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Can Government Policy Influence Industrial Competitiveness: Evidence from Poland and the Czech Republic

Author

Listed:
  • Iraj Hashi

    (Staffordshire University, Stoke on Trent, U.K.)

  • Darko Hajdukovic

    (Royal Holloway College, University of London, U.K.)

  • Erjon Luci

    (Bank of Albania, Tirana, Albania)

Abstract

Government intervention in support of a particular firm or industry has generally been justified on the grounds of market failure. Theoretical and empirical developments in the last thirty years, particularly the concepts of ‘regulatory capture’, ‘government failure’ and ‘intergovernmental competition’, have significantly weakened the case for government intervention. We use data on the population of three-digit industries in the 1996/97-2003 period to develop a model in which industrial competitiveness is affected by a range of industry-specific factors including government policy instruments. The initial results seem to confirm the view of the sceptics that policy intervention through taxes and subsidies do not improve the performance of the sector as a whole.

Suggested Citation

  • Iraj Hashi & Darko Hajdukovic & Erjon Luci, 2005. "Can Government Policy Influence Industrial Competitiveness: Evidence from Poland and the Czech Republic," Zagreb International Review of Economics and Business, Faculty of Economics and Business, University of Zagreb, vol. 8(2), pages 1-22, November.
    • Handle: RePEc:zag:zirebs:v:8:y:2005:i:2:p:1-22
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    Citations

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    Cited by:

    1. Nulsch, Nicole, 2014. "Is Subsidizing Companies in Difficulties an Optimal Policy? An Empirical Study on the Effectiveness of State Aid in the European Union," IWH Discussion Papers 9/2014, Halle Institute for Economic Research (IWH).
    2. Alena Zemplinerová & Patrik Paneš, 2008. "Státní podpora podniků a konkurenceschopnost odvětví [Competitiveness and state aid to enterprises]," Politická ekonomie, Prague University of Economics and Business, vol. 2008(2), pages 182-195.
    3. Xiaoqiang Cheng & Patrick Van Cayseele, 2009. "State Aid and Competition in Banking: the Case of China in the Late Nineties," LICOS Discussion Papers 25009, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
    4. R. S.-H. Lee & M. Pak, 2018. "Pro-competitive effects of globalisation on prices, productivity and markups: Evidence in the Euro Area," Documents de Travail de l'Insee - INSEE Working Papers g2018-06, Institut National de la Statistique et des Etudes Economiques.
    5. Hölscher, Jens & Nulsch, Nicole & Stephan, Johannes, 2010. "State Aid in the Enlarged European Union. An Overview," IWH Discussion Papers 24/2010, Halle Institute for Economic Research (IWH).
    6. Vladimír Benáček & Jiří Podpiera & Ladislav Prokop, 2006. "Command Economy after the Shocks of Opening up: The Factors of Adjustment and Specialisation in the Czech Trade," Working Papers IES 2006/20, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Apr 2006.
    7. Alena Zemplinerova, 2010. "Competition policy and economic analysis: What can we learn from firm and industry data?," CERGE-EI Books, The Center for Economic Research and Graduate Education - Economics Institute, Prague, edition 1, number b07, May.

    More about this item

    Keywords

    competitiveness; market failure and government failure; intergovernmental competition; state aid;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods

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