Greater availability of data on industrial subsidies does not only matter for monitoring the global scope and scale of such subsidies, but it also enables analysis of what these subsidies mean for global markets. Recent OECD work has shown the subsidies captured in the OECD MAGIC database to have increased the global market share of recipient firms between 2005 and 2023 (OECD, 2025[8]). The published estimates imply that around 22% of the global market share gains of firms that grew between 2005 and 2023 can be explained by the subsidies they received. For Chinese firms, almost 60% of their global market share gains can be explained by the subsidies they received (Box 1).
OECD MAGIC Database of Industrial Subsidies
OECD work (OECD, 2025[8]) has shown that higher levels of subsidies lead to an increase in firms’ global market share. The analyses revealed an economically sizeable impact relative to observed small annual changes in market shares, with an increase of one percentage point in subsidies relative to revenue corresponding to between the 27th and 51st percentile of the observed distribution of annual absolute market share changes, depending on the estimation method.
Another way to understand the magnitude of the effect is to assess what proportion of actual market share shifts can be explained by subsidies. The expected change in market share resulting from subsidies can be defined and calculated as the regression coefficient of interest multiplied by the firm’s value for the subsidy intensity variable. Dividing this expected change by the observed change in market share gives a ratio capturing what share of the real-world market share shifts for a given firm can be explained by the subsidies it received.
Two features of the econometric model used make this simple calculation possible. First, the treatment was defined as the difference between a firm’s subsidies as a share of its revenue and the average subsidy intensity in its sector. Therefore, the average value of the independent variable is by construction zero. Second, the outcome variable of changes in market share must also average to zero across all firms in a sector, as one firm’s gain will necessarily be another firm’s loss. These two facts make it possible to focus only on the relative change induced by subsidies without incorporating absolute levels.
To account for, on the one hand, high levels of variability at the firm level and, on the other hand, the constraint that total market share changes must always sum to zero, the results of this exercise can be most meaningfully interpreted for subgroups of firms. For firms whose headquarters are located in China, the ratio between the hypothetical change predicted by their subsidy intensity relative to that of other firms is 59%. Looking at the subset of firms whose total change in market share between 2005 and 2023 (the period of analysis covered in the paper) was positive, the share of gains that can be explained is 22%.
While subsidies appear to have caused an increase in firms’ market share, they did not lead to any significant increase in their productivity and profitability. Altogether, this suggests that the gains in market share may have stemmed from subsidised firms’ ability to lower their prices, undercut their competitors, and deter them from making investments. Just like doping in sports, there is therefore a risk that subsidies result in less productive players winning unfairly at the expense of more innovative and efficient ones.1 This could eventually impose long-term costs on the global economy in the form of less innovation, product quality, and competition, even as consumers benefit in the short-term from the lower prices.
Global revenue shares, by location of firms’ headquarters or main place of business
Note: *Data for SHIP are from 2010 to 2024 due to large volumes of missing data before 2010. AERO: Aerospace and defence; ALUM: Aluminium; AUTO: Automobile; CEMT: Cement and other building materials; CHEM: Chemicals; FERT: Fertilisers; GLAS: Glass, ceramics and refractories; MACH: Heavy machinery; SEMI: Semiconductors; SHIP: Shipbuilding; SOLA: Solar photovoltaic cells and modules; STEE: Steel; TELC: Telecommunications network equipment; TRAN: Rolling stock and signalling; WIND: Wind turbines. Geographical groupings are based on the location of firms’ headquarters or main place of production, which does not always correspond to where production actually takes place.
Source: OECD MAGIC database.
The link between subsidies and market shares suggests the possible emergence of concentration risks in global supply chains. Amongst the sectors covered by the OECD MAGIC database, a number became increasingly geographically concentrated between 2005 and 2024 (Figure 7). This is especially the case for the production of solar panels, shipbuilding, steel, and aluminium, where the share of global sales of Chinese firms grew significantly between 2005 and 2024.
The production of solar panels is a case in point, displaying both high levels of subsidies – as the most subsidised sector in MAGIC in relative terms (Figure 4) – and acute geographical concentration. Subsidies for the solar panel sector have notably translated into a build-up of production capacity significantly exceeding market demand, which caused a drop in solar module prices and led producers in 2024 to experience declining revenue, sizable losses, and job cuts (OECD, 2026[9]). This underscores that subsidies are not only a problem for trade partners and global markets but also potentially a source of domestic imbalances, inefficiencies in the allocation of resources, and fiscal pressures.
Moreover, subsidised production in one economy can impact suppliers in other economies even in the absence of trade, where the scale of subsidised production is such that it impacts global prices and renders other producers non-viable.