Firm subsidies in central and eastern Europe and central Asia: Is there urban bias?

Abstract

Regional disparities exist due to the uneven impact of economic development. The World Bank’s World Development Report (2009) advocates that attempts to spread out economic activity will undermine growth. This study finds that policy-makers in Central and Eastern Europe and Central Asia favour subsidizing firms in less urbanized locations. However, innovation market outcomes would probably be higher if there was an urban bias in subsidy distribution.