Do the Governmental Grants Influence in Breaching Free-Market Competition? – The Data of SMEs Taken in Kosovo

This study used the data from fifty-six SMEs with the purpose to evaluate the role of governmental grants in increasing investments and profitablility of SMEs as well as the influence of grants in free market competition. The data were gathered with the help of a questionnaire. SMEs that have been supported with governmental grants realized their investment with cofinancing (one part of the project was financed with governmental grants, whereas the other part was financed by entrepreneurs with self-finances). The results showed that governmental grants as a method of public finances of SMEs increased investment and profitability of supported SME, but also it influences in breaching the free competition. From finances of governmental grants are damaged non-supported SME of governmental grants that work the same activity as the supported enterprises by government. Governmental grants help a limited number of enterprises and the competition in between SME is not allowed to be regulated only with market forces that in the free-market competition decide which firms will stand or will get removed by the market based on their performance on the market. In the short-term period governmental grants keep “artificially” a number of SME in the market. This study argument what is most necessary to do for free market competition and presents the ideas of stable development and function of free-market economy