IESET.
Hypotheses·regulatory·incumbent_subsidy_market_share_persistence

Across OECD and emerging-market economies 1995-2020, subsidies to incumbent firms — measured by state aid, bailouts, and directed credit guarantees as a share of GDP — predict persistent market concentration (rising top-4 firm revenue share) and weaker subsequent total-factor-productivity growth.

The pre-registered claim is that a one-percentage-point increase in incumbent-subsidy share of GDP is associated with at least a 0.5-percentage-point increase in top-4 concentration over the subsequent decade and at least a 0.15-percentage-point reduction in annual TFP growth, after controlling for initial concentration, sectoral composition, and country fixed effects.

INCONCLUSIVEengine/runs/incumbent_subsidy_market_share_persistence

INCONCLUSIVE_DATA_PENDING — interaction term requested but no loadable constructed interaction variable is defined. The generic panel_fe runner would otherwise grade a main-effect coefficient instead of the pre-registered interaction estimand. Add a treatment or decomposition variable with transformation/source/name marking the interaction, or use a bespoke replication script.

confidence cueResult card produced; verdict unclassified.

policy briefCoverage too thin

In ordinary language

Over a long period, do more market-oriented institutions translate into higher income or productivity, once the comparison looks beyond a single success story?

plain answer

This test cannot make a firm call yet. interaction term requested but no loadable constructed interaction variable is defined.

why it matters

This matters because regulatory claims should change belief only when they survive a pre-declared empirical test.

how the test works

It compares 40 country or place units from 1995 to 2020, using a panel fe design, with fixed effects for country and year.

what was measured
What changed
  • Incumbent subsidy share income
  • State aid share income
What we checked
  • Top 4 concentration change 10yr
  • Productivity growth 10yr
  • Markups index
what this does not prove

A single test is not the whole truth. It narrows the claim under a specific sample, time period, and method. Strong policy conclusions need the pattern to survive nearby tests, alternative data, and serious objections.

verification

No evidence packet has been generated yet.

Results

engine/runs/incumbent_subsidy_market_share_persistence
1007550250199520082020USAGBRDEUFRAITAESPNLD
illustrative sketch · run pending
No coefficients yet. When the model fires, this chart will show top_4_concentration_change_10yr across 40 sampled countries over 1995–2020.
The shapes above are stylised — none of the lines are real data.
Placeholder for incumbent_subsidy_market_share_persistence. Published chart will be generated from engine/runs/incumbent_subsidy_market_share_persistence/chart_data.json.

Pre-registration

pre-registered
first-spec commit 5ce4495 · 2026-05-02T19:11:20Z
run generated · 2026-06-29T17:54:30Z

Across OECD and emerging-market economies 1995-2020, subsidies to incumbent firms — measured by state aid, bailouts, and directed credit guarantees as a share of GDP — predict persistent market concentration (rising top-4 firm revenue share) and weaker subsequent total-factor-productivity growth. The pre-registered claim is that a one-percentage-point increase in incumbent-subsidy share of GDP is associated with at least a 0.5-percentage-point increase in top-4 concentration over the subsequent decade and at least a 0.15-percentage-point reduction in annual TFP growth, after controlling for initial concentration, sectoral composition, and country fixed effects.

Falsification criterion — what would disprove this

set before the run · honoured after

This hypothesis is considered falsified if:

Not supported if (a) the panel-FE coefficient on incumbent subsidy is not positive and significant at p<0.05 on concentration change, OR (b) the coefficient on incumbent subsidy is not negative and significant at p<0.05 on TFP growth, OR (c) the implied 1-pp subsidy effect on top-4 concentration is below 0.25 pp. A developmentalist reading wins if subsidies to incumbents are positively associated with TFP growth (suggesting learning-by-doing and scale economies dominate rent-seeking) or if the concentration effect is negative (subsidies enable entry against foreign incumbents).

formal test & threshold
test:      panel_fe_incumbent_subsidy_on_concentration_and_tfp
threshold: panel_FE_beta(subsidy → top4_concentration_change_10yr) > 0 at p<0.05 AND panel_FE_beta(subsidy → tfp_growth_10yr) < 0 at p<0.05 AND implied_effect_1pp_subsidy_on_concentration >= 0.25 pp

Method

Template
panel_fe
Fixed effects
country, year
Clustering
country
Sample
40 countries · 1995 – 2020
Evidence type
associational

Panel FE with 10-year forward-differenced outcomes on lagged incumbent-subsidy share. Country FE absorb persistent cross-country differences in industrial policy philosophy. Identification from within-country changes in subsidy intensity (e.g. EU state-aid waves, Korean chaebol support, Chinese SOE subsidies). Robustness: exclude China (largest subsidy outlier); use only EU sub-sample with Scoreboard data; IV using EU membership x sectoral-regulation timing.

Data

VariableSourceTransform
top_4_concentration_change_10yr
outcome
oecd_stan:concentration_ratio_top4tier 5
level_diff_10yr
tfp_growth_10yr
outcome
pwt:rtfpnatier 3
log_diff_10yr
markups_index
outcome
constructed:de_loeker_eeckhout_markups_proxytier 5
level
incumbent_subsidy_share_gdp
treatment
constructed:state_aid + bailouts + directed_credit_guarantees_to_incumbentstier 5
level
state_aid_share_gdp
treatment
oecd:competition_state_aidtier 2
level
initial_top4_concentration
control
oecd_stan:concentration_ratio_top4tier 5
lagged_level
log_initial_gdp_pc
control
world_bank_wdi:NY.GDP.PCAP.KDtier 2
log
services_share_gdp
control
world_bank_wdi:NV.SRV.TOTL.ZStier 2
level
trade_openness
control
world_bank_wdi:NE.TRD.GNFS.ZStier 2
level
product_market_regulation
control
oecd_pmr:pmr_compositetier 4
level

● ready  · ● pending  · ● reconstruct-needed

Detailed result card

Result card — incumbent_subsidy_market_share_persistence

Verdict: INCONCLUSIVE_DATA_PENDING — interaction term requested but no loadable constructed interaction variable is defined. The generic panel_fe runner would otherwise grade a main-effect coefficient instead of the pre-registered interaction estimand. Add a treatment or decomposition variable with transformation/source/name marking the interaction, or use a bespoke replication script.

Pre-registration

  • Claim: Across OECD and emerging-market economies 1995-2020, subsidies to incumbent firms — measured by state aid, bailouts, and directed credit guarantees as a share of GDP — predict persistent market concentration (rising top-4 firm revenue share) and weaker subsequent total-factor-productivity growth. The pre-registered claim is that a one-percentage-point increase in incumbent-subsidy share of GDP is associated with at least a 0.5-percentage-point increase in top-4 concentration over the subsequent decade and at least a 0.15-percentage-point reduction in annual TFP growth, after controlling for initial concentration, sectoral composition, and country fixed effects.
  • Falsification rule: Not supported if (a) the panel-FE coefficient on incumbent subsidy is not positive and significant at p<0.05 on concentration change, OR (b) the coefficient on incumbent subsidy is not negative and significant at p<0.05 on TFP growth, OR (c) the implied 1-pp subsidy effect on top-4 concentration is below 0.25 pp. A developmentalist reading wins if subsidies to incumbents are positively associated with TFP growth (suggesting learning-by-doing and scale economies dominate rent-seeking) or if the concentration effect is negative (subsidies enable entry against foreign incumbents).
  • Falsification test: panel_fe_incumbent_subsidy_on_concentration_and_tfp

Estimate

  • Error: interaction term requested but no loadable constructed interaction variable is defined. The generic panel_fe runner would otherwise grade a main-effect coefficient instead of the pre-registered interaction estimand. Add a treatment or decomposition variable with transformation/source/name marking the interaction, or use a bespoke replication script.

Variables resolved

  • pwt:rtfpna → tfp_growth_10yr (outcome, publisher=pwt, n=6407)
  • world_bank_wdi:NY.GDP.PCAP.KD → log_initial_gdp_pc (controls, publisher=world_bank_wdi, n=12104)
  • world_bank_wdi:NV.SRV.TOTL.ZS → services_share_gdp (controls, publisher=world_bank_wdi, n=10330)
  • world_bank_wdi:NE.TRD.GNFS.ZS → trade_openness (controls, publisher=world_bank_wdi, n=10714)
  • oecd_pmr:pmr_composite → product_market_regulation (controls, publisher=oecd_pmr, n=105)

Variables missing data

  • oecd_stan:concentration_ratio_top4 (outcome, name=top_4_concentration_change_10yr) — vintage not on disk
  • constructed: de_loeker_eeckhout_markups_proxy (outcome, name=markups_index) — vintage not on disk
  • constructed: state_aid + bailouts + directed_credit_guarantees_to_incumbents (treatment, name=incumbent_subsidy_share_gdp) — vintage not on disk
  • oecd:competition_state_aid (treatment, name=state_aid_share_gdp) — vintage not on disk
  • oecd_stan:concentration_ratio_top4 (controls, name=initial_top4_concentration) — vintage not on disk

Generated by scripts/run_panel_fe.py at 2026-06-29T17:54:30+00:00

Strongest opposing argument

Every hypothesis ships with its charitable opposing argument. The framework earns credibility by handling objections at their strongest, not weakest.

Notes

State-aid data is best for EU members (EU Scoreboard). For non- EU countries, incumbent subsidies are proxied by SOE subsidies, bailout programmes, and directed credit from national sources. Coverage gaps flagged in diagnostics.

Authored framework. Read the transparency note.