Analysis of state interventions in the US aircraft manufacturing

Abstract

Aircraft manufacturing is an industry strongly related to the defense production also providing work places to a significant number of countries’ citizens. Such importance determines high attention of governments to this area. Local authorities can take a big variety of measures to protect and encourage aircrafts’ production, depending on their abilities and aims. Economic policies might be different, from laissez-fair to foundation of public corporations. Depending on one’s point of view, attitudes towards state interventions can differ dramatically. Protectionists encourage subsidies as a way to create new jobs and increase production. The free market advocates regard state interventions as more harmful than useful for economy, since they require resources diversion. This article considers application of subsidies in the aircrafts manufacturing industry and their influence on market competition. Without denying the negative effects associated with the budgetary reallocation of resources between industries, the author examines the impact of government intervention on competition within one of the sectors of the US economy. This article is dedicated to the methods and results of state interventions in US aircraft manufacturing industry. The main goal of the article is to determine whether the subsidies have a selective nature of coverage and if they influence the market competition. In order to study if state interventions rely on company’s size, the author applied the methods of mathematical statistics, including Poisson distribution, to check a hypothesis about the absence of any relation between distribution of subsidies and company’s revenue. The research was based on subsidies and incomes data of the US enterprises received from open sources. As the result of this study, it was concluded that subsidization of aircraft manufacturing companies probably is not related to their size. This is explained by the fact the decision-making authorities have multiple levels and subjects due to the country’s federal governance structure.

Keywords

• aircraft manufacturing
• poisson distribution
• state intervention
• subsidies
• tax incentives