Measuring distortions in international markets: Below-market finance
No 247, OECD Trade Policy Papers from OECD Publishing
The support that governments provide to their industrial producers has been a growing source of concern. Much of that support is provided by governments through the financial system, either in the form of below‑market borrowings or below-market equity. To better understand the nature and scale of this support, this report uses publicly available information for 306 of the largest manufacturing firms in 13 industrial sectors, covering the period 2005-19. It finds that below-market borrowings tend to be relatively large in heavy industries, including some that reportedly suffer from excess capacity, while below-market equity returns appear to be more common in high-tech industries such as aerospace and semiconductors. Below-market borrowings also appear to benefit firms with more than 25% government investment relatively more. These findings on below-market finance raise a number of important issues for trade rules, including in relation to transparency and the scope of subsidy disciplines.
Keywords: Excess capacity; Government equity; Government support; Loan subsidies; State-Owned Enterprises; Subsidies; Trade (search for similar items in EconPapers)
JEL-codes: F13 F23 G32 H25 H81 L33 L52 L62 O25 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:oec:traaab:247-en
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