Subsidies: A double-edged sword

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SUBSIDIES have been an important policy instrument in many countries from economic, social and political perspectives.

According to the World Trade Organisation, a subsidy is defined as a financial contribution by a government that provides a benefit to its recipients. Subsidies, whether provided to producers or consumers, are a form of transfer payment. Unlike expenditures, subsidies do not generate direct value-added In general, subsidies are one of the mechanisms to foster economic development and help disadvantaged groups in the effort to further boost business investment and improve quality of life.