The Admissibility of State Aid in The European Union from The Perspective of the Evolution of The Concept of State Interventionism

The concept of State intervention in economic processes does not imply the replacement of the market mechanism with an alternative State mechanism; rather, it entails the limitation of market failures, which are defined as inefficient market allocation of resources. The State should assume responsibility for those tasks and functions that the market either does not perform at all or performs inefficiently. State aid is therefore considered to be one of the instruments of state interventionism in the economy. The objective of this article is to present the evolution of economic thought on the admissibility of State aid as an instrument of intervention in the market mechanism. The author conducts a review of economic theory from the perspective of the achievements of the classical school of economics and criticism of its accomplishments. In addition, the development of views on state interventionism in the 20th century is examined, as well as the implementation of principles of interference in free market mechanisms in the European Commission’s State aid policy.

JEL codes: E62, K20, K33