Еconomic Efficiency of State support for Industry (by the example of the engineering industry): an Optimization Model

Abstract

Budget financing can become a growth source for industrial enterprises. At the same time, the efficient use of budget funds is of particular importance. Achieving the efficiency of using budget subsidies is an important task for the state. The state applies various criteria to determine the efficiency of spending budget funds. The search for an optimal solution for the efficient allocation of public funding continues at the present time. This paper discusses the methodology for assessing the effectiveness of state budget funds, which provides for a set of criteria, by which a consistent analysis of the subsidies impact on the enterprises performance in the engineering industry is carried out. The methodology used ranks companies according to economic and institutional indicators, as well as simulation modeling to solve the issue of the state support optimal allocation for different scenarios. The results of the study showed that R&D expenditures increase the profi tability of public investments in the industry and this effect is long-term. The proposed model for the subsidies allocation contributes to the achievement of positive effects in the activities of the engineering industry enterprises, depending on the scen ario chosen by the state to impact on the industry. Its application will allow to effectively spend budget funds and predict the development of the industry, taking into consideration the priorities of its development chosen by the state. The model of the budget subsidies allocation shows the necessity for active application of innovations by the enterprises of the engineering industry for its sustainable development.