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State Aid for Industrial Enterprises in Belarus: Remedy or Poison?

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  • Kolesnikova Irina

Abstract

In this paper the impact of various types of state aid on aggregate productivity growth in Belarusian manufacturing is investigated by combining the data on government support with firm-level accounting data for period 1998-2007. Obtained results indicate that the state aid provided for restructuring truly leads to the modernization of the enterprises (capital-to-labor ratio grows), that this modernization leads to an increase in effectiveness (TFP grows, especially at large enterprises), and that this growth of TFP allows the newly restructured enterprises to raise their market share which results in the growth of the allocative efficiency. However, when the state aid is provided to support enterprises in financial distress, while it leads to an increase in employment (only for enterprises receiving aid, especially for large enterprises, but not for the total sample) and to an expansion in the market share of large enterprises (not small and medium size), this achievement comes at the expense of the decrease in TFP.

Suggested Citation

  • Kolesnikova Irina, 2010. "State Aid for Industrial Enterprises in Belarus: Remedy or Poison?," EERC Working Paper Series 10/01e, EERC Research Network, Russia and CIS.
    • Handle: RePEc:eer:wpalle:10/01e
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    Cited by:

    1. Dzmitry Kruk & Kiryl Haiduk, 2013. "The Outcome of Directed Lending in Belarus: Mitigating Recession or Dampening Long-Run Growth?," BEROC Working Paper Series 22, Belarusian Economic Research and Outreach Center (BEROC).
    2. Dzmitry Kruk, 2013. "Belarus' Anti-Crisis Management: Success Story of Delayed Recession?," Europe-Asia Studies, Taylor & Francis Journals, vol. 65(3), pages 473-488.
    3. Nebojsa Stojcic, 2012. "Patterns And Determinants Of Enterprise Restructuring In Central And East European Countries," Economic Thought and Practice, Department of Economics and Business, University of Dubrovnik, vol. 21(2), pages 429-456, december.

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    More about this item

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
    • L53 - Industrial Organization - - Regulation and Industrial Policy - - - Enterprise Policy
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • P31 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - Socialist Enterprises and Their Transitions

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