Subsidy Reform and Sustainable Development

Political Economy Aspects

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Unsustainable subsidies are pervasive in the industry, agriculture, transport and energy sectors of most OECD countries. They are expensive for governments and can have harmful environmental and social effects. Eliminating these supports requires comprehensive approaches which are supported by top political leadership, transparent in their potential effects on all parties, consistent over the long-term, and often accompanied by transition supports. This volume uses sectoral case studies to illustrate that achieving change in structural policies such as subsidies depends largely on good governance practices.




Reforming environmentally-harmful subsidies is a focus of the OECD Horizontal Programme on Sustainable Development. The OECD’s combination of economic, environment, social, development and trade expertise, as well as its work in sectors such as energy, agriculture, fisheries, industry, transport and services, give it a special role in addressing the challenge of reforming harmful subsidies. Subsidies often introduce economic, environmental and social distortions with unintended consequences. They are expensive for governments and may not achieve their objectives while also inducing harmful environmental and social outcomes.


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