THE IMPACT OF SUBSIDIES ON FIRM SALES IN THE COMMONWEALTH OF INDEPENDENT STATES (CIS)

Abstract

The aim of the following study is to investigate the impact of subsidies on firm sales in Commonwealth of Independent States (CIS) countries. This study is based on the fifth round of Business Environment and Enterprise Performance Survey (BEEPS) that is implemented by the European Bank for Reconstruction and Development (EBRD) in partnership with the World Bank. In order to account for the possibility that subsidy is jointly determined with the dependent variable lsales through an equilibrium mechanism, I use simultaneous equations model. According to the estimation results, receiving a subsidy does not have a significant positive impact on firms’ sales in CIS countries and Russian Federation. In addition, the results show that larger firms are more likely to receive a subsidy.