How Governments Back the Largest Manufacturing Firms

Government support has long been a central issue for trade but recently countries’ interest in subsidies, and industrial policies more broadly, has intensified. Yet evidence on the nature and scale of industrial subsidies and what they mean for global competition is scarce. This paper uses the recently created OECD MAnufacturing Groups and Industrial Corporation (MAGIC) database to shed more light on the level and types of subsidies received by the largest companies operating globally across 14 key industrial sectors. Subsidies are found to be widespread among these firms but modest on average relative to revenue. There are, however, cases of sizeable subsidies, especially in heavy industries and semiconductors. Subsidies relative to firm revenue are also larger on average for firms based in China. The report then looks at the evolution of global market shares for the firms covered, finding China-based companies to have often gained market share, unlike OECD-based companies.