The myth of subsidies in the film industry: a comparative analysis of European and US approaches

It has been widely believed that subsidies can help revive film industries, but the link between the intent and the actual results deserves more careful scrutiny. This paper addresses this issue by comparing and analyzing Europe and the United States. Originally, Europe’s subsidies were developed to increase the number of film productions, but they soon became ineffective and were largely exploited by Hollywood as a way to circumvent European protectionist measures. By contrast, US subsidy policies have been initiated and implemented by local state governments in order to enjoy the economic and cultural benefits from the filmmaking business, instead of supporting the film industry per se. Again though, these local subsidies have been exploited by Hollywood studios leaving little benefit for the local states. All of these points show that subsidies can easily become a myth, thus careful consideration should be undertaken when developing more effective policies for the future.