A Counterfactual Impact Evaluation of EU State Aid in Greece

Abstract

EU state aid adopted from Member States is increasing at a fast pace due to the Covid-19 pandemic and energy crisis. Given its impact on the European economy, securing a maximum value added is a challenge for both policy makers and public administration. State aid impact depends not only on available resources but also on spending decisions that must be in line with state aid rules. It is believed that new policies would benefit if they were based on assessed evidence of existing policies during periods with similar characteristics. Our contribution analyses the characteristics of Greek development law based on a unique dataset extracted from the management information system of the Ministry of Economy. We hypothesize that there will be a change in firm productivity in the first years since program closure. Using counterfactual impact evaluation and propensity score matching, we find that there is a minor negative impact of development law on productivity. This might be an indication that firms receiving state aid do not perform as expected and perhaps better planning during policy modeling is needed.