In the context of the EU State aid modernisation initiative, the European Commission highlighted the need to evaluate the ex post effects of State aid in order to analyse whether State aid indeed achieves its policy targets.
The objective of State aid evaluation is to identify the causal impact of the policy itself (i.e. the difference between the outcome with the aid and the outcome in the absence of the aid). The latter is by definition unobservable: one cannot observe what the outcome would have been without the aid for the firms which received the aid. The analysis therefore consists of constructing possible similar scenarios. This requires finding the most comparable firm or control group.
A major issue arises from the fact that there usually exist significant differences between aid beneficiaries and non-aid beneficiaries. It is then necessary to account for these differences when comparing the outcomes between the two groups of aid and non-aid beneficiaries. Several tools have been developed to take these differences into account: