Impact of Tax Incentives on Industry Performance and Growth

Abstract:

In this paper we develop a theoretical framework to analyze the impact of tax incentives on productivity growth of firms. The effect of subsidies on agricultural performance is one of the most debatable topics in economics academic literature and in agricultural economics in particular. Subsidies, however, can take many forms. The effect of explicit budgetary outlays on sector efficiency received a great deal of attentions in the literature. The effect, however, of implicit forms of subsidization on efficiency and productivity is not well explored in the empirical agricultural economics literature. And this is despite the fact that implicit subsidies in the form of tax incentives, for example, are very popular for developing countries. The empirical analysis is carried out using Ukraine-wide farm-level accounting data for an unbalanced panel of agricultural enterprises over the period 1995-2014