google Scholar
  6. 6.
    Ulrich•Hiemenz, and Kurt von Rabenau, ‘Effective Protection of German Industry’ in W. M. Corden and Gerhard Fels (eds.) Public Assistance to Industry: Protection and Subsidies in Britain and Germany ( London: Macmillan for the Trade Policy Research Centre and the Institut für Weltwirtschaft, Kiel, 1976 ).Google Scholar
  7. 9.
    Geoffrey Denton, Seamus O’Cleireacain, and Sally Ash, Trade Effects of Public Subsidies to Private Enterprise ( London: Macmillan for the Trade Policy Research Centre, 1975 ), p. 60.Google Scholar
  8. 12.
    Harald B. Malmgren, International Order for Public Subsidies, Trade Policy Research Centre, Thames Essays ( London: Trade Policy Research Centre, 1977 ).Google Scholar
  9. 13.
    E. Bruce Butler, ‘Countervailing Duties and Export Subsidization: A Reemerging Issue in International Trade’, Virginia Journal of International Law, vol. 9: 1 (1969), pp. 82–151.Google Scholar

Copyright information

© Steven J. Warnecke 1978

Authors and Affiliations

  • Seamus O’cleireacain

There are no affiliations available

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