Rail subsidisation in the European Union: An issue beyond left and right?

Abstract:

Despite the considerable amount of public subsidies granted by the member states of the European Union (EU) to their national railway industries, the determinants of State aid to this particular sector are still largely unexplored from a cross-country perspective. Using official subsidy data for a sample of 25 EU countries over the period 1998–2008, this article poses the classic do-parties-matter question in comparative political economy to examine whether the political allocation of railway subsidies is completely determined by sector-specific conditions or whether it leaves room for governments’ partisan preferences. Controlling for other potential politico-economic determinants (sector size, public/private ownership, intermodal competition and so on), a multiple regression analysis indicates that government ideology in fact helps explain the considerable differences between countries with respect to rail subsidisation. Contrary to the expectations of traditional partisan theory, countries governed by left-wing (bourgeois) parties showed significantly lower (higher) subsidy levels. The article goes deeper into this regression result and discusses a number of explanations as to how this unexpected empirical finding can be explained.