Measuring Financial Subsidies to SOEs: An Asset Return Based Framework with an Application to TVA

State-owned enterprises (SOEs) play an increasingly important role in the global economy.34 Much has been written about the pros and cons of state ownership, governance, and the economic and broader social consequences of the many types of SOEs in operation (e.g., state-owned financial institutions, manufacturers, and public utilities). However, the question of how to comprehensively measure the value of the financial subsidies that governments confer to SOEs has received much less attention. There is no agreed-upon conceptual framework for how those subsidies should be budgeted or otherwise accounted for, and in practice, there is wide variation in whether and how government authorities and policy analysts measure and report them.

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