State Aid Impact on Central and Eastern Europe Economies

State aid is a fairly common phenomenon in the European Union, and, in the context of the COVID-19 pandemic, the number of companies receiving state aid has even increased. However, scientific research confirms that, depending on the macroeconomic, political and social situation as well as on industry specifics, state aid can have a dual effect -positive or negative. To date, there is no clear answer to the question of what impact and under which conditions state aid has on national economies in the long run. This article contributes to filling a gap in the literature because to date researchers have focused on the cases of large, heavily populated European Union countries, but the research into the impact of state aid on the Central and Eastern EU economies, where the level of state aid as percentage of GDP is higher than the EU average, is still scarce. In addition, the mixed results obtained in previous studies caused confusion over the effects of state aid and its relevance for economic development. In our research, we applied correlation analysis, Granger causality test, ARDL, PTR models and evaluation of multipliers for the analysis of the panel data set representing 11 Central and Eastern EU countries over a 20-year period (from 2000 to 2019). We found that state aid does not promote economic development in most Central and Eastern EU countries under certain conditions in the long term. This paper contributes to a deeper understanding of the state aid-economic development relationship at the national level in the Central and Eastern Europe and has implications for policy makers.

Revenues and Expenditures for Public Elementary and Secondary Education: FY 21. Finance Tables. NCES 2023-301

This set of tables introduces new data for national and state-level public elementary and secondary revenues and expenditures for fiscal year (FY) 2021. Specifically, these tables include the following school finance data: (1) revenue and expenditure totals;(2) revenues by source;(3) expenditures by function and object;(4) current expenditures;(5) revenues and current expenditures per pupil;(6) expenditures from Title I funds;and (7) revenues and expenditures from COVID-19 Federal Assistance Funds. The tables chosen for this report demonstrate the range of information available when using the National Public Education Financial Survey (NPEFS). [For "Revenues and Expenditures for Public Elementary and Secondary Education: FY 20. Finance Tables. NCES 2022-301," see ED619372.]

Effectiveness of COVID-19 state aid for microenterprises in Poland

The effectiveness of COVID-19 state aid for microenterprises in Poland is presented. The quantitative analysis based on the logistic regression models revealed that it was limited. Our results show that state aid was more readily transferred to micro-entities that had been insignificant employers and expanding their performance during the pandemic through increasing employment and revenues. Since the governmental programmes in Poland were assumed to stabilise enterprises' revenues, our study allowed assessing their effectiveness in this regard. The problem of longer-term revenue decreases and increases was identified among supported micro-entities. Revenue decreases primarily resulted from the overall deterioration of their economic position. These beneficiaries, most of all, stood out with longer-term declines in liquidity and profitability, redundancies of employment, and stressed access to financial market funding. Thus, the aid was insufficient concerning their actual needs, though it came from generous measures. In turn, the supported micro-entities with revenue growth during the pandemic were found to be resilient to stress conditions, with access to selected market and non-market liquidity, and increasing their liquidity and profitability in the longer term. Despite the fact that they did not need to be supported, they often benefited from state aid provided within an unconditionally available measure. Based on the results obtained, recommendations for policymakers have been formulated regarding allocation aspects of support for micro-entities during a pandemic. © 2023

Quoi qu'il en coûte : un conditionnement incertain des aides publiques ?

Le versement massif d'aides publiques par les États membres pour venir au secours de l'économie affectée par cette crise sanitaire sans précédent, s'effectue dans un cadre qui peut apparaître très permissif. L'observateur peu averti pouvant avoir le sentiment que la Commission autorise toutes les aides sans conditions et sans lignes claires. Un examen plus attentif doit toutefois conduire à une conclusion bien différente car si la Commission utilise son pouvoir de contrôle pour sauver des pans entiers de l'économie européenne, elle instrumentalise aussi ce pouvoir d'autorisation pour d'autres finalités : la résilience de notre modèle social et la mutation de notre économie pour l'adapter aux impératifs du XXIe siècle.Alternate : The massive disbursement of public aid by Member States to come to the aid of the economy affected by this unprecedented health crisis is taking place within a framework that may appear very permissive. The uninformed observer may feel that the Commission is authorizing all aid without conditions and without clear lines. A closer examination should however lead to a very different conclusion because if the Commission uses its power of control to save whole sections of the European economy, it also exploits this power of authorization for other purposes: the resilience of our social model and the transformation of our economy to adapt it to the imperatives of the 21st century.

European State Aid during COVID-19

Summary During the COVID-19 unexpected pandemic crisis, to minimalize socio-economic damages within the Member States, the European Commission has taken several steps to increase the flexibility of the support framework and include more diversified forms of aid and extended time-frames for granting them. Implementing urgent measures, in particular for the sectors that are mostly affected by the economic shock and unpredicted limitations pushed them to increase their resilience to be more stable for emergencies. In order to ensure the EU internal market is not fragmented and the level of playing field stays intact, as well as to avoid harmful subsidy races to the detriment of cohesion within the Union, the use of State Aid proved its necessity in various diversified forms of aid. The article discusses State Aid in the context of the global pandemic and tries to find out raised questions. © 2022 Turan Jafarli, published by Sciendo.

Pandemic and state aid measures: financially conditioned social rights implications

If the effective enjoyment of constitutionally enshrined and financially conditioned social rights depends above all on the spending limits imposed by the balanced-budget rule, they risk being sacrificed in the current macroeconomic landscape, characterized by the slack of public finance constraints due to the Covid-19 pandemic. State aid authorized by the European Commission with the Temporary Framework of 19 March 2020, although mainly intended for enterprises, could represent a precious opportunity to ensure the stability of the constitutional state and counter the progressive process of degradation of social rights. After a brief examination of the nature of the rights and incentive measures de quo, the present discussion intends to illustrate how the intention of financing the social welfare functions with such aid would remain a practicable way, provided, however, that effective implementation of the PNRR is given (pursuing the objectives of social justice, inclusion and economic and social cohesion) and that reforms focused on the spending review process and on the improvement of the public sector net borrowing are implemented. In fact, public administrations often do not have the possibility to provide welfare grants, beacuse they cannot take out loans of Recovery and Resilience Facility. © 2023, Societa Editoriale Federalismi s.r.l.. All rights reserved.

Bank supervision between risk reduction and economic renewal

This paper investigates specific challenges of Covid for balancing economic growth and financial stability as they apply to paradigms, programmes and policies of bank regulation and supervision at the European Commission and European Central Bank. It finds that dominant paradigms of risk reduction and control remained intact, despite a temporary programme of regulatory relaxation to spur credit growth. The ECB and the Commission were united on state aid, regulatory loosening and promoting credit creation. However, while the Commission sought credit for businesses, much of the credit went into the European housing sector, with ECB support. © 2023 The Author(s). Published by Informa UK Limited, trading as Taylor & Francis Group.

Une remise en cause des contraintes européennes par la crise ? Entre capacité d'adaptation et imperfections

Les contraintes européennes à l'aune de la crise du Covid-19 pourraient être remises en cause, tant concernant le régime des aides d'État que les règles de discipline budgétaire. Pourtant, le droit de l'Union européenne s'est révélé adapté au temps de crise. Si, au regard de l'asphyxie économique que subissent les États, il était urgent d'activer de nouveaux instruments, ces instruments étaient prévus par les textes, qu'il s'agisse de la possibilité d'émettre certaines aides d'État dans des circonstances exceptionnelles ou de suspendre les règles de discipline budgétaire. Toutefois, si la capacité d'adaptation des contraintes européennes est apparue à travers cette crise, certaines imperfections ont également été accentuées participant alors à l'éternelle remise en question des contraintes européennes.Alternate : European constraints in the light of the Covid-19 crisis might be questioned, either in reference to the State aid regime or to the rules of budgetary discipline. However, the EU legal system has proved to be adapted to the crisis circumstances. Indeed, the instruments for overcoming the crisis were provided for in the texts, whether it be the possibility of issuing certain state aid in exceptional circumstances or suspending the rules of budgetary discipline. However, if the capacity to adapt European constraints has been shown through this crisis, certain imperfections have also been accentuated, thus contributing to the everlasting questioning of European constraints.

The EU Trade Agenda—Rules on State Intervention in the Market

This Article critically analyzes the main legal and policy issues that are likely to determine the development of the EU's trade policy concerning rules on State intervention in the market, specifically on subsidies and SOEs. The article assesses the aforementioned issue especially within the context of the new trade strategy entitled "An Open, Sustainable and Assertive Trade Policy” set out by the European Commission in February 2021, at the core of which stands the concept of strategic autonomy. The focus of our analysis is on key elements of the current EU competition and trade policies and normative initiatives, namely: the relaxation of the usual State aid regime under Articles 107 and 108 TFEU to give Member States more flexibility in supporting their economies and strengthen EU industrial policy;the likelihood of EU proposals resulting in any substantial change to international trade law on subsidies and SOEs at the multilateral (WTO) level;a systemic horizontal investigation into the relevant trade rules promoted by the EU in its most recent practice of PTAs;and, finally, the EU pursuing stronger protection of its companies with its recently announced new regulation on foreign subsidies, on the basis of which the European Commission can investigate foreign subsidies and impose remedies. Even though, at first sight, it may seem that the current evolution of the EU trade policy on these issues seems inconsistent, the Article argues that the unilateral, bilateral, and multilateral approaches are indeed strictly intertwined, and they reveal a significant shift in the most recent EU trade policy objective in relation to the role of State in the market.

A Counterfactual Impact Evaluation of EU State Aid in Greece

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. © 2023, World Scientific and Engineering Academy and Society. All rights reserved.

A Counterfactual Impact Evaluation of EU State Aid in Greece

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. © 2023, World Scientific and Engineering Academy and Society. All rights reserved.

Addressing the Impact of COVID-19 on the Early Care and Education Sector

The COVID-19 pandemic has exacerbated challenges in the early care and education (ECE) sector, including: preexisting structural flaws, insufficient funding mechanisms, sector fragmentation, inadequate support for the workforce, and inequalities, such as the lack of access to high-quality care among low-income, rural populations, and communities of color. Addressing the impacts of the pandemic and the resulting economic recession on the ECE sector will require that state, local, and tribal decision makers use available COVID-19 relief funds to mitigate those impacts while also laying the foundation for longer-term solutions. This rapid expert consultation identifies mitigation strategies that could be implemented to achieve these goals. These strategies include: (1) Reduce the rate of closures, (2) Assist the ECE workforce, (3) Modify subsidy reimbursement and payment policies, (4) Improve coordination of the ECE sector and funding systems, and (5) Integrate data systems across provider and funding types.

Teacher Shortages during the Pandemic: How California Districts Are Responding

How are California districts handling deepening teacher shortages 18 months into the COVID-19 pandemic? Following up on a March 2021 study, "California Teachers and COVID-19: How the Pandemic Is Impacting the Teacher Workforce" (ED614374), this report describes the severe shortages many districts are experiencing and the strategies some are using to mitigate these shortages. Through a survey of a sample of California superintendents and human resources administrators conducted in August and September 2021, this study investigates the role COVID-19 has had on key aspects of teacher supply and demand, including teacher retirements, resignations, vacancies, and hiring strategies. Leaders from eight of the largest California districts participated in the study. In addition, the study included leaders from four small rural districts because research shows these types of districts often have additional challenges recruiting and retaining teachers. Together, these districts serve nearly 1 in 6 California students.

Capture of state aid provided to businesses as a result of the COVID-19 pandemic in European antitrust law

The COVID-19 pandemic has caused the need for massive state aid to strengthen businesses in the member states of the European Union. The European Commission promptly adopted a soft law act in which it offered member states various instruments for providing state aid to businesses and specified the conditions and indicators upon fulfillment of which it will consider the provided state aid compatible with the internal market. © 2022, Institute of State and Law of the Slovak Academy of Sciences. All rights reserved.

COVID-19 Affected State Aid Provision in the EU

The EU State Aid regulation is based on the premise that the market and the entities within it must operate independently without additional unnecessary intervention by the state. In other words, state intervention must be kept to a minimum. Unjustified aid to one or another entity may distort the situation in the market and lead to a number of undesirable consequences, including market advantage acquired by the aided entity. The willingness of the state and its institutions to help those who face difficulties may be understandable, but not always justified. However, the prohibition on a state and its institutions to grant aid is not unconditional and, in some cases, may cause serious undesired consequences. The coronavirus disease (COVID-19), which hit EU member states in the first half of 2020, led to a re-thinking of the rules in force and a broadening of the scope for state aid exemptions. However, there are a number of questions about the nature of the EU State Aid regulation and its correlation with COVID-19 outbreak-conditioned decisions. The article analyses the state aid granting practices across the EU (including the UK) related to COVID-19. It covers approximately two- year period—from the start of the pandemic in Europe to March 2022.

Challenges of the Tourism Sector in Lithuania in the Context of the Covid-19 Pandemic: State Aid Instruments and the Efficiency of the Tourism Business Support

At the beginning of 2020 Lithuania, and many other European countries, introduced quarantine and began restricting movement across the country's borders. The imposed restrictive measures have greatly impacted and led to the stagnation of tourism sector. Due to the COVID-19 pandemic and travel restrictions, the number of international tourist arrivals sharply decreased. In 2021 the majority of restrictions have been eased due to the decreasing morbidity, but it did not reinstate the tourism into the previous level. According to statistics, the decline in tourist flows in Lithuania in 2021 still continued, albeit the decrease was smaller. The increase in the number of local tourists (especially in 2021) has somewhat compensated the loss of international tourism, but has not changed it. The tourism business is still going through a difficult period. This article emphasizes the issues of local and inbound tourism business in Lithuania in the context of Covid-19 pandemic. The greatest attention is placed on the instruments proposed by the Lithuanian Government to mitigate the negative consequences of the pandemic on tourism service. The research combines secondary and primary data sources. Secondary data was used for the analysis of official Lithuanian statistics in order to introduce general trends of the development of tourism sector during the last decade. Primary data was received using the methods of focus group and survey (a questionnaire to collect data sets from tourism business enterprises in Lithuania). The statistical analysis revealed that the difficult situation was noticed in all fields of tourism sector, however, the main losers of the pandemic were those relying on the international tourist. The analysis of official documents disclosed, that even though the tourism business was able to benefit from the variety of offered governmental aid packages in 2020-2021, the quantity and quality of support was not enough and strongly criticized. Our survey results pointed out the instruments that were most effective among the tourism enterprises. Moreover, from the collected answers we noticed, that at least part of tourism enterprises took the opportunity to use the support not only for compensation of pandemic related costs but also to look forward and the received financial support invested in innovative solutions in the tourism business, so pandemic potentially had some positive effects as well. Also, the survey results reviled that there are considerable opportunities for tourism related development of the nature rich, non-metropolitan regions, though at the moment these activities quite often remain outside the market relations and do not produce new incomes and jobs.

Fiscal Federalism and K–12 Education Funding: Policy Lessons from Two Educational Crises

We synthesize and critique federal fiscal policy during the Great Recession and COVID-19 pandemic. First, the amount of aid during both crises was inadequate to meet policy goals. Second, the mechanisms used to distribute funds were disconnected from policy goals and provided different levels of aid to districts with equivalent levels of economic disadvantage. Third, data tools are missing, making it difficult to understand whether funds were used to meet policy goals. Details for these results are provided along with policy recommendations.

COVID-19, Schumpeter, and the Size of the Market

During the first quarter of 2020, the global economy was rapidly hit by a pandemic which led to state-wide lockdowns and the worst economic crisis since the World War II. Both the supply and the demand sides of economies were severely affected, followed by a dramatic dip in global GDP. As a response, policymakers introduced an unprecedented number of interventions to back up employees, firms, and industries to counteract the collapsing markets. Our main objective is to explore how these fundamental policy interventions are likely to influence the future potential and functioning of markets. Historically swings in the pendulum favoring either market-based solutions or more regulated public sectors have coincided with disruptive crises. The overall question is what will happen during post-COVID-19, will governments withdraw their crisis policies and how will a possible retreat be organized? Are we entering an era of permanently increased governmental interventions? More precisely, we identify three specific threats to the market-oriented economy: the extension and development of governmental expenditures, protectionistic measures, and the level of state aid and the degree of competition at markets. We are particularly interested in the effect of the COVID-19 measures, and their possible extension, on Schumpeterian dynamics, both in terms of entry and exits (Schumpeter I) and how the position of large firms will be affected (Schumpeter II). © 2022, The Author(s), under exclusive license to Springer Nature Switzerland AG.

Neutrality and Equality Aspects in the EU State Aid Temporary Framework 2020: The Case of the Airline Industry

Following the declaration of the COVID-19 pandemic, the restrictions imposed by the Member States (MSs) of the European Union (EU) led the tourism and commercial air transport industry to face serious financial difficulties that required airlines to apply for state support. In March 2020, the European Commission adopted a State Aid Temporary Framework (TF) for the COVID-19 period to simplify the process of granting aid, allowing the MSs rapid economic interventions. Claims regarding the approval of State aid to certain airlines reached the EU General Court (EGC), on the grounds of violation of the fair competition principle. It became clear that the processes enabled by the TF dispensed unequal treatment to airline companies and that the flexibility of the TF created competition imbalances. In spite of these events, little attention has been given to the way its application ignores the requirements of EU State aid control and other procedural justice and fairness principles, by failing to ensure neutrality and equality. This article addresses the matter using a standard legal interpretive approach to explain the imbalances created by the regulation. It presents a systematic review of the current regime, identifies the TF inefficiencies affecting competition principles, and argues for specific adjustments that could enhance its transparency. These contributions are useful to improve the existing framework and help prepare for a better management of future crises. © 2022 Kevin Kasser et al., published by Sciendo.

Forms of COVID-19 state aid by beneficiary size in Poland in 2020

Lockdowns imposed by the European Union (EU) Member States produced significant consequences in the form of losses to companies, which is why the Member States decided to assist businesses from public funds. This paper aims to identify and initially assess the implementation of schemes under which coronavirus disease-2019 (COVID-19)-related state aid was granted in Poland in 2020 for different instruments and beneficiary sizes. The idea was to find out how well aforementioned schemes responded to the needs of companies affected the most by the COVID-19-inflicted crisis. To this end, statistical analysis was deployed to learn about the share of individual groups of businesses of different sizes in support instruments granted in relation with COVID-19 by type of aid. The study helped to demonstrate that Polish aid schemes approved by the European Commission in 2020 assisted mainly micro- and small-sized companies, which usually suffered from poor liquidity, by predominantly soft instruments.