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In this study, we examine how State aid policy in the European Union (EU) affects the level of economic growth. By applying several panel data econometric techniques, to a sample of 27 EU countries over the period 2007–2019, we investigate how state support and government interventions affect the level of economic growth in the EU member states. Based on the empirical findings, we document a positive impact of state aid programmes on fostering economic growth leaving significant room for the implementation of a new pan-European industrial policy. Lastly, we provide policy implications to government officials and policymakers on the effectiveness of the State Aid Modernization programme and the future of State aid control in the aftermath of the pandemic crisis.

The impact of state aid on economic growth: fresh evidence from a panel of 27 EU countries