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State Aid Law of the European Union edited by Hofmann, Herwig C H; Micheau, Claire (11th August 2016)

Part I Rationales for State Aid Rules, 1 State Aid Review in a Multi-level System: Motivations for Aid, Why Control It, and the Evolution of State Aid Law in the EU

Viktor Kreuschitz, Hanns Peter Nehl

From: State Aid Law of the European Union

Edited By: Herwig C. H. Hofmann, Claire Micheau

From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2015. All Rights Reserved.date: 23 September 2019

Subject(s):
State aid provisions — European Union — Economics — State aid

This introductory chapter discusses factors that motivate why aid is given by states in the first place. Highlighting the interplay between both the political and economic motivations that guide states and their sub-structures, it is possible to identify several related motivations for giving aid: the first consists of attaining political preferences of governments; a second, and often related reason is that political leaders may be guided by pure electoral pragmatism aimed to increase future votes; and third, State aid remains one of the few economic tools that Member States have at their disposal given increasing Europeanization. The necessity for control and review of State aid and subsidies could be linked to potential risks and disadvantages of aid. A key notion of analysing these risks of aid is the concept of inter-jurisdictional externalities: supporting economic development and activities in one jurisdiction may cause intended or unintended negative impacts on activities within other jurisdictions.

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