The Effect of Different Aids on Gross Domestic Product of European Union

Abstract

State aid control can encourage the design of more effective growth-enhancing policies and it can ensure that competition distortions remain limited so that the European Union (EU) internal market remains open and contestable. The objectives of this paper are exhaustive in nature. One of them is to examine the impact of different aids on GDP of EU for time period of 2005 to 2015. Another is to evaluate the proportion of different aids in a year and their cross-year analysis. To achieve the objectives, descriptive as well as inferential analysis has been used and to assess the effect of different aids on GDP of EU, the Autoregressive Distributed Lag (ARDL) Model has been used. The descriptive analysis reveals that the aid in subsidies (SUB) and tax exemptions (TAX) have the larger proportion throughout the time period. The results of ARDL model conclude that the two aids SUB and TAX having the largest proportion do not have a significant impact on EU GDP.