State Aid in Poland following accession to the EU

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Immediately after EU accession, Poland was not granting a lot of state aid (as % of GDP) in comparison to other EU Member States, including Central and Eastern European Countries. Poland, at the beginning of its EU membership, did not belong to the group of countries that would be willing and able to intervene in the EU Internal Market. Therefore, it should be underlined, that, while joining the EU, Poland could be regarded as a country supporting the internal market without (or with limited) public intervention. However, when EU funds have become available to Polish companies for objectives stipulated by the European Union, Poland became a Member State granting substantial public financial assistance in relation to GDP. The above tendency was not affected by the crisis, but strengthened by programs and sources of consecutive multiannual financial frameworks for 2007–2013 and 2014–2020.

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... One explanation of these positions is a relatively low value added in both countries of sectors selected for this research, which increases the overall value of the index. The other one is the long term national financial support granted to companies for employment-related projects [Ambroziak, 2020b]. ...
... Moreover, it should be noted that an increase in the share of state aid for R&D&I in Poland was accompanied by a decrease in the importance of that public support category in the EU (from 17.2% in 2012 to 9.2% in 2018).On top of that, the EU observed fast and sharp increases in percentage of state aid for environment and energy saving (which doubled in 2014 and amounted to 55.2% in 2018), while in Poland it reached only 19.2%. It should be admitted that immediately after the EU accession it represented less than 1% of the total state aid in Poland, nevertheless, the current index shows that the country is still lagging in comparison to the EU standards[Ambroziak, 2020b].Although rules concerning state aid admissibility in the EU are unified, MemberStates use them in different way. Therefore, directions and scope of public interventions clearly differ across the EU Member States, including Poland. ...
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Taking into consideration all changes in the EU law after Poland’s accession, one can assume, that directions and scope of public interventions should be similar among the EU Member States. At the same time, it is obvious, that they should take account of financial constraints, starting points and national/government preferences. Therefore, the primary goal of the chapter is to present Poland’s performance in the EU in terms of state aid granted after the EU accession. To this end we introduced two indices, which are based on works on trade by distinguished authors: Relative State Aid Intensity Index and State Aid Similarity Index. Our research allows us to formulate two observations: first, that state aid in Poland is subordinated to EU multiannual financial programmes in terms of available/offered financial sources, and second, the structure of state aid offered in Poland does not match the structure of public financial assistance observed in most other EU Member States. Poland still grants mailny regional investment aid, which does not require any sophisticated criteria, and only a small percentage of aid for environmental protection and energy, which would support innovation and, at the same time, is desirable in the face of climate change.
... In the examined period of Q2 2020 -Q2 2021, the share of regional aid -the previous leader -decreased to 20.0% (from 24.4% estimated for the reference period Q2 2018 -Q2 2019) (Figure 8.). The previous focus on regional investment aid, which was supposed to ensure the mere inflow of investment projects without requiring them to bring in new technologies, to help mitigate climate change or successfully face digital challenges, was assessed critically (Ambroziak, 2020;2021c). On the other hand, the share of aid allocated for research, development and innovation increased by 10 percentage points (compared to the previous period) reaching 24.4%, and the share of aid for environmental protection and energy efficiency increased by 3.1 percentage points to 23.1%. ...
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The COVID-19 pandemic hit the European Union (EU) at the end of the first quarter of 2020. The lack of knowledge about the disease’s ichthyology, prevention, and treatment, meant that virtually all governments worldwide, including those of the EU Member States, introduced numerous restrictions on the movement and close contacts of people. In addition, bans were introduced on certain economic activities which, by their very nature, made it most difficult to maintain social distancing (tourism, hotels, restaurants and cafes). As a result, the losses that entrepreneurs began to suffer were not due to their bad business decisions, failure to adapt to the competition, or failure to foresee the effects of changes in consumer needs and expectations. It is therefore difficult to find fault with the business community. The market situation also failed to meet the basic premises of the market failure concept. From a theoretical point of view, it is assumed that this market failure occurs when the market mechanism does not lead to efficient allocation of resources. For many researchers, but also for the European Commission, this continues to be a premise for accepting public interventions in the EU. However, these premises do not include decisions to freeze economies in whole or in part in response to COVID-19. In this case, we are dealing with two types of state intervention: the first in the form of preventing certain entities from doing business in certain industries, and the second in the form of payment of funds to those who incurred losses.
Poland’s accession to EU was connected with substantial changes in the state aid control system. However, the changes did not concern the criteria of admissibility of state aid, which were adapted to the acquis communautaire during the pre-accession period, but the procedural-competence sphere. The new principles of notification of state aid cases (transition from the facultative notification of the European Commission to obligatory notification) were the biggest change in the procedure of granting aid. The authors, apart from the procedural changes in the sphere of state aid, discuss the problems evoking the biggest controversies during the accession negotiations and constituting the subject of separate arrangements in the Accession Treaty: state aid in the form of tax credits for investors in special economic zones (SEZ), state aid in iron and steel industry and aid connected with investments adjusting to the Community environment protection standards.