The Relationship Between Public Support and the Industrial Sector in the European Union

Public financial support is often treated as one of the most important governmental instruments to boost the growth, development and competitiveness of an economy and of companies. However it can also have a negative effect on both: aforementioned economy and companies. Due to the fact that the internal market of the EU represents an area of free movement of goods, services, workers and capital, EU law contains a ban on any state aid which distorts competition in so far as it affects trade between Member States. However, the Treaty on the Functioning of the European Union introduces some exemptions to that rule. These allow Member States to grant a large amount of state aid to their companies operating in the market economy. In order to make all the rules and procedures more transparent and increase predictability with respect to the European Commission’s decisions on the compatibility of state aid schemes with EU law, the Commission elaborates special rules and conditions of admissibility for public support to entrepreneurs. These rules have been changed dramatically on many occasions during the 1970s, 1980s, and 1990s, when the internal market was established, as well as in the recent years covering the financial and economic crisis of 2008–2010. Due to the fact that a new industrial policy is evolving on the basis of the experiences of the last decade, it is noteworthy that we did not find any relationship between selected categories of state aid granted before and after the ‘big bang’ enlargement of 2004 and manufacturing added value. Thus it seems that the importance of state aid in the industrial sector, including manufacturing development, has been substantially reduced.