Subsidies in developing nations allow manyconsumers access to fuel at a fraction of itsmarket cost. However, rather than helping thepoor, most of the benefits of these subsidiesaccrue to richer people who use more energy.What’s more, these types of subsidies encouragewasteful consumption and can dramaticallyworsen budget deficits. This can actually makethe poor worse off, as spending on oil subsidiescrowds out spending on more socially usefulprojects.
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