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Abstract
European Union policy on regional aid has always exhibited a concern for the possibility of bidding wars for mobile investment, but it is only since 1998 that the EU has had comprehensive rules designed to address investment incentives. The Multisectoral Framework on Regional Aid for Large Investment Projects, now incorporated into the Regional Aid Guidelines, provides for reduced aid maxima for projects over €50 million. This paper shows that the Multisectoral Framework has largely accomplished its goals: aid award levels have fallen significantly since the reform of the Framework in 2002, and in comparison with the unregulated location tournaments of the US, aid packages are smaller in the EU. In fact, in 2010–2011, there were only three aid awards of $100 million or more in the EU, versus 21 in the US.
Notes
1. Calculated at €1 = $1.35.
2. See, for example, Charlton (2003).
3. Note that this excludes public projects, hospitals, educational facilities, and retail, among others.
4. The Council adopted its ‘First Resolution on General Regional Aid Systems’, 20 October 1971; OJ C111, 4 November 1971; cited in CEC 1972, point 145.
5. Disclosure: The author was a signatory to an amicus curiae brief in favor of plaintiffs in this case.
6. Note also that motor vehicles were exempt from the requirement for individual pre-notification under the MSF 2002 as well as a different, flat-rate, reduction matrix; see Wishlade (2009, 44).
7. Alabama and the Czech Republic each received a Hyundai plant in the 2000s: Alabama’s per capita income in 2006 was $29,414 in chained 2000 dollars (Bureau of Economic Analysis 2009, 74), while the Czech Republic’s was $12,680 at current exchange rates or $21,470 at purchasing power parity (World Bank 2007, 334).