Question

What is the difference between a direct and an indirect agricultural export subsidy?

Answer 1

An export subsidy is a payment to firms for every unit exported (either a fixed amount or a fraction of the sales price). Governments give subsidies to encourage domestic firms to produce more in particular industries

Direct subsidies can be defined as those subsidies which incorporate an actual payment of funds towards a certain individual, group in order to promote the export in the agricultural field. While indirect subsidies are those which do not have any predetermined monetary value or involved actual cash outlays but these mainly include the different types of motivating activities for example price reduction, promotional schemes.