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Challenges Related to the Implementation of State Aid Measures for Entrepreneurs Affected by the Covid-19 Pandemic

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  • Paulina Kubera
  • Weronika Kwiatkowska

Abstract

Purpose: The aim of the paper is to identify and discuss many trade-offs which have to be made by public authorities while designing and implementing state aid measures for entrepreneurs affected by the Covid-19 pandemic. Design, Methodology/Approach: Based on the case study - the project “Grant for working capital for micro and small enterprises from the Wielkopolska Region” four interrelated lines of inquiry are pursued concerning: the grant selection process, timelines of support, administrative burden imposed on applicant entrepreneurs and the appropriateness of the amount of aid granted. Specific problems are discussed in a broader perspective of public support programmes design. Findings: Timelines of support and simplicity of the rules of granting aid are imperative in designing the public support delivery for entrepreneurs affected by the Covid-19 pandemic. However, one should not lose sight from other important aspects of allocating limited public funds, as it is usually a matter of striking the right balance by public policymakers between competing objectives in an attempt to ensure effective and fair allocation of limited resources. Practical Implications: State aid that involves granting a selective economic advantage to undertakings imply the question about the allocation method of funds. Given the risk of liquidity shortage for SMEs that makes fast delivery of aid crucial for the aid to achieve its objective, providing public support on the basis ‘first-come, first served’ principle can be a justifiable rationing device. However, this holds true under certain conditions: all applicants must be in relevantly similar circumstances and have equal prospects to receive a benefit. As these are not fully met in the case under investigation, some recommendations are formulated for future interventions. Originality/Value: Public debate on SME policy responses in times of Covid-19 crisis is often limited to numbers: how many entrepreneurs benefited from the public support and what is the aggregate value of the aid. The uniqueness of the conducted research lies in “looking under the surface” in the quest for ensuring effectiveness of state aid measures in the context of COVID-19.

Suggested Citation

  • Paulina Kubera & Weronika Kwiatkowska, 2021. "Challenges Related to the Implementation of State Aid Measures for Entrepreneurs Affected by the Covid-19 Pandemic," European Research Studies Journal, European Research Studies Journal, vol. 0(Special 5), pages 209-220.
    • Handle: RePEc:ers:journl:v:xxiv:y:2021:i:special5:p:209-220
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    References listed on IDEAS

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    1. Malcolm Sawyer, 2021. "Economic Policies and the Coronavirus Crisis in the UK," Review of Political Economy, Taylor & Francis Journals, vol. 33(3), pages 414-431, July.
    2. Ossenbrink, Jan & Finnsson, Sveinbjoern & Bening, Catharina R. & Hoffmann, Volker H., 2019. "Delineating policy mixes: Contrasting top-down and bottom-up approaches to the case of energy-storage policy in California," Research Policy, Elsevier, vol. 48(10).
    3. repec:nas:journl:v:115:y:2018:p:2952-2957 is not listed on IDEAS
    4. Alessandro Sancino & Christian Garavaglia & Mariafrancesca Sicilia & Alessandro Braga, 2021. "New development: Covid-19 and its publics—implications for strategic management and democracy," Public Money & Management, Taylor & Francis Journals, vol. 41(5), pages 404-407, July.
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    More about this item

    Keywords

    Covid-19; state aid; SME policy; effectiveness of anti-crisis measures; liquidity support; measures; aid implementation.;
    All these keywords.

    JEL classification:

    • M2 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics
    • H12 - Public Economics - - Structure and Scope of Government - - - Crisis Management

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