Abstract
Unemployment and/or slow economic growth nationally and in poorer regions are two problems which political decision-makers often refer to when they argue for the need to grant different producer subsidies to firms. Moreover, it is often asserted that the problems are due to different market failures. However, it is not certain that market failures exist and political attempts to correct "market-failures" might easily turn into government failures. In the thesis various industrial and regional policy subsidies are examined. The subsidies, which are studied, have become increasingly important in many countries, not least in the EU, over time.The thesis consists of four essays, which examine different aspects of interventionistic policy and political decision making from the perspective of market failure vs. government failure. The purpose of Essay 1 is to study whether Swedish regional policy, which was introduced around 1970, has significantly affected the process of growth of per capita income in Swedish counties. In Essay 2 characteristics of recipient firms are analysed from an interest-group perspective. In Essay 3, the subsidies effect on total factor productivity growth is studied. In the final essay employment effects are examined.