Abstract
State aid aimed to certain market participants, especially some of its categories, carries a risk of distortion of competition. Therefore, it is necessary to control allocation of state aid and its direction from the sectoral objectives towards more justified horizontal objectives of allocating. This paper examines the practice of assigning sectoral state aid in the European Union and in the selected Western Balkan countries by using the methods of comparative and correlation analysis. The aim is to identify deviations and point out to the preferred ways of state aid allocation.