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Vertical industrial policy in the EU: an empirical analysis of the effectiveness of state aid

Author

Listed:
  • Gual, Jordi

    () (IESE Business School, Barcelona)

  • Jodar, Sandra

    (Student in GREMAQ, University of Toulouse)

Abstract

This paper assesses the effectiveness of vertical industrial policies within the European Union. Vertical industrial policy is defined as government support of specific firms or industries ("picking winners" or "supporting losers"). It is measured as state aid granted by Member States to the manufacturing sectors, with the aim to analyse to what extent this government intervention affects the growth of multifactor productivity (MFP) in manufacturing. The analysis is conducted with both sectoral and horizontal aid, since in many cases vertical aid is disguised as aid pursuing horizontal objectives. Controlling for the potential endogeneity of state aid policy, the results indicate that vertical state aid contributes positively to MFP growth.

Suggested Citation

  • Gual, Jordi & Jodar, Sandra, 2006. "Vertical industrial policy in the EU: an empirical analysis of the effectiveness of state aid," EIB Papers 10/2006, European Investment Bank, Economics Department.
  • Handle: RePEc:ris:eibpap:2006_010
    as

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    Citations

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    Cited by:

    1. Augusto Ninni, 2006. "The “New” European Industrial Policy in Europe: consequences for the Italian industrial policy," QA - Rivista dell'Associazione Rossi-Doria, Associazione Rossi Doria, issue 4, November.
    2. Kolesnikova Irina, 2010. "State Aid for Industrial Enterprises in Belarus: Remedy or Poison?," EERC Working Paper Series 10/01e, EERC Research Network, Russia and CIS.
    3. Pierre-André Buigues & Khalid Sekkat, 2011. "Public Subsidies to Business: An International Comparison," Journal of Industry, Competition and Trade, Springer, vol. 11(1), pages 1-24, March.
    4. Nulsch, Nicole, 2014. "Is Subsidizing Companies in Difficulties an Optimal Policy? An Empirical Study on the Effectiveness of State Aid in the European Union," IWH Discussion Papers 9/2014, Halle Institute for Economic Research (IWH).
    5. Kolesnikova, Irina, 2010. "State Aid for Industrial Enterprises in Belarus: Remedy or Poison?," MPRA Paper 22403, University Library of Munich, Germany.

    More about this item

    Keywords

    Industrial policy; vertical support; multifactor productivity;

    JEL classification:

    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods
    • L53 - Industrial Organization - - Regulation and Industrial Policy - - - Enterprise Policy
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe

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