The Political Economy of State Aids in the European Community: Some Econometric Evidence

Damien Neven

No 945, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: This paper analyses the pattern of state aids to the manufacturing sector in ten EC countries for the period 1981--90. It focuses on determinants suggested by the political economy of state aids. We estimate a regression model where the intensity of state aids is accounted for by the weakness of government, their ideological orientation, the concentration of industry, and the timing of elections. The evidence indicates that the fractionalization of political parties is associated with higher state aids. We also find support for the view that state aids are higher under right-wing governments and when firms' interests are highly concentrated. This is consistent with a partisan view of government in which firms represent an important constituency for right-wing coalitions. By contrast, the timing of elections does not seem to matter. Finally, the paper observes significant fixed country effects. We gather evidence on the transparency of procedures used to allocate and control state aids and suggest that these fixed effects could be associated with lax procedures which enhance the scope for capture.

Keywords: Capture; European Community; Political Economy; State Aids (search for similar items in EconPapers)
JEL-codes: H20 L50 L51 (search for similar items in EconPapers)
Date: 1994-04
References: Add references at CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
http://www.cepr.org/active/publications/discussion_papers/dp.php?dpno=945 (application/pdf)

Related works:
Working Paper: The Political Economy of State Aids in the European Community: Some Econometric Evidence (1994)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:945

Ordering information: This working paper can be ordered from
http://www.cepr.org/ ... pers/dp.php?dpno=945

Access Statistics for this paper

More papers in CEPR Discussion Papers from Centre for Economic Policy Research 33 Great Sutton Street, London EC1V 0DX, UK.
Bibliographic data for series maintained by CEPR ().