Subsidizing as a tool to ensure economic sovereignty: a quantitative analysis

Abstract

Objective: to assess the relationship between the basic monetary instrument of state support for industry – subsidies – and basic macro-indicators of its effectiveness in the context of economic sovereignty. Methods: content analysis of publications, statistical analysis of macroeconomic indicators, econometric analysis on a wide sample of countries. Results: 1) the analysis of mentioning the category “subsidies” in Russian, English and Chinese printed publications confirmed the high interest to subsidies in China; 2) the analysis of correlation between the level of subsidies and the basic macro-indicators by countries on IMF data showed statistically significant correlations of the level of subsidies with the level of current account balance (low correlation) and GDP per capita (moderate correlation); 3) the evaluation showed no significant relationship between the level of subsidies and GDP per capita. According to the study results, conclusions were drawn about the absence of dependence between the level of transfers provided and the decrease of dependence on import. Scientific novelty: the hypothesis was checked that the level of subsidies in the state has a statistically significant impact on the country’s current account balance. The model is based on earlier studies with the added analysis of the role of subsidies in reaching the economic development goals. The novelty of this study consists in the absence of a significant relationship between the level of subsidies and the current account balance. Practical significance: the study results can be useful to specialists in the field of industrial policy. They provide a basis for a fuller understanding of the tools to ensure technological sovereignty. Modifications of the regression model can be used in further studies of the factors of the current account balance.