Reproducibility package for Hooked on Subsidies: The Case for Reform

This flagship establishes a conceptualization of fiscal subsidies, estimates their fiscal costs in emerging market and developing economies, provides a framework for assessing them, and demonstrates sectoral applications of the framework. Emerging market and developing economies spend an average of 6.9 percent of GDP annually on subsidies — often exceeding combined public spending on health and education — making subsidies a major driver of deteriorating fiscal balances. Many of these subsidies are poorly targeted, disproportionately benefiting wealthier households, and a significant share remains hard to account for and absent from official fiscal reporting, meaning true costs are likely even higher. The assessment framework introduced in this report consists of six pillars: rationale and appropriateness, design, fiscal costs, additionality and welfare improvements, implementation, and evaluation. Applied across sectors, the framework reveals that reforming, repurposing, or ending them can generate substantial savings that could be redirected toward productive investments in human capital and infrastructure. The report also identifies pathways for reform, including improved transparency and tracking, better-targeted delivery mechanisms, and political economy strategies to build broad-based support for change.