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

Jordi Gual () and Sandra Jodar
Additional contact information
Jordi Gual: IESE Business School, Barcelona
Sandra Jodar: Student in GREMAQ, University of Toulouse

No 10/2006, EIB Papers from European Investment Bank, Economics Department

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.

Keywords: Industrial policy; vertical support; multifactor productivity (search for similar items in EconPapers)
JEL-codes: L52 L53 O52 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2006-06-26
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Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:ris:eibpap:2006_010

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