World Business and Economic Analysis
World Business and Economic Analysis
This post is part of a blog series that we hope will provide some food for thought on the critical questions outlined in the report on social safety nets.
Governments in the Arab world have historically relied on subsidies to lower the cost of fuel and food as the principal means for protecting the poor and sharing wealth. Or so they claim. The fundamental problem with subsidies is that they benefit the rich far more than the poor. They are as expensive as they are inefficient, failing to deliver any economic or social value equal to the money spent on them. Subsidies also have negative side effects, distorting consumption and economic activity in unproductive ways. A number of international examples have shown that there are far more effective and less expensive methods for protecting the poor. It is why many countries around the world have abolished subsidies in favor of more efficient instruments, such as targeted cash transfers, and improved social service delivery.
