Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/203971 
Year of Publication: 
2013
Series/Report no.: 
wiiw Working Paper No. 106
Publisher: 
The Vienna Institute for International Economic Studies (wiiw), Vienna
Abstract: 
Despite the proclaimed return of industrial policy (Wade, 2012) state aid provided by EU Member States remains at a historically low level. This is partly explained by the unique institutional arrangement in the EU which empowers the European Commission to monitor and restrict state aid activities of Member States. Making use of European state aid statistics over the period 1995-2011 we employ an augmented macroeconomic export function to investigate the relationship between state aid for the manufacturing sector and Member States' export performance. With manufacturing value added exports serving as a proxy for export performance, our model suggests that a 10% increase in manufacturing aid increases exports by 0.67% for the average EU country. The result is confirmed by instrumental variable estimation. We also find that the impact of state aid on exports is increasing with government effectiveness leading to large differences in the leverage of aid expenditures to promote export performance across Member States.
Subjects: 
industrial policy
state aid
value added exports
external competitiveness
JEL: 
F13
L52
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.