Abstract
AbstractIn the early phase of transition, which began in the 1990s, Central and Eastern European countries (CEECs) pursued economic restructuring that involved massive injections of state support. With reference to the history of state aid in centrally planned economies, we investigate state aid practices of CEECs since attaining full EU membership. We analyse whether their state aid policies during and after transition challenged European state aid legislation, and whether these fit into the EU strategy of ‘less but better targeted aid’. The data‐based analysis is complemented with some indicative insights from state aid in the steel industry as well as the financial service sector to suggest that there is today no significant difference in state aid law application between East and West any more – the new EU members have further caught up by better aligning to the objectives of the State Aid Action Plan.
Highlights
Non-compliance with European state aid rules was commonplace in many Member State governments during the 1960s and 1970s
The analysis shows that the new EU Member States have gradually improved compatibility with European state aid objectives
While the transition from planned to market economies initiated a first change in Central and Eastern Europe Countries (CEECs) state aid practices, the signing of the Europe Agreements led to a second wave of major changes
Summary
Non-compliance with European state aid rules was commonplace in many Member State governments during the 1960s and 1970s. Even at the dawn of EU accession, CEECs’ levels of public support to certain industries and individual firms were significantly higher than in the EU-15 Member States This raised the expectation of political discussions at a European level (see Röller and Hirschhausen, 1996, bearing in mind the experience from East Germany’s attempts to revive its industries by massive state intervention and expenditure). Contrary to these expectations, the compliance literature in other policy fields suggests that there is no significant lag in application and institutional enforcement of EU law among the CEECs either prior to or after accession. This study is essentially of an empirical nature, but attempts to embed descriptive statistical analysis into explanatory frameworks and concepts
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