subsidy
SUB-sih-dee
/ˈsʌbsədi/
A sum of money granted by the government or a public body to assist an industry or business so that the price of a commodity or service may remain low or competitive.
Often controversial in trade, as it can give domestic companies an 'unfair' advantage over foreign competitors.
The story behind the word. From the Latin 'subsidium', which originally referred to troops stationed in reserve behind the main battle line to provide help if needed. It evolved to mean any form of assistance or support.
Word relationships
- grant: A grant is a general gift of money; a subsidy is specifically to support a price or industry.
- allowance: An allowance is usually for an individual's expenses; a subsidy is for a business or sector.
- tax: A tax takes money away; a subsidy gives money.
Commonly confused with
- bailout: A bailout is a one-time emergency rescue; a subsidy is often an ongoing support system.
Word family
- subsidize (verb): To support an organization or activity financially.
Collocations
- government subsidy
- agricultural subsidy
- state subsidy
Example sentences
- "Without a government subsidy, many small farms would go out of business due to low crop prices." Agriculture
- "The state provides a subsidy for electric vehicle buyers to encourage green transportation." Renewable energy
Memory hook
Subsidy = 'Sub' (under) + 'Sidy' (sit). The government 'sits under' the business to hold it up. Support from beneath.
When not to use
Not a 'loan'; a subsidy is usually a grant that doesn't need to be paid back.
Fun facts
- The global fossil fuel industry receives hundreds of billions of dollars in subsidies every year, far exceeding subsidies for renewable energy.
Related words
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