The Vienna Institute for International Economic Studies ISMERI EUROPA Ex post evaluation of cohesion policy programmes Work Package 1: Coordination, analysis and synthesis Evaluation Network Meeting November 2008

The Vienna Institute for International Economic Studies ISMERI EUROPA  Task 1– Macroeconomic situation and regional trends  Task 2 – Financial data on implementation  Task 3 – Cohesion strategy + international policy recommendations  Task 4 – Developments and achievement in Member States  Task 5 – Taxonomy of Objective 2 programmes  Task 6 – Support to Commission services  Task 7 – Synthesis Report Work Package 1: Tasks

The Vienna Institute for International Economic Studies ISMERI EUROPA Macroeconomic context + regional developments Over period :  Macroeconomic context unfavourable in most EU15 countries  In DE, IT and PT over most of period  Slow growth plus fiscal restriction limited resources for investment in regions  Much more favourable in new Member States  High growth in GDP in new Member States led to narrowing of gap in GDP per head with EU15  And reduction in of regional disparities across EU25 as a whole  Smaller reduction within EU15  And widening in new Member States - growth concentrated in capital city regions

The Vienna Institute for International Economic Studies ISMERI EUROPA Regional disparities in GDP per head in the EU,

The Vienna Institute for International Economic Studies ISMERI EUROPA Regional convergence of GDP per head,  GDP per head grew most in regions where initially lowest  Most of these regions in new Member States – apart from Athens region  Growth was lowest in regions in EU15 – apart from Malta  Limited convergence of GDP per head in EU15  In new Member States, high growth in capital city regions offset high growth in Baltic States …

The Vienna Institute for International Economic Studies ISMERI EUROPA Growth in GDP per head and GDP per head in 2000

The Vienna Institute for International Economic Studies ISMERI EUROPA Convergence of Objective 1 and 2 regions,  In EU15, growth of GDP per head highest in Objective 1 regions  Growth lower in Objective 2 regions but still more than in non- assisted regions  In Objective 2, growth highest in regions receiving most support in terms of share of population covered  Pattern repeated in most Member States but not all …

The Vienna Institute for International Economic Studies ISMERI EUROPA Change in GDP per head as % of EU-25 average,

The Vienna Institute for International Economic Studies ISMERI EUROPA Growth high in most regions in new Member States,

The Vienna Institute for International Economic Studies ISMERI EUROPA Employment rates also rose by most in assisted regions in EU15

The Vienna Institute for International Economic Studies ISMERI EUROPA Cohesion policy recommendations of international organisations  No attempt yet made to assess effect of cohesion policy on growth and employment  But cohesion policy compared to economic theory recommendations which stress different drivers of growth: Physical capital Human resources Agglomeration and clustering Environment – natural, physical, business and institutional Innovation – increasingly Importance of favourable macroeconomic context  These factors also feature prominently in policy recommendations of international organisations  How far have Member States and regions followed this advice?

The Vienna Institute for International Economic Studies ISMERI EUROPA Cohesion policy implemented across the EU in Compliance of regional development strategies with recommendations difficult to determine because of:  The general nature of the recommendations  Lack of advice on which of the various drivers to focus on  And the relative priority to be given to each  Insufficient recognition of differences in regional characteristics and circumstances  No distinction made between Objective 1 and Objective 2 regions or between regions in EU15 and new Member States – but hard to believe that strategy and policy mix should be the same

The Vienna Institute for International Economic Studies ISMERI EUROPA Cohesion policy mix,  Division of expenditure between broad policy areas can be taken to reflect relative priorities  This in turn reflects importance attached to different drivers – ie infrastructure vs human resources vs innovation and so on  The actual division, and therefore relative priorities, differs between Objective 1 and Objective 2 regions and between EU15 and new Member States …

The Vienna Institute for International Economic Studies ISMERI EUROPA Division of expenditure by policy area,

The Vienna Institute for International Economic Studies ISMERI EUROPA Expenditure division as a reflection of priorities  The weight given to transport, human resources and support for companies reflects importance attached to investment in infrastructure, human capital, innovation and business competitiveness  Territorial policy not among drivers but can be regarded as improving economic and social environment for attracting investment as well as improving quality of life  The natural environment also among drivers but can serve same purpose as well as important for sustainability of development  Agglomeration and clustering is not reflected in any category of expenditure - but national reports indicate importance in some cases but also point to problems of excessive concentration

The Vienna Institute for International Economic Studies ISMERI EUROPA Deviations of cohesion policy from recommendations  Support to firms in line with emphasis on investment but not with recommendations to avoid direct grants and potential ‘deadweight’  Only limited expenditure on RTDI especially in Objective 1 regions - contrary to Lisbon  Limited concentration of expenditure in many cases contrary to agglomeration recommendation  Major differences in policy mix and emphasis across regions Reasons:  Desire to strengthen business competitiveness and maintain jobs  Uncertainty about how to strengthen innovation in lagging regions  Conflict between growth and cohesion – balanced regional development vs concentration  Differing priorities as well as differing regional characteristics, circumstances and perceived needs

The Vienna Institute for International Economic Studies ISMERI EUROPA Features of national reports  Concern to maintain cohesion rather than maximise growth especially in new Member States where regional imbalances have widened  Equally evident in single NUTS 2 region countries – Baltic States and Slovenia – raises question over regional focus of EU policy  Importance of macroeconomic context for regional growth  Limited problems in spending budgets even in new Member States  In most cases, quantitative targets set have generally been met  But questions over relevance of targets for development of regions  And many objectives set which impossible to verify  In general, difficult to identify tangible effects on development  In most cases, only limited attempts to do this through evaluation  Most tangible effects on policy-making and widening participation

The Vienna Institute for International Economic Studies ISMERI EUROPA Emerging Issues  How to improve evaluation in terms of methods and indicators – how to define counterfactuals  How far should cohesion policy focus on GDP per head to judge success – what other indicators should be used  How should sustainable development be defined and measured  How much importance should be attached to quality of life relative to growth – how should this be measured  How to reconcile importance of agglomeration and concentration of expenditure with balanced regional development  What weight should be attached to different policy areas in allocating funding  What should be territorial dimension of policy  Should cohesion policy extend beyond lagging regions – if so, what should be focus  How should innovation capacity be strengthened in lagging regions