Factors Influencing the Enterprises Receiving Subsidies In Transitional Economies

Abstract

This paper used a set of survey data on 32094 firms in 28 transition countries for the time period from 1999 to 2009, in order to examine the factors influencing the probability of receiving subsidy. "EBRD-World Bank Business Environment and Enterprise Performance Survey (BEEPS)" data set has been used in this work. The study reveals that firm’s performance is not a significant fact to influence the probability of receiving subsidy. Firm’s financial strength, connection with the government, and whether its nature of product market are the major factors determining the probability of receiving subsidy. Providing subsidy is not found to be the paternalistic attitude of the state rather state’s economic and political interest play the crucial role in decision making.