A subsidy is an financial aid, i.e. a sum of money, which is allocated by an public institution or is deprived with a person or a private or public organization within the framework of a project. The recipients of the subsidies can be associations with nonlucrative goal or other, companies of private law or public law, farms or of the places of spectacles like the Théâtre S and the independent Cinéma S, of the local government agencies, etc
Discusses on the subsidiesThe majority of the subsidies are fought by the liberal economists and the World Trade organization (OMC) because they undermine the principle of free competition and favor companies compared to the competitors. Indeed, the subsidies according to the production make it possible to the recipients to run out their products at an artificially low price. The Developing country criticize highly the subsidies with the European and North-American farmers, influencing the prices of the agricultural produce to the fall. Nevertheless, it is possible to subsidize the producers and not to bind the amounts of the support for the produced quantity. The distortion on the prices is not then any more that the consequence of the overproduction, but more artificial fall of the prices.
The debate on the subsidies is complex. Defenders of Cinema of author, for example, explain that subsidies are necessary, insofar as they make it possible to produce and diffuse films which are not simple “commercial products”, but of “artistic creations”. The subsidies are then justified by the principle of “cultural Exception”.
The subsidies are also the means of ensuring of the missions of Public service. Indeed, if an economic activity is not profitable, the economic actors forsake it, which can harm the community. A subsidy thus makes it possible to ensure the economic profitability of activity nonprofitable in oneself but considered useful for the community (ex: Basic research).
The amount of the government aid to the companiesThe report/ratio on the government aid 2007 () entered an exceptional amount of government aid to the companies in France, namely 65 billion euros, that is to say 3,5% of the GDP.
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