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Economic impact evaluation challenges posed by the new European Union Cohesion policy: The case of...
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Economic impact evaluation challenges posed by the new European Union Cohesion policy:
The case of the GMR-approach
Attila VargaUniversity of Pécs, Hungary
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Outline
• Introduction• The New Cohesion Policy and economic
impact evaluation challenges• The GMR approach• Policy simulations• Conclusions
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Introduction
• Project level vs. economic evaluation – the need for economic models
• Cohesion Policy: regional development vs. monetary transfers
• Smart growth, inclusive growth, sustainable growth
• Place-based approach: Smart specialization• Challenges for economic impact evaluation
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Challenges in economic impact evaluation
• Place-based approach to economic development– “smart specialization”
• In target: place-specific industrial comparative advantages
• integrated policy instruments (human capital, R&D, entrepreneurship)
• multi-level governance• Participation (industry, universities, local organizations)
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• Regional features determining the growth effects of development policies:
– Local specificities (industrial structure, research specialization, factor endowment)
– Cumulative agglomeration effects– Additional impacts (Keynesian demand effects,
intersectoral linkages)– Interrregional impacts (spillovers, trade, migration)
Challenges in economic impact evaluation
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• The macroeconomic dimension: selection of projects/regions – on what basis?
– Same budget – diff results: depending on the instrumental distribution (ref. to the first simulation)
– Same budget – diff results: depending on the regional distribution (ref. to the second simulation)
Need for macro level representation (costs/benefits, macroeconomic framework conditions)
Challenges in economic impact evaluation
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• Representation of both:
– Macroeconomic dimension: costs and benefits
– Regional dimension: local specificities affecting policy needs and policy effectiveness
Challenges in economic impact evaluation
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• Search for new impact modeling approaches:
– MASST (Capello-Fratesi 2013)
– GMR-type models • GMR-Hungary, GMR-Europe (Varga et al. 2010, 2013)• RHOMOLO (Brandsma et al. 2012)
Challenges in economic impact evaluation
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The GMR
(Geographic Macro and Regional)
impact modeling approach
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The GMR approach: Model versions and applications
• Antecedents and model versions:
– Links to theory: Acs-Varga 2002
– Empirical modeling framework (Varga 2006)
– The EcoRet model (Schalk, Varga 2004, Varga, Schalk 2004)
– GMR-Hungary: (Varga, Schalk, Koike, Járosi,Tavasszy 2008)
– GMR-EU (Varga, Járosi, Sebestyén 2011; Varga,Törma 2011)
– GMR-HUNGARY II (Varga, Járosi, Sebestyén, 2013)
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The GMR approach: Model versions and applications
• Applications:
– Cohesion Policy impact studies for the Hungarian government (2003- )
– Cohesion Policy impact studies for the European Commission (DG Regio - 2011)
– FP6 impact study (2010)
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• The GMR- Europe model (163 EU NUTS 2 regions and the EU level) includes:
– a regional Knowledge Production Function (KPF) sub-model (163 NUTS 2 regions)
– a regional Spatial Computable General Equilibrium (SCGE) sub-model (163 NUTS 2 regions)
– a macro (EU level) Dynamic Stochastic General Equilibrium (DSGE) sub-model (Quest III)
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