subsidy
SUB-suh-dee
/ˈsʌb.sə.di/
A sum of money granted by the government to assist an industry or business so that the price of a commodity remains competitive.
Direct or indirect financial aid aimed at lowering production costs and protecting domestic producers.
The story behind the word. In ancient Rome, 'subsidium' referred to military reserves stationed behind the front lines ('sub-' under + 'sedere' to sit) ready to reinforce troops. In English, it evolved from military assistance into state financial aid.
Word relationships
- grant: A grant is often a one-time project funding award, while a subsidy provides ongoing economic support to a market sector.
- duty: A duty taxes imported goods, whereas a subsidy provides money to cheapen domestic production.
Commonly confused with
- tariff: A tariff adds cost to foreign goods, while a subsidy reduces cost for domestic goods.
Word family
- subsidize (verb): To support financially with a subsidy
- subsidized (adjective): Supported by government subsidy
Collocations
- government subsidy
- export subsidy
- state subsidies
- subsidize production
Example sentences
- "Heavy government subsidy programs made domestic grain far cheaper than foreign imports." Agricultural economics
- "The state introduced a substantial subsidy for solar manufacturers to stimulate clean tech development." Clean energy policy
Memory hook
SUBsidy SITS UNDER a company to hold up its profits. Government financial aid.
When not to use
Do not confuse with personal tax deductions or individual social welfare payments.
Fun facts
- Agricultural subsidies in wealthy countries remain one of the most contentious topics during World Trade Organization policy summits.
Related words
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