Synthesis Report - European Commission - Europa
Synthesis Report - European Commission - Europa
Synthesis Report - European Commission - Europa
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Cohesion Policy<br />
Ex-Post Evaluation<br />
of Cohesion Policy programmes 2000-06<br />
co-financed by the ERDF (Objective 1 & 2)<br />
EN<br />
<strong>Synthesis</strong> report<br />
Evaluation report April 2010
ISMERI EUROPA<br />
The Vienna Institute for<br />
International Economic Studies<br />
Ex Post Evaluation of Cohesion Policy Programmes<br />
2000-2006 financed by the<br />
<strong>European</strong> Regional Development Fund in<br />
Objective 1 and 2 Regions<br />
<strong>Synthesis</strong> <strong>Report</strong><br />
March 2010
<strong>Synthesis</strong> <strong>Report</strong> Ex-post Evaluation of the ERDF 2000-2006<br />
Acknowledgments<br />
This <strong>Report</strong> has been prepared by Terry Ward, Applica, in cooperation with Enrico Wolleb, ISMERI<br />
<strong>Europa</strong>. They were assisted by Lydia Greunz, Loredana Sementini and Fadila Sanoussi of Applica,<br />
Andrea Naldini and Marco Pompili of ISMERI <strong>Europa</strong> and Roman Römisch of wiiw.<br />
The authors would like to thank the members of the Expert Panel for their comments during the<br />
course of the evaluation and the country experts for providing essential material for Chapter 4 on<br />
regional developments in each of the 25 EU Member States. They are equally grateful to Veronica<br />
Gaffey and Kai Stryczynski of the Evaluation Unit of DG Regional Policy for valuable comments on<br />
earlier versions of the report as well as to members of the Steering Committee.<br />
The report is a based on all the various Work Packages and studies undertaken for the evaluation,<br />
which are listed below together with those responsible for the reports produced, all of which are<br />
available on the DG Regional Policy website:<br />
http://ec.europa.eu/regional_policy/sources/docgener/evaluation/rado2_en.htm<br />
This report is a synthesis of the findings of these studies and of the substantial amount of<br />
material and evidence collected. It is not a summary of them, for which readers are referred to the<br />
Work Packages themselves.<br />
The views expressed in this report are those of the authors and do not necessarily reflect the<br />
official opinion of the <strong>European</strong> <strong>Commission</strong> or indeed of any of the authors of the Work<br />
Packages. Any errors or omissions remain the responsibility of the authors.<br />
Quotation is authorised as long as the source is acknowledged.<br />
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Ex-post Evaluation of the ERDF 2000-2006<br />
<strong>Synthesis</strong> <strong>Report</strong><br />
WORK PACKAGES AND MAIN AUTHORS<br />
WP Title Main Authors Organisation<br />
WP1 Analysis, synthesis, Terry Ward Applica<br />
co-ordination<br />
Lydia Greunz<br />
Applica<br />
Loredana Sementini<br />
Applica<br />
Andrea Naldini<br />
ISMERI <strong>Europa</strong><br />
Enrico Wolleb<br />
ISMERI <strong>Europa</strong><br />
Roman Römisch<br />
wiiw<br />
WP2 Data feasibility study Mary van Overbeke ADE<br />
Christophe Sauboin<br />
ADE<br />
WP3 Macroeconomic<br />
John Bradley EMDS<br />
modelling<br />
Gerhard Untiedt<br />
GEFRA<br />
Jan In 't Veld<br />
<strong>European</strong> <strong>Commission</strong>, DG ECFIN<br />
Janos Varga<br />
3<br />
<strong>European</strong> <strong>Commission</strong>, DG ECFIN<br />
WP4 Structural Change and<br />
Globalisation<br />
Massimo Florio<br />
Julie Pellegrin<br />
Michael Ploder<br />
Michal Miedzinsky<br />
CSIL - Centre for Industrial Studies<br />
CSIL - Centre for Industrial Studies<br />
Joanneum Research<br />
Technopolis<br />
WP5a Transport Simon Nielsen<br />
Simon Ellis<br />
Francesco Dionori<br />
Steer Davies Gleave<br />
Steer Davies Gleave<br />
Steer Davies Gleave<br />
WP5b Environment, Climate Mary van Overbeke ADE<br />
Change Benoit Lixon ADE<br />
WP6b Enterprise support - Annegret Bötel Rambøll Management<br />
evidence from the 30 Benita Kidmose Rytz<br />
Rambøll Management<br />
biggest programmes Xavier Le Den<br />
Rambøll Management<br />
Thomas Westergaard-Kabelmann Rambøll Management<br />
WP6c Enterprise support -<br />
econometric and<br />
counterfactual approach<br />
Björn Alecke<br />
Anne Otto<br />
Gerhard Untiedt<br />
GEFRA<br />
IAB<br />
GEFRA<br />
WP7 Gender Equality and Manuela Samek Lodovici IRS-Istituto per la Ricerca Sociale<br />
Demographic Change Flavia Pesce<br />
IRS-Istituto per la Ricerca Sociale<br />
CSIL<br />
Silvia Vignetti<br />
WP9 Rural development Herta Tödtling-Schönhofer METIS<br />
Isabelle Naylon<br />
METIS<br />
Erich Dallhammer<br />
Bernd Schuh<br />
ÖIR<br />
ÖIR<br />
WP10 Efficiency Hugh Kelly RGL Forensics<br />
Oliver Hogan<br />
RGL Forensics<br />
Chris Hidle<br />
Faber Maunsell - AECOM<br />
Jose Carbajo<br />
Frontier Economics<br />
WP11 Management and John Bachtler EPRC<br />
Implementation Systems Laura Polverari<br />
EPRC<br />
for Cohesion Policy Keith Clement<br />
Frederike Gross<br />
Irene McMaster<br />
Hildegard Oraze<br />
Herta Tödtling-Schönhofer<br />
Isabel Naylon<br />
EPRC<br />
EPRC<br />
EPRC<br />
METIS<br />
METIS<br />
METIS
<strong>Synthesis</strong> <strong>Report</strong> Ex-post Evaluation of the ERDF 2000-2006<br />
LIST OF EXPERTS WHO ADVISED ON THE WORK PACKAGES<br />
WP Title Experts Organisation<br />
WP1 Analysis, synthesis coordination<br />
Michael Dunford<br />
Sebastiano Fadda<br />
Augusto Mateus<br />
University of Sussex<br />
University of Rome III<br />
Technical University of Lisbon<br />
WP4 Structural Change and<br />
Globalisation<br />
Maurice Baslé<br />
Andres Rodriguez Pose<br />
Harvey Armstrong<br />
University of Rennes<br />
London School of Economics<br />
Sheffield University<br />
WP5a Transport Roger Vickerman Kent University<br />
José Manuel Vassallo<br />
Polytechnic University of Madrid<br />
Gabriele Pasqui<br />
Politecnino di Milano<br />
WP5b Environment, Climate<br />
Change<br />
Kit Strange<br />
Luc De Cordier<br />
Milan Scasny<br />
Resource Recovery Forum, UK<br />
Union Wallon des Entreprises<br />
Charles University, Czech Republic<br />
WP6b Enterprise support -<br />
evidence from the 30<br />
Dirk Czarnitzki<br />
Marianne Simonsen<br />
University of Leuven<br />
University of Aarhus<br />
biggest programmes<br />
WP6c Enterprise support -<br />
econometric and<br />
Alberto Martini<br />
Joachim Ragnitz<br />
Progetto Valutazione<br />
Ifo Institute, Dresden<br />
counterfactual approach<br />
WP7 Gender Equality and<br />
Demographic Change<br />
Gianfranco Viesti<br />
Charlotte Höhn<br />
Italian Trade <strong>Commission</strong><br />
Former President of Bundesinstitut<br />
für Bevölkerungsforschung<br />
Università degli Studi di Trento<br />
Paola Villa<br />
WP9 Rural development Janet Dwyer University of Gloucestershire<br />
Hans Wiskerke<br />
Wageningen University<br />
Ilari Karppi<br />
University of Tampere<br />
WP10 Efficiency Jacques Timmermans Former staff member of <strong>European</strong><br />
Court of Auditors<br />
Nigel Grout<br />
Chartered Institute of Arbitrators of<br />
the Institute of Highways and<br />
Transportation<br />
Bent Flyvbjerg<br />
University of Oxford<br />
WP11 Management and<br />
Implementation Systems<br />
for Cohesion Policy<br />
Daniel Tarschys<br />
Danielle Anne Bossaert<br />
Michael Narodoslawsky<br />
University of Stockholm<br />
<strong>European</strong> Institute of Public<br />
Administration<br />
Graz University of Technology<br />
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Ex-post Evaluation of the ERDF 2000-2006<br />
<strong>Synthesis</strong> <strong>Report</strong><br />
Acronyms<br />
CSF<br />
DG<br />
DG REGIO<br />
EAGGF<br />
EBRD<br />
EC<br />
EIB<br />
ERDF<br />
ESF<br />
EU<br />
EUROSTAT<br />
FDI<br />
FIFG<br />
FOI<br />
GDP<br />
GHG<br />
ICT<br />
ISPA<br />
NUTS<br />
OECD<br />
OP<br />
PPS<br />
R&D<br />
RTDI<br />
SME<br />
TEN-T<br />
WP<br />
Community Support Framework<br />
Directorate-General<br />
Directorate General for Regional Policy<br />
<strong>European</strong> Agricultural Guidance and Guarantee Fund<br />
<strong>European</strong> Bank for Reconstruction and Development<br />
<strong>European</strong> <strong>Commission</strong><br />
<strong>European</strong> Investment Bank<br />
<strong>European</strong> Regional Development Fund<br />
<strong>European</strong> Social Fund<br />
<strong>European</strong> Union<br />
Statistical Office of the <strong>European</strong> Communities<br />
Foreign Direct Investment<br />
Financial Instrument for Fisheries Guidance<br />
Field of interventions<br />
Gross Domestic Product<br />
Greenhouse Gas<br />
Information and Communication Technology<br />
Instrument for Structural Policies for Pre-Accession<br />
Nomenclature of Territorial Units for Statistics<br />
Organisation for Economic Co-operation and Development<br />
Operational Programme<br />
Purchasing Power Standard<br />
Research and Development<br />
Research, Technological Development and Innovation<br />
Small or medium-sized enterprise<br />
Trans <strong>European</strong> Transport Network<br />
Work Package<br />
Member State acronyms<br />
BE Belgium LU Luxembourg<br />
CZ The Czech Republic HU Hungary<br />
DK Denmark MT Malta<br />
DE Germany NL The Netherlands<br />
EE Estonia AT Austria<br />
IE Ireland PL Poland<br />
EL Greece PT Portugal<br />
ES Spain SI Slovenia<br />
FR France SK Slovakia<br />
IT Italy FI Finland<br />
CY Cyprus SE Sweden<br />
LV Latvia UK United Kingdom<br />
LT Lithuania<br />
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<strong>Synthesis</strong> <strong>Report</strong> Ex-post Evaluation of the ERDF 2000-2006<br />
CONTENTS<br />
INTRODUCTION....................................................................................................................................7<br />
THE APPROACH ADOPTED ......................................................................................................................... 8<br />
THE CHALLENGES OF THE EVALUATION ....................................................................................................... 10<br />
CHANGING CIRCUMSTANCES AND NEW ISSUES............................................................................................... 11<br />
EU15 VERSUS EU10 AND OBJECTIVE 1 VERSUS OBJECTIVE 2 REGIONS................................................................ 12<br />
OUTLINE OF REPORT.............................................................................................................................. 13<br />
CHAPTER 1 – THE NATURE OF COHESION POLICY, 2000-2006 ..........................................................17<br />
1.1 THE POLICY CONTEXT................................................................................................................... 17<br />
1.2 ALLOCATION OF ERDF FINANCING BETWEEN BROAD POLICY AREAS ........................................................... 28<br />
1.3 ALLOCATION OF ERDF FUNDING BETWEEN TYPES OF AREA...................................................................... 33<br />
1.4 POLICY OBJECTIVES, ECONOMIC THEORY AND POLICY RECOMMENDATIONS................................................... 42<br />
1.5 THE ABSORPTION OF THE ERDF ALLOCATED....................................................................................... 43<br />
CHAPTER 2 – REGIONAL DEVELOPMENTS, 2000-2006 .......................................................................46<br />
2.1 INTRODUCTION........................................................................................................................... 46<br />
2.2 MACROECONOMIC DEVELOPMENTS OVER THE PERIOD 2000-2006 .......................................................... 46<br />
2.3 THE GROWTH PERFORMANCE OF ASSISTED AND NON-ASSISTED REGIONS, 2000-2006................................... 53<br />
2.4 MAIN POINTS TO EMERGE............................................................................................................... 63<br />
CHAPTER 3 – POLICY OUTCOMES AND EFFECTS IN MAIN POLICY AREAS ............................................65<br />
3.1 ENTERPRISE SUPPORT.................................................................................................................... 65<br />
3.2 EVALUATING ENTERPRISE SUPPORT IN EASTERN GERMANY USING COUNTERFACTUAL METHODS .......................... 73<br />
3.3 RESTRUCTURING IN OBJECTIVE 2 REGIONS .......................................................................................... 75<br />
3.4 TRANSPORT ............................................................................................................................... 77<br />
3.5 UNIT COSTS OF MAJOR PROJECTS ..................................................................................................... 88<br />
3.6 SUPPORT FOR THE ENVIRONMENT..................................................................................................... 89<br />
3.7 CLIMATE CHANGE AND SUSTAINABLE DEVELOPMENT ............................................................................ 101<br />
3.8 RURAL DEVELOPMENT................................................................................................................. 102<br />
3.9 GENDER EQUALITY AND DEMOGRAPHIC CHANGE................................................................................. 106<br />
3.10 CONTRIBUTION OF THE MANAGEMENT AND IMPLEMENTATION SYSTEM TO DELIVERING EFFECTIVE POLICIES ......... 110<br />
CHAPTER 4 – THE EFFECT OF COHESION POLICY ON ECONOMIC GROWTH AND REGIONAL<br />
DEVELOPMENT .................................................................................................................................112<br />
4.1 USING MACROECONOMIC MODELS TO ESTIMATE THE EFFECTS OF COHESION POLICY ..................................... 112<br />
4.2 THE EFFECT OF COHESION POLICY ON THE REGIONS ASSISTED................................................................. 120<br />
CHAPTER 5 – CONCLUSIONS AND IMPLICATIONS FOR FUTURE POLICY.............................................153<br />
5.1 MAIN CONCLUSIONS................................................................................................................... 153<br />
5.2 IMPLICATIONS FOR COHESION POLICY IN THE FUTURE ........................................................................... 163<br />
ANNEX – CASE STUDY REGIONS........................................................................................................170<br />
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Ex-post Evaluation of the ERDF 2000-2006<br />
<strong>Synthesis</strong> <strong>Report</strong><br />
1 Introduction<br />
The purpose of the present report is to synthesise the results of the ex post evaluation of<br />
cohesion policy in Objective 1 and Objective 2 regions across the EU over the 2000-2006<br />
programming period. The particular focus is on the ERDF (<strong>European</strong> Regional Development Fund),<br />
The aim is threefold:<br />
• to examine how the finance provided by the ERDF was used in the regions concerned in<br />
both the EU15 countries and the EU10 countries which entered the Union in 2004;<br />
• to consider the effects of ERDF support in these regions and how far they furthered the<br />
pursuit of the goals of cohesion policy;<br />
• to draw lessons from the experience over the period in order to improve both the design<br />
and operation of policy in future years, especially from 2014 onwards.<br />
In practice, however, though the focus is on the ERDF which accounted for almost two-thirds of<br />
the finance made available over the period, its effects cannot be separated from those of the<br />
other sources of finance which make up the Structural Funds. These are the ESF (<strong>European</strong> Social<br />
Fund), aimed at supporting human resource development and disadvantaged groups, the EAGGF<br />
(the <strong>European</strong> Agriculture Guidance and Guarantee Fund), for supporting rural development and<br />
the FIFG (Financial Instrument for Fisheries Guidance), for restructuring the fishing industry.<br />
Together they are intended to provide the financial means of pursuing integrated development<br />
strategies across the EU.<br />
A further source of finance, the Cohesion Fund, is complementary to the ERDF and was used over<br />
the period to support investment in transport and environmental infrastructure in Member States<br />
with relatively low levels of national income – specifically, Greece, Spain, Portugal and Ireland in<br />
the EU15 and all of the EU10 countries which entered the Union in May, 2004 1 .<br />
Evaluations either have been carried out, or are in the process of being carried out, on each of the<br />
above Funds 2 . Together with the present evaluation, they are intended to give an overall view of<br />
how the substantial amount of finance made available under EU cohesion policy has been used<br />
and to what effect. Their purpose is to provide responses to the questions which EU taxpayers<br />
have a right to know the answers to – how the money was spent and what was achieved.<br />
At various points in the present report, reference is made to the operation of these other funds.<br />
Indeed, it is not possible in practice to distinguish the effect of the ERDF on the development of<br />
the regions receiving support from that of the other Structural Funds which contributed to the<br />
strategies pursued over the period.<br />
A theme running throughout the report is the fact that cohesion policy has multiple goals rather<br />
than a single objective. This was just as much the case in the 2000-2006 period as now. In line<br />
with the EU Treaty objectives at the time, it was concerned with:<br />
1 Member States with Gross National Product of under 90% of the EU average are eligible for receipt of funding.<br />
Ireland was eligible for the first part of the period up to the end of 2003 but ceased to be eligible from the<br />
beginning of 2004.<br />
2 The ex post evaluation of the ESF and the FIFG are in the process of being finalised at the time of writing. The ex<br />
post evaluations of the EAGGF and the Cohesion Fund are due to be completed before the end of 2011. All the<br />
evaluation will be published on the websites of the DGs responsible for the Funds – DG Employment for the ESF, DG<br />
Agriculture for the EAGGF, DG Fisheries for the FIFG and DG Regional Policy for the Cohesion Fund.<br />
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<strong>Synthesis</strong> <strong>Report</strong> Ex-post Evaluation of the ERDF 2000-2006<br />
‘promot(ing) economic and social progress and a high level of employment and to achieve<br />
balanced and sustainable development, in particular through …. the strengthening of economic<br />
and social cohesion…’ 3<br />
Although territorial cohesion was added explicitly to economic and social cohesion only<br />
subsequently, in practice, it is implicit in the aim of ‘balanced and sustainable development’, so<br />
that policy objectives were much the same in the period being examined here as now. This is<br />
evident from the form which cohesion policy took in the various parts of the EU in the period.<br />
These multiple goals complicate the evaluation. It means that the performance of the policy<br />
cannot be judged simply in terms of the economic convergence of the regions assisted towards<br />
the EU average. It is all the more so since the relative weight attached to the objectives differed<br />
across regions reflecting their needs and priorities. Moreover, the relative weight concerned was<br />
rarely spelled out in any detail in programming documents or policy statements, which further<br />
adds to the difficulties of the evaluation.<br />
THE APPROACH ADOPTED<br />
Ex post evaluations of previous programming periods have attempted to provide a comprehensive<br />
coverage of the programmes supported by the ERDF in all of the regions in each of the EU<br />
Member States. Such an approach had limited success, largely because of the sheer number of<br />
programmes involved. This made it impossible to go into the detail necessary to properly assess<br />
the results and effects of all of them within a reasonable time-frame and with a reasonable<br />
amount of resources. Accordingly, the reports produced tended to be overly general and<br />
superficial in their analysis of the performance of policy over the period in question, failing to<br />
provide firm, empirically supported conclusions regarding its achievements and deficiencies. As<br />
such, they were limited in the advice and guidance they could offer for the formulation and<br />
implementation of cohesion policy in the future.<br />
In response to these failings and the evident difficulty of assessing all 230 or so programmes in<br />
25 Member States comprehensively without a massive expansion in the resources devoted to the<br />
task and the time taken, the present evaluation instead adopted a more selective approach. This<br />
was to divide the evaluation into 14 Work Packages which examined separate issues of policy<br />
relevance and which between them covered most of the expenditure co-financed by the ERDF<br />
(details of these Work Packages and of those responsible for them are set out at the beginning of<br />
this report). In particular, three Work Packages covered policy areas which absorbed the bulk of<br />
funding:<br />
• enterprise and innovation<br />
• transport<br />
• the environment<br />
Broadly defined to include support for tourism as part of enterprise support and the physical as<br />
well as the natural environment as part of the environment, these together accounted for around<br />
85% of total ERDF funding in the programming period.<br />
A number of cross-cutting issues were also examined:<br />
• gender equality, which was included in the guidelines to the Structural Funds as a<br />
horizontal priority,<br />
3 Treaty of Amsterdam, Article B, 1997.<br />
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Ex-post Evaluation of the ERDF 2000-2006<br />
<strong>Synthesis</strong> <strong>Report</strong><br />
• demographic change, which was included as part of the study of gender equality since it<br />
raised similar issues, even though it was not an explicit horizontal priority in the<br />
guidelines;<br />
• sustainable development and climate change, which were included as part of two separate<br />
Work Packages<br />
• the cost effectiveness of major projects, which was concerned with trying to compare the<br />
unit costs of major construction projects across the EU.<br />
In addition, three separate studies were carried out into issues of policy relevance:<br />
• the contribution of Objective 2 support for restructuring in the regions assisted in the<br />
context of globalisation;<br />
• the contribution of the ERDF to the development of rural areas, which was the specific<br />
focus of the EAGGF but there were many rural areas in the regions supported by the ERDF<br />
under Objective 1 and Objective 2;<br />
• the performance of the system for managing and implementing the ERDF in different<br />
countries and regions and its contribution to the design and implementation of effective<br />
cohesion policies as well as the spill-over of the principles embedded in the system into<br />
other policy areas.<br />
Two further pieces of work were also undertaken as part of the evaluation:<br />
• the construction of a database of quantitative indicators used by Member States to<br />
monitor policy in the different programme areas,<br />
• the deployment of two macroeconomic models, specially constructed to incorporate the<br />
expenditure on investment financed by the Structural Funds, to estimate the effects of<br />
intervention on the growth of the economies receiving funding.<br />
To provide the background to the different Work Packages – to set out the context in which<br />
cohesion policy was operated – and to compile a common set of data to feed into them, analysis<br />
was undertaken as well on:<br />
• the growth of GDP and employment in assisted and non-assisted regions and changes in<br />
regional disparities in the EU over the 2000-2006 period;<br />
• the allocation of Objective 1 and 2 funding between policy areas, the counterpart<br />
national co-financing and the contribution from the private sector to expenditure;<br />
• the development policies pursued across the EU and their coherence with economic<br />
theory and the recommendations of major international organisations;<br />
• regional developments over the programming period and the ERDF contribution to<br />
tackling development problems in all 25 Member States in the form of succinct national<br />
reports;<br />
• the types of NUTS 3 regions receiving financial support under Objective 2 and how the<br />
ERDF was allocated between policy areas in the regions concerned 4 .<br />
4 These various pieces of analysis were carried out under Work Package 1 by the people and organisations listed in<br />
the description above, who were also responsible for assisting in the coordination of the ex post evaluation and in<br />
advising on the analysis undertaken in the various Work Packages.<br />
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<strong>Synthesis</strong> <strong>Report</strong> Ex-post Evaluation of the ERDF 2000-2006<br />
The authors responsible for the studies carried out under the various Work Packages are listed<br />
above, together with the experts who, in each case, gave advice and guidance throughout the<br />
course of the studies.<br />
The approach adopted in each of the Work Packages was in most cases similar. It was to begin by<br />
setting out the rationale for policy intervention in the area concerned, or as regards the issue<br />
being examined, in the light of economic theory. This was followed by an overview of<br />
developments across the EU in the policy area in question and of the policy measures and<br />
projects supported by the ERDF, together with an examination of the outputs produced and the<br />
results of these on the basis of available data. Case studies of development in selected regions<br />
across the EU, which had received funding under either Objective 1 or Objective 2, were then<br />
carried out in order to examine in more detail the way the funding was used, the problems<br />
encountered and the effects of the projects supported.<br />
The case studies covered regions with differing characteristics, with different needs and<br />
priorities, in different parts of the EU and at different stages of economic development. They<br />
were, therefore, intended to gain an insight into the achievements of policy in different contexts<br />
and their specific contribution to furthering cohesion policy goals. Altogether 72 regional case<br />
studies at either the NUTS 1 or NUTS 2 level were carried out in the different Work Packages (see<br />
Annex for a list of the case study regions), 12 regions were included in more than one Work<br />
Package.<br />
While there are inherent difficulties in drawing general conclusions from case studies because of<br />
their selective nature, they are the only viable way of finding out what the effects of policy were in<br />
practice and what kind of impact they had on the development of the region concerned. In short,<br />
they provide concrete evidence of policy achievements and essential support for more general<br />
analysis of developments in the regions assisted by the ERDF.<br />
It should be stressed that the present report is not a summary of the various Work Packages and<br />
other studies which have undertaken for the evaluation. Instead, it is a synthesis of the findings<br />
which attempts to draw out the main points which emerged from each of them and from<br />
examining all the material compiled as a whole.<br />
THE CHALLENGES OF THE EVALUATION<br />
The context in which cohesion policy was implemented, the often small scale of the funding in<br />
relation to the forces it was intended to counteract and the many other factors at work mean that<br />
it is unrealistic in most cases to expect to be able to trace a direct link between policy and<br />
regional developments. This is all the more so in view of the often lengthy time lags involved<br />
between measures being implemented and having a discernible effect on developments. The<br />
difficulty of tracing an effect is compounded by the long time lags in relevant data becoming<br />
available to examine the link in question. A stark illustration of this that data on regional GDP per<br />
head, which are central to assessing the impact of policy on the development of assisted regions,<br />
were available only up to 2006 when the evaluation was carried out. This is two years before<br />
expenditure co-financed by the fund was due to be completed (under the n+2 rule) and three<br />
years before the actual completion date, which was extended as part of the measures for<br />
combating the recession.<br />
There was also a lack, in many cases, of a clear indication in concrete terms of the objectives of<br />
the policy implemented in a form which would enable the success or failure of the measures<br />
taken to be properly assessed. Often the aims of the policy were expressed in terms so general<br />
(e.g. an improvement in regional competitiveness) to make it difficult, if not impossible, to judge<br />
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Ex-post Evaluation of the ERDF 2000-2006<br />
<strong>Synthesis</strong> <strong>Report</strong><br />
after the event whether they were achieved or not. Though quantitative targets were often set and<br />
an indicator system established, as required by the Structural Fund regulations, in many cases<br />
neither were linked in a meaningful way to ultimate policy objectives.<br />
Where targets were set, they were often not taken seriously in the sense of being carefully<br />
determined in relation to the funding made available and what it could plausibly achieve.<br />
Accordingly, they were either attained far too easily – in a few cases, in the first few months of<br />
the programme being initiated – and, therefore, represented no challenge at all, or were<br />
unattainable given the funds deployed. In most cases, they did not play a central role either in the<br />
design or in the monitoring of policy and rarely featured in the policy debate. No authorities were<br />
held accountable for not meeting the targets set and few questions were asked when the targets<br />
were easily achieved.<br />
In consequence, whether the targets were achieved or not cannot be taken as evidence of success<br />
or failure of the measures implemented and they are generally of limited relevance for the<br />
evaluation. Though systems for monitoring expenditure were established over the period in all<br />
Member States together with a set of indicators for assessing the outcome of spending, they were<br />
not a central part of the decision-making process.<br />
Nevertheless, numerous evaluations have been carried out across the EU which have made use of<br />
the systems established to assess particular programmes. Though many focused narrowly on<br />
issues of financial implementation, a number examined the achievements of policy and are drawn<br />
upon here. Moreover, quantitative indicators do say something about the achievements of the<br />
programmes carried out even if far from everything. They at least provide evidence that the<br />
projects supported had tangible outputs and produced results which, according to economic<br />
theory, can be expected to have contributed to regional development and the pursuit of the wider<br />
objectives of cohesion policy.<br />
These wider objectives complicate the evaluation exercise. Policy was concerned with social and<br />
territorial objectives as well as economic ones. These objectives, however, are even less tangible<br />
than the economic aims of policy and tend to pose even greater problems of measuring<br />
outcomes. Issues such as the quality of life or territorial balance are less susceptible to<br />
quantification than economic growth and as yet few indicators exist which can be used to judge<br />
whether they are improving or worsening. Nevertheless, they need to feature in the evaluation as<br />
much as the more tangible outcomes.<br />
CHANGING CIRCUMSTANCES AND NEW ISSUES<br />
The evaluation needs equally to take account of the changes in underlying circumstances which<br />
occurred over the period which inevitably affected the focus of programmes in the various policy<br />
areas. The context in which cohesion policy was initially determined was, therefore, very different<br />
in certain aspects from that which prevailed at the end of the programming period. New issues<br />
arose during the period, or existing issues became more pressing, which posed new challenges<br />
for regional development and, accordingly, for cohesion policy.<br />
Prominent examples include:<br />
• the continuing process of globalisation, which altered the environment in which firms<br />
were operating, by putting increased pressure on those seeking to compete in terms of<br />
low labour costs and opening up opportunities for the relocation of labour-intensive<br />
activities to low wage countries;<br />
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• the growing emphasis on the sustainability of development in the context of global<br />
warming and the mounting concerns with safeguarding the environment;<br />
• the ageing of the population, the implications of which became more apparent as the<br />
period went on, and the increase in migration which affected many regions, both those<br />
experiencing high levels of inflow and those experiencing significant outflows.<br />
All of these issues, which were not a prominent part of the policy agenda when the programmes<br />
for the period were initially formulated, were covered explicitly in the evaluation. The aim was, in<br />
part, to check the extent to which programmes were flexible enough to respond to a changing<br />
context and new challenges, as well as assessing the measures taken themselves.<br />
EU15 VERSUS EU10 AND OBJECTIVE 1 VERSUS OBJECTIVE 2 REGIONS<br />
A distinction was made throughout the evaluation between the operation of cohesion policy in<br />
EU15 regions and that in the regions of the EU10 (the Member States which entered the Union in<br />
May 2004). This is because the period over which financial support from the ERDF was provided<br />
was much shorter for the latter, beginning only with their entry into the EU. They, accordingly,<br />
had much less time than regions in the EU15 to make use of the funding, which means that what<br />
can be expected to have been achieved is also much less. It is equally the case that GDP per head<br />
in most regions was much further below the EU average than that in the least prosperous EU15<br />
regions. The problems of economic development which cohesion policy needed to tackle were,<br />
therefore, bigger in scale and more wide-ranging than in the EU15.<br />
An equally important distinction was also made between regions supported under Objective 1 and<br />
those supported under Objective 2 (for all eligible areas, see map at the end of this section). The<br />
latter were predominantly in the EU15. Only three regions, Cyprus, Praha and Bratislava, in the<br />
EU10 did not qualify for Objective 1 support and were assisted under Objective 2. The separation<br />
of the two groups of regions is because of differences in the scale and, in many cases, the nature<br />
of problems faced and because of the size of funding involved was much smaller in the case of<br />
Objective 2 than Objective 1.<br />
Regions receiving Objective 1 support were those with GDP per head below 75% of the EU average<br />
at the time eligibility for funding for the 2000-2006 period was determined. Those in the EU15<br />
can be divided into two broad groups. The first group consists of regions, mostly in the Southern<br />
Member States, in which economic development was lagging behind. The main focus of policy<br />
was, accordingly, on extending and improving their endowment of infrastructure of various kinds<br />
so as to help create the conditions for sustained growth. The second group contains regions in<br />
other parts of the EU15 with mixed characteristics. It includes those where development had<br />
occurred in the past but which were left with declining industries, in much the same way as many<br />
Objective 2 regions but to a larger extent. It also includes very sparsely populated regions in the<br />
northern and central parts of Finland and Sweden, where the concern was to help to establish<br />
competitive businesses partly in order to maintain population.<br />
There are equally important differences between Objective 1 regions which were surrounded by<br />
other Objective 1 regions, such as those in the south for the most part – in the extreme, where all<br />
the regions in a country were Objective 1, as in Greece and Portugal – and those which were<br />
located in the midst of stronger regional economies, such as those in Belgium, Austria or the UK.<br />
Nevertheless, the Objective 1 regions share one important feature. They are all defined at the<br />
NUTS 2 level which means that their boundaries are readily identifiable and a set of regional<br />
statistics exist which can be used to examine developments over the programming period. The<br />
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regions assisted under Objective 2, on the other hand, were, in general, much smaller – in most<br />
cases areas (or zones) within NUTS 3 regions – and more diverse in terms of their characteristics<br />
and the problems they faced. They comprised three relatively distinct types of region which had<br />
been separately targeted in the preceding programming period:<br />
• those hit by the decline of traditional industries;<br />
• rural areas with economic problems;<br />
• coastal areas dependent on fishing.<br />
The diversity of Objective 2 regions adds to the difficulty of assessing the effect of the support<br />
given. This is reinforced by the small size of the areas assisted and the fact that, in most cases,<br />
they do not coincide with statistical boundaries, which means that there is no set of consistent<br />
data available to examine developments. Although estimates can be made from the data for NUTS<br />
2 and NUTS 3 regions on the growth of GDP per head and of employment, the results obtained<br />
are essentially based on the assumption that the performance in these terms in the areas assisted<br />
is reflected in the performance of the regions as a whole. This assumption is difficult to verify.<br />
Given the lack of data, relatively small scale of Objective 2 funding and the size of the areas<br />
targeted, case studies are an even more vital part of the evaluation than for Objective 1.<br />
OUTLINE OF REPORT<br />
Chapter 1: The nature of cohesion policy over the 2000-2006 period<br />
The report begins, in Chapter 1, by considering the nature of cohesion policy over the 2000-<br />
2006 period – what the aims of the policy were and how they evolved over the period as<br />
underlying circumstances changed and new issues emerged.<br />
It indicates the scale of the finance made available under the ERDF and the other Structural Funds,<br />
as well as national government co-financing and the private sector contribution, and how it was<br />
divided between Objective 1 and Objective 2 regions.<br />
It also considers the division of funding between policy areas in different Member States and how<br />
far funding was targeted on the main drivers of development identified by economic theory and<br />
was consistent with the recommendations of international organisations.<br />
In addition, it examines the way that funding was allocated across different types of region -<br />
urban, rural or intermediate – at the NUTS 3 level and the division in each type of region between<br />
policy areas to see how this was affected by the type of region concerned.<br />
Chapter 2: Economic developments over the 2000-2006 period<br />
Chapter 2 reviews economic developments over the period 2000-2006, beginning with the<br />
macroeconomic context in which cohesion policy was implemented, before examining growth of<br />
GDP per head and employment in regions receiving Structural Fund support as compared with<br />
non-assisted regions.<br />
The macroeconomic context here includes the overall growth in GDP, the fiscal policy pursued<br />
over the period and the scale of government investment, all of which are likely to have affected<br />
developments at regional level It also includes the process of globalisation and EU enlargement<br />
both of which had an effect on the policies followed at regional level.<br />
Regional economic developments are analysed at both the EU level, differentiating developments<br />
in the EU15 from those in the EU10, and at national level, since cohesion policy is about reducing<br />
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disparities within countries as well as across the EU as a whole. The chapter examines the<br />
changes in regional disparities at the various levels in terms of GDP per head and considers the<br />
way that these were affected by changes in commuter flows. It also examines changes in<br />
disparities in household disposable income per head across region, which is a more relevant<br />
indicator of living standards and, therefore, of social cohesion.<br />
Chapter 3: The outcome in selected policy areas<br />
Chapter 3 examines the evidence from the studies undertaken on particular policy areas, focusing<br />
first on the two main broad areas of intervention, enterprise support and infrastructure,<br />
specifically transport and environmental infrastructure which accounted for the bulk of<br />
expenditure in this area.<br />
The issues examined in respect of enterprise support include:<br />
• the effect of aid to enterprises on employment across the EU;<br />
• the effect of grants for investment to firms on investment per worker and grants for R&D<br />
on the level of expenditure on this per worker;<br />
• the effects of support under Objective 2 on restructuring in the context of globalisation.<br />
The issues considered in the case of support for investment in transport include:<br />
• the relative weight given to investment in the different modes of transport, especially in<br />
rail as opposed to road in view of the horizontal priority over the period of taking explicit<br />
account of environmental considerations when deciding on projects to fund;<br />
• the importance attached to investment in public transport in urban areas for similar<br />
reasons;<br />
• the outcome of investment in terms of the construction completed and the results of this.<br />
The issues examined as regards support for protecting and improving the environment include:<br />
• the share of funding going to support for investment in environmental infrastructure, on<br />
the one hand, and the clean-up of the natural and physical environment, on the other;<br />
• the results in terms of increased access to clean drinking water and wastewater treatment<br />
systems ;<br />
• the effect of the expenditure funded on cohesion policy objectives;<br />
• the support provided by the ERDF in relation to climate change.<br />
The further concern of Chapter 3 is to present the results of the other studies carried out as part<br />
of the evaluation. These covered:<br />
• ERDF support for rural development and the focus of this as compared with the financing<br />
provided by the EAGGF;<br />
• gender equality and demographic change and the extent to which they were reflected in<br />
the design of programmes and the projects supported, especially the first which was a<br />
horizontal priority in the programming period;<br />
• the cost effectiveness of major projects and how the unit cost of these varied across<br />
regions, as well as the factors underlying such variations.<br />
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Chapter 4: The effects of policy on regional development and wider objectives<br />
Chapter 4 considers the overall effects of policy on regions in the different Member States.<br />
The chapter begins by reviewing the results of simulations carried out using two macroeconomic<br />
models, QUEST and HERMIN, to estimate the effects of the expenditure co-financed by the<br />
Structural Funds in the 2000-2006 programming period on GDP growth in Member States. Given<br />
the complexities of economies and the difficulties of tracing a direct link between the expenditure<br />
supported and economic performance, such models represent the only practical means of<br />
estimating the effects of cohesion policy.<br />
The second part of the chapter examines developments in Objective 1 and Objective 2 regions in<br />
the different Member States across the EU and relates these to the various pieces of evidence<br />
assembled during the evaluation on the results of the expenditure funded over the period.<br />
Chapter 5: Conclusions and implications for future policy<br />
The final chapter sets out the conclusions of the evaluation. It is divided into two parts. The first<br />
part summarises the main findings as regards the effects of cohesion policy in the regions<br />
receiving Objective 1 and Objective 2 support in the different parts of the EU over the 2000-2006<br />
period, distinguishing between EU15 and EU10 countries.<br />
The second part of the chapter draws out the main lessons to emerge from the evaluation for the<br />
future shape of cohesion policy after 2013. These relate to a number of different aspects,<br />
including the process of evaluation itself, the indicators to use for the design and assessment of<br />
policy, the concentration of funding and the form it should take and the decision-making process<br />
surrounding this.<br />
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1 Chapter 1 – The nature of cohesion policy, 2000-2006<br />
1.1 THE POLICY CONTEXT<br />
The form which cohesion policy took in the 2000-2006 period inevitably reflected the underlying<br />
circumstances which prevailed across the EU at the time the policy was formulated. Although<br />
there were some modifications to the programmes and the allocation of expenditure both<br />
between and within them over the period, the initial situation in the late 1990s had a major<br />
influence on the objectives set and the priorities attached to them. This situation differed in a<br />
number of respects from that which evolved as the period went on.<br />
1.1.1 A focus on employment<br />
In the first place, while enlargement of the Union was already being contemplated, when it would<br />
occur and how many countries it would involve were still uncertain and in any case some years<br />
off. The focus of attention, therefore, was very much on the 15 Member States which comprised<br />
the EU at the time. Secondly, the major economic preoccupation in most cases was the limited<br />
rate of employment creation, despite several years of sustained economic growth following the<br />
recession of the earlier 1990s, and the resulting persistence of a high level of unemployment.<br />
This was the theme, for example, of the Luxembourg job summit at the end of 1997, which led to<br />
the formulation of the <strong>European</strong> Employment Strategy. It was also a major issue at the Lisbon<br />
summit in early 2000, which set employment targets for the EU to be attained by 2010 in addition<br />
to the aim of transforming the EU into a more dynamic, knowledge-based economy which<br />
became a major policy theme during the period.<br />
The concern with employment is apparent in the focus on both the creation and the maintenance<br />
of jobs in the policy documents drawn up and the quantitative targets set when the programmes<br />
for the period were formulated. The aim in many regions receiving assistance was to try to avoid<br />
an overly rapid decline in traditional industries, as much as to support the growth of new sectors<br />
of activity. A significant part of enterprise support, accordingly, went to firms in labour-intensive<br />
sectors in an attempt to maintain employment as well as to improve their competitiveness.<br />
1.1.2 Globalisation and EU enlargement giving rise to new challenges<br />
Such a policy focus became increasingly difficult to sustain as the period went on and as the<br />
continuing process of globalisation, coupled with the dismantling of trade barriers, led to<br />
increasing competitive pressure on firms in traditional industries, many of which were<br />
concentrated in assisted regions. Rising imports of basic manufactures into the internal market<br />
and growing difficulties in exporting were accompanied by greater opportunity to relocate<br />
labour-intensive activities to low wage countries. This was a result of both the industrialisation of<br />
these countries and of technological advances, which made it possible organise the production<br />
process in many industries across widely separated locations.<br />
The process of globalisation, and the increased competitive pressure it brought with it, was<br />
reinforced in the EU15 by EU enlargement. Not only did this intensify competition in internal<br />
markets but it offered an opportunity to relocate labour-intensive activities to low-wage<br />
countries closer to home. Accordingly, the accession countries in Central and Eastern Europe<br />
provided an alternative destination for such activities, which by being closer gave rise to fewer<br />
logistical problems and was, therefore, in many cases, more cost effective than countries in<br />
South-East Asia.<br />
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1.1.3 Increased migration<br />
At the same time, enlargement led to an influx of workers from many of the new Member States,<br />
but especially from Poland and the Baltic countries, into parts of the EU15, particularly those<br />
which refrained from imposing restrictions on their entry, such as Ireland and the UK. In both<br />
countries this helped to feed the growing demand for labour – in Ireland, in the construction<br />
industry in particular. In some activities in Poland, however, it also gave rise to shortages of<br />
skilled labour, so potentially hindering the longer-term development of the economy.<br />
Nevertheless, in the short-term, it helped to reduce unemployment, which was close to 20% in the<br />
early years of the decade before entry.<br />
In Spain, and to a lesser extent in Italy, inflows of migrants were not so much from the East but<br />
from the South, from Africa in particular, many of them illegal, leading to a marked growth in<br />
population of working age in a number of regions after years of little increase. As in Ireland,<br />
many of the migrants into Spain went into the construction industry, employment in which<br />
increased by over 50% in the country as a whole over the programming period and by even more<br />
in some regions. In Italy, because of the much slower growth of the economy, the inflow gave rise<br />
to greater social problems than in Spain and, in the South especially, to an expanding clandestine<br />
cheap source of labour to be employed in the informal economy.<br />
1.1.4 Growing concern with sustainable development<br />
Globalisation and enlargement were accompanied over the period by a growing concern with the<br />
environmental damage caused by human activities and, in particular, with global warming and its<br />
implications. The result was increasing emphasis on the need to ensure that economic<br />
development was sustainable and consistent with the preservation of the natural assets of the<br />
region in which it occurred. This emphasis was not evident in the policy documents drawn up at<br />
the beginning of the programming period, even though concern with environmental protection<br />
was embodied in the horizontal priority included in the Structural Fund guidelines. Sustainable<br />
development was adopted soon after as an EU strategy at Goteborg in 2001, followed by Member<br />
States signing up to the Kyoto protocol in 2002.<br />
1.1.5 Population ageing becoming more apparent<br />
A further issue which came to prominence over the programming period, but again was not<br />
explicitly reflected in the initial programmes, was the ageing of the population as a consequence<br />
of demographic trends, in the form of low fertility rates and declining mortality rates. This has<br />
well-publicised implications for the growth of the work force, since working-age population is set<br />
to decline in future years as demographic trends unwind, and, accordingly, for the capacity of<br />
economies to generate the income needed to support people in retirement. It also has<br />
implications for the demand for social services and the pattern of consumption generally, which<br />
vary in significance across regions according to their characteristics and the composition of their<br />
populations.<br />
An aim of the evaluation was to examine how far this changing context affected the policies<br />
which were implemented over the period and led to adaptation of the initial programmes to take<br />
account of the changes concerned. This is not only to assess the relevance of the policies<br />
implemented but more generally to consider the degree of flexibility of the management systems<br />
to respond to new developments.<br />
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1.1.6 A different context in the EU10<br />
This aim applies only to the EU15. The countries which entered the EU in May 2004 had very little<br />
time to alter programmes and in any case were faced by a very different set of circumstances as<br />
regards both economic development and the design and implementation of cohesion policy. In<br />
particular, in most regions, there was a lack of basic infrastructure of adequate standard, posing<br />
a major constraint on sustained development, together with very limited experience of<br />
implementing regional policy, allied to a lack of capacity for doing so. The problems of<br />
development were, therefore, essentially long-term in nature, involving not only infrastructure<br />
deficiencies but also low levels of productivity in most activities and a concentration of<br />
employment in low value-added sectors. The programming period, however, was very short –<br />
initially, the countries had only around 4½ years for funds to be allocated and spent – so that it<br />
was possible only to make a start on programmes which would have a significant effect on<br />
development.<br />
1.1.7 The multiple nature of cohesion policy objectives<br />
The broad objective of policy over the period was to strengthen economic and social cohesion. In<br />
the case of lagging regions receiving funding under Objective 1, the emphasis in the initial<br />
programme documents was, for the most part, on alleviating the constraints on economic<br />
development. In the case of problem regions in the more developed parts of the EU, those<br />
receiving funding under Objective 2, but also some of those receiving funding under Objective 1,<br />
the emphasis was on improving the competitiveness of businesses. These broad objectives were<br />
the same in EU10 countries as in the EU15.<br />
While the main focus in the regions in both sets of countries was an economic one, there were<br />
other aims too, not least a concern to ensure that development was balanced across regions and<br />
that the more peripheral and/or rural ones did not lose out. This was the case not only between<br />
NUTS 2 regions but also within them. It was especially true in countries which were a single NUTS<br />
2 region, such as Denmark, as well as in a number of the EU10 countries which were designated<br />
as Objective 1 regions – the three Baltic States, Slovenia and Malta – but it was also evident in<br />
many other regions. This was the case not only in the larger regions but also in some of the<br />
smaller ones. In Burgenland in Austria, for example, an Objective 1 region with a population of<br />
only around 280,000, an important concern was to stimulate development in the more rural and<br />
less prosperous central and southern part more than in the more favourably placed northern part.<br />
1.1.8 Potential conflicts between objectives<br />
A dilemma was to choose a strategy for deploying the Structural Funds which strengthened the<br />
development potential of the region, or country, as a whole but, at the same time, maintained or<br />
improved territorial balance by achieving a more even spatial distribution of economic activity.<br />
The relative weight attached to these two options tended to determine the allocation of funding –<br />
the extent to which financial resources were concentrated in areas which offered the highest<br />
immediate potential for growth, typically agglomerations (in smaller countries, invariably the<br />
capital city), as opposed to being spread more widely across the region, or even concentrated in<br />
areas where development problems were most acute.<br />
In practice, the decision of how and where to allocate funding is a political one since in some<br />
degree it depends on the importance attached to social cohesion, as well as territorial balance,<br />
and avoiding widening disparities between people living in different areas, as against economic<br />
growth.<br />
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Even if priority is given to economic considerations, there is no compelling evidence to suggest<br />
that concentrating resources in existing agglomerations is most likely to yield the best return in<br />
terms of growth in the longer-term, whatever its short-term merits. As the Barca report points<br />
out 5 , existing agglomerations are not necessarily the result of market forces, a tangible<br />
demonstration that such a concentration represents the most efficient spatial distribution of<br />
economic activity. Since most agglomerations tend to have been artificially created by<br />
government intervention in the past, stimulating the development of a new centre of economic<br />
activity may be no less an effective use of funds than deploying them to strengthen an existing<br />
one. This is especially the case if a long-term perspective is taken.<br />
The argument in favour of supporting existing centres of economic activity is not only that this<br />
represents the best strategy for the region, or country, to achieve a high rate of short-run<br />
growth, but that it is also the best one in the long-term because growth will ‘trickle down’ to<br />
other areas. The evidence for this, however, is limited and even if it should eventually occur, the<br />
approach runs the risk of worsening social cohesion and engendering instability and political<br />
unrest before it does so.<br />
In practice, whatever the merits of one approach over the other, social cohesion considerations<br />
tend to push governments, both regional and national, to seek to reduce regional disparities in<br />
infrastructure endowment and public and other essential services of various kinds across regions,<br />
so that particular areas are not disadvantaged in these terms.<br />
Whether or not such an allocation of funding conflicts with the pursuit of sustainable<br />
development over the long-term is by no by means clear, irrespective of its possible effect in<br />
slowing down growth in the short-term.<br />
1.1.9 The regional dimension of policy<br />
Cohesion policy as conducted through the ERDF is essentially about reducing imbalances between<br />
regions. This includes, imbalances within regions defined at the NUTS 2 level as well as between<br />
them. Although changes in disparities at the NUTS 2 level have tended to be how cohesion policy<br />
as a whole is judged, the logic of the Objective 2 approach in the 20002-2006 programming<br />
period is that the situation in small regions below the NUTS 2 level is also important.<br />
It can be argued further that the sustained growth of any particular region defined at the NUTS 2<br />
level is dependent on maintaining a certain balance between the different areas which it<br />
comprises. Indeed, sustainable development, in addition to the preservation of the natural<br />
environment and the avoidance of excessive depletion of exhaustible resources, could be defined<br />
to incorporate this condition, as well as perhaps avoiding excessive disparities between social<br />
groups within each of the areas concerned 6 . What kind of balance should be maintained and,<br />
accordingly, what kind of policy should be adopted in pursuit of this, however, varies between<br />
regions according to their specific characteristics.<br />
A related point is that, in many cases, NUTS 2 regions correspond with neither functional, or<br />
economic, regions nor administrative regions. In these cases, the appropriate regional level for<br />
development policy to be determined differs from that which is the focus of cohesion policy at EU<br />
level. This is reflected, as indicated in Chapter 2 below, in commuting being on a significant scale<br />
5 Fabrizio Barca, An agenda for a reformed cohesion policy, April 2009.<br />
6 The study of sustainable development as part of Work Package 11 adopted such a wide definition.<br />
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in the case of many of the regions concerned. As a consequence, GDP per head in these regions<br />
no longer reflects their relative prosperity 7 .<br />
1.1.10 The scale of funding<br />
Just over a quarter of the population in the EU15 lived in regions which received Objective 1<br />
funding over the 2000-2006 period, while 21% lived in areas eligible for Objective 2 support<br />
(Table 1.1). In the EU10 countries, all regions were eligible for Objective 1 except Praha, Cyprus<br />
and Bratislava, in each of which around 30% of the population lived in areas receiving funding<br />
under Objective 2. In total, therefore, some 37% of the EU25 population were covered by<br />
Objective 1 from mid-2004 onwards after the EU10 countries had entered the Union.<br />
Table 1.1 Population covered by Objective 1 and 2, 2000-2006<br />
% population<br />
Objective 1 Objective 2<br />
BE 12.3 14.3<br />
DK 12.5<br />
DE 17.9 15.5<br />
IE 100.0<br />
GR 100.0<br />
ES 58.7 21.5<br />
FR 4.7 33.9<br />
IT 33.4 14.9<br />
LU 25.6<br />
NL 2.2 18.1<br />
AT 3.4 28.8<br />
PT 100.0<br />
FI 19.8 32.6<br />
SE 10.6 15.8<br />
UK 11.9 27.3<br />
EU15 26.0 21.9<br />
CY 28.7<br />
CZ 96.4 3.6<br />
SK 96.7 3.3<br />
EU10 95.4 4.6<br />
EU25 37.2 21.1<br />
Note: Population in Objective 2 phasing-out regions is weighted by<br />
the amount of funding per head received relative to that received in<br />
Objective 2 regions eligible for full funding to allow for the relatively<br />
small amount of funding involved. EU10 countries not shown were<br />
eligible for Objective 1 funding in all regions.<br />
Source: Calculations based on DG Regio data.<br />
7 As indicated in Chapter 2, in regions with significant net inward commuting, a sizable number of the people who<br />
generate the GDP live outside the region and accordingly are not counted in the population over which GDP per<br />
head is measured. Conversely, in regions with significant net outward commuting, the GDP which commuters are<br />
responsible for generating occurs outside the region and so is not counted in the measurement of GDP per head of<br />
the region concerned, which therefore understates the income which people living in the region have access to.<br />
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Overall, the Structural Funds allocated to Objective 1 and 2 regions amounted to around EUR<br />
185.5 billion over the 2000-2006 period, or an average of EUR 26.5 billion a year. Of this, some<br />
EUR 170 billion went to the EU15 countries, mostly to finance expenditure in Objective 1 regions<br />
(86% of the total). National government co-financing amounted to another EUR 122.6 billion in<br />
EU15 countries and EUR 5.7 billion in the EU10 (Table 1.2).<br />
Table 1.2 Total funding going to Objective 1 and 2 regions, 2000-2006<br />
EUR million<br />
Allocation<br />
Expenditure<br />
Objective 1 Objective 2 Objective 1 Objective 2<br />
Public Structural Public Structural Public Structural Public Structural<br />
funds funds funds funds Expend Expend Expend Expend<br />
AT 389.9 282.9 1,328.2 733.5 374.4 257.0 1,412.6 649.9<br />
BE 1,357.9 671.2 1,129.6 464.8 1,304.2 579.7 1,054.7 381.1<br />
DE 33,524.9 21,503.2 7,611.5 3,761.4 33,003.3 19,809.9 7,190.6 3,350.4<br />
DK 412.9 196.8 400.0 164.3<br />
ES 62,492.8 41,257.6 6,032.6 2,863.9 53,872.4 35,601.8 4,955.2 2,322.4<br />
FI 1,978.0 989.0 1,319.9 530.0 1,933.2 928.9 1,403.1 505.8<br />
FR 7,774.0 4,118.1 16,953.3 6,504.2 7,058.9 3,523.7 17,920.8 5,794.6<br />
GR 32,418.0 22,698.0 28,528.6 20,282.6<br />
IE 5,506.2 3,184.2 5,459.1 2,909.6<br />
IT 45,327.7 23,886.1 6,995.6 2,721.0 38,637.9 20,396.0 6,446.0 2,464.5<br />
LU 145.4 44.0 181.8 40.4<br />
NL 416.5 131.9 2,188.1 859.0 437.3 114.7 2,032.3 685.2<br />
PT 32,237.6 20,453.7 29,949.0 18,106.5<br />
SE 1,402.3 778.0 1,052.3 440.0 1,497.1 673.0 1,124.9 418.6<br />
UK 11,751.3 6,287.7 11,299.8 5,052.9 10,343.6 5,381.9 10,046.9 4,176.8<br />
EU15 236,577.3 146,241.6 56,469.3 24,171.5 212,399.0 128,565.2 54,168.8 20,954.0<br />
CY 58.7 28.0 47.0 22.5<br />
CZ 1,954.9 1,454.3 142.6 71.3 1,598.7 1,165.6 107.9 54.0<br />
EE 495.8 371.4 459.6 308.1<br />
HU 2,696.4 1,995.7 2,488.2 1,838.3<br />
LT 1,204.6 895.2 1,184.8 833.2<br />
LV 846.5 625.6 756.3 532.0<br />
MT 86.5 63.2 69.6 50.7<br />
PL 11,487.3 8,275.8 9,691.6 6,651.8<br />
SI 334.5 237.5 282.1 195.8<br />
SK 1,424.9 1,041.0 77.9 37.0 1,148.5 828.6 65.4 31.6<br />
EU10 20,531.5 14,959.6 279.2 136.4 17,679.4 12,403.9 220.3 108.0<br />
EU25 257,108.7 161,201.2 56,748.5 24,307.9 230,078.4 140,969.2 54,389.1 21,062.0<br />
Public funds are Structural Funds plus national government co-financing<br />
Source: Calculations based on DG Regio data, expenditure as at end-2008<br />
The ERDF was by far the largest single fund, accounting for around two-thirds of the total and<br />
contributing overall some EUR 122.8 billion over the 7 years, or just over EUR 17.5 billion a year<br />
(Table 1.3). Almost all of the ERDF over the period went to EU15 countries (92.5% of the ERDF),<br />
most of it to supporting Objective 1 regions (81% in the EU15, almost 99% in the EU10).<br />
The scale of funding varied markedly between countries reflecting their population size but<br />
equally importantly the level of GDP per head in their regions and the extent to which they,<br />
therefore, qualified for support under Objective 1. As in previous periods, the regions supported<br />
under this Objective were those with a GDP per head of less than 75% of the EU average at the<br />
time eligibility for funding was determined. In addition, those assisted during the previous<br />
programming period under Objective 1, but whose GDP per head had subsequently risen above<br />
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75% of the average, qualified for ‘phasing out’ support –i.e. they received less, but still some aid<br />
in order to enable them to adjust to life without the funding 8 .<br />
Table 1.3 ERDF allocation by Objective and Member State, 2000-2006<br />
EUR million<br />
ERDF Allocation<br />
ERDF Expenditure<br />
Objective 1 Objective 2 Total Objective 1 Objective 2 Total<br />
AT 181.5 706.0 887.5 161.5 623.8 785.3<br />
BE 427.6 416.3 843.9 377.9 342.1 720.0<br />
DE 12,177.0 3,251.6 15,428.6 11,199.7 2,908.9 14,108.6<br />
DK 141.6 141.6 125.1 125.1<br />
ES 25,358.5 2,553.6 27,912.1 22,189.4 2,070.1 24,259.5<br />
FI 498.6 412.2 910.8 470.1 392.6 862.7<br />
FR 2,466.2 5,702.7 8,168.9 2,122.2 5,129.8 7,252.0<br />
GR 15,152.5 15,152.5 13,580.6 13,580.6<br />
IE 1,946.3 1,946.3 1,810.4 1,810.4<br />
IT 15,918.1 2,721.0 18,639.1 13,919.6 2,464.5 16,384.1<br />
LU 44.0 44.0 40.4 40.4<br />
NL 81.7 859.0 940.7 77.6 685.2 762.9<br />
PT 13,229.8 13,229.8 11,717.9 11,717.9<br />
SE 489.5 386.0 875.4 432.3 368.4 800.7<br />
UK 3,970.1 4,526.1 8,496.2 3,447.7 3,785.7 7,233.4<br />
EU15 91,897.5 21,720.1 113,617.6 81,506.7 18,936.8 100,443.5<br />
CY 28.0 28.0 22.5 22.5<br />
CZ 914.3 71.3 985.6 781.3 54.0 835.3<br />
EE 232.8 232.8 203.6 203.6<br />
HU 1,239.4 1,239.4 1,212.1 1,212.1<br />
LT 583.9 583.9 567.3 567.3<br />
LV 382.0 382.0 343.6 343.6<br />
MT 46.7 46.7 39.0 39.0<br />
PL 4,972.8 4,972.8 4,198.3 4,198.3<br />
SI 136.5 136.5 123.8 123.8<br />
SK 573.6 37.0 610.6 465.1 31.6 496.6<br />
EU10 9,082.0 136.4 9,218.4 7,934.1 108.0 8,042.1<br />
EU25 100,979.5 21,856.4 122,836.0 89,440.8 19,044.8 108,485.6<br />
Source: Calculations based on DG Regio data; expenditure as at end-2008<br />
Around a quarter of the ERDF over the period went to Spain, reflecting both its size and relatively<br />
large number of Objective 1 regions, while just over 16% went to Italy for the same reason, just<br />
under 14% to the Eastern part of German and around 12-13% to each of Greece and Portugal.<br />
These 5 countries between them, therefore, received around 80% of the total funding going to<br />
EU15 Member States and almost 90% of the funding under Objective 1.<br />
As indicated below, almost all of the funds allocated had been spent by the end of 2008 in nearly<br />
all of the countries. It is likely that most of the remainder will be spent before the deadline<br />
imposed for the funds to be used. The above figures are, therefore, closely in line with the actual<br />
expenditure over the programming period.<br />
In terms of the scale of funding in relation to GDP, however, which is more relevant in the present<br />
context, the importance of the support provided varied somewhat differently between countries,<br />
8 In practice, eligibility was determined by GDP per head in the latest two consecutive years for which data were<br />
available at the time the decision was made. There were also two regions, Mellersta Norrland and Övre Norrland, in<br />
Sweden which were in receipt of special support under Objective 1.<br />
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<strong>Synthesis</strong> <strong>Report</strong> Ex-post Evaluation of the ERDF 2000-2006<br />
as well as, of course, between regions receiving assistance under Objective 1 and those in receipt<br />
under Objective 2.<br />
Overall, the ERDF allocated to regions in the EU15 receiving Objective 1 support amounted to<br />
0.7% of GDP, on average, over the period, while for those in receipt of Objective 2 support –<br />
counting only the areas eligible for funding – it amounted to 0.15% of GDP. Both figures may<br />
seem relatively small, but it implies that, in Objective 1 regions, if account is taken of the fact that<br />
not all of the funding went to capital formation – i.e. some took the form of capital transfers to<br />
support enterprises – the funds received contributed around 2-3% to total fixed investment and<br />
around 15% to government investment 9 . Assuming the additionality requirement was respected,<br />
this means that the ERDF increased investment by this amount in the regions concerned.<br />
What it is not possible to do from published data, as noted below, is to relate the funds made<br />
available under cohesion policy to the overall expenditure on regional development which<br />
occurred across the EU over the period. The lack of this essential information means that it is<br />
necessary to rely on these kinds of broad estimate to indicate the size of the contribution made<br />
by the ERDF to development expenditure.<br />
In Objective 2 regions, the support was much less, though still not negligible, amounting perhaps<br />
to around 3% or so of government investment in the regions receiving funding.<br />
The scale of funding in relation to GDP varied markedly across Member States in the EU15,<br />
reflecting the account taken of their relative prosperity when deciding the amount they should<br />
receive. The scale also varied in relation to investment, reflecting not only the overall amount of<br />
support but also the differing ways in which this was used in the different regions, and, in<br />
particular, how much was allocated to enterprise support as opposed to the development of<br />
infrastructure of various kinds.<br />
In the case of Objective 1 regions, the amount of funding received in relative terms was largest in<br />
Portugal and Greece, the countries with the lowest levels of GDP per head, averaging around 1.3-<br />
1.4% of GDP in both cases (Table 1.4), which implies that it contributed around 25-30% or more<br />
to government fixed investment in the regions in these countries. In the Objective 1 regions in<br />
Spain, taken together, it amounted to around 0.9% of GDP, in those in Italy – all in the south of<br />
the country – it amounted to 0.8% and in those in France, which were mainly the DOMs (Nord Pas<br />
de Calais and Corse receiving phasing-out support), it averaged 0.7% (though over 1% in the<br />
DOMs if taken separately).<br />
Elsewhere, the scale of support relative to GDP was less, ranging from 0.5% in Burgenland, the<br />
one Austrian region receiving Objective 1 funding, to 0.2% in the two phasing-out regions in<br />
Ireland and slightly less in Flevoland, the one phasing-out region in the Netherlands.<br />
In Objective 2 regions in the EU15, there was not the same variation at all. In all Member States,<br />
funding under Objective 2 amounted to around 0.15% of GDP in the areas receiving support over<br />
the period, the only exceptions being Denmark and Luxembourg, where it was only half this.<br />
In the EU10 countries, in which funding was provided for a much shorter period, just over half of<br />
the ERDF allocated (52%) went to Poland, 15% to Hungary and just over 10% to the Czech<br />
Republic. Virtually all of the funding was to Objective 1 regions (EUR 9.2 billion in total), all but<br />
9 There are no data at EU level for government fixed investment by region, but at the national level, this amounted<br />
to 3-4% of GDP over the period in the southern Member States though less in most other EU15 countries – less than<br />
2% of GDP in Germany and the UK.<br />
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three of the NUTS 2 regions in the EU10 being eligible for support under this head, as noted<br />
above.<br />
In total, funding in Objective 1 regions in the EU10 amounted to some 0.65% of GDP over the<br />
period from May 2004 to the end of 2006. The variation between countries, however, was wider<br />
than in the EU15, ranging from around 1% of GDP in Latvia and Lithuania and around 0.7-0.8% in<br />
Poland, Estonia and Slovakia to under 0.2% in Slovenia, the differences again reflecting the GDP<br />
per head of the countries concerned.<br />
In the three Objective 2 regions in the EU10, funding varied from 0.24% of GDP in Cyprus to<br />
0.46% in Bratislava with Praha midway between. The scale of support in these regions was,<br />
therefore, larger relative to their GDP than in Objective 2 regions in the EU15 and closer to the<br />
scale in Objective 1 regions – indeed, in the Czech Republic, there was only a difference of 0.1%<br />
of GDP between the support provided to Objective 1 regions and that provided to the areas in<br />
Praha receiving Objective 2 funding.<br />
Table 1.4 Allocation of ERDF in relation to GDP in regions eligible, 2000-2006<br />
% GDP<br />
ERDF Allocation<br />
Objective 1 Objective 2<br />
AT 0.50 0.17<br />
BE 0.27 0.15<br />
DE 0.47 0.14<br />
DK 0.08<br />
ES 0.93 0.16<br />
FI 0.31 0.12<br />
FR 0.71 0.16<br />
GR 1.25<br />
IE 0.20<br />
IT 0.78 0.19<br />
LU 0.08<br />
NL 0.15 0.14<br />
PT 1.36<br />
SE 0.26 0.14<br />
UK 0.38 0.14<br />
EU15 0.73 0.15<br />
CY 0.24<br />
CZ 0.44 0.35<br />
EE 0.75<br />
HU 0.52<br />
LT 1.01<br />
LV 1.04<br />
MT 0.36<br />
PL 0.75<br />
SI 0.17<br />
SK 0.73 0.46<br />
EU10 0.65 0.35<br />
EU25 0.72 0.15<br />
Note: In the case of Objective 1, the regions covered relate to<br />
the NUTS 2 regions receiving support. In the case of Objective<br />
2, they relate only to the areas eligible for funding.<br />
Source: Calculations beased on DG Regio and Eurostat data.<br />
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<strong>Synthesis</strong> <strong>Report</strong> Ex-post Evaluation of the ERDF 2000-2006<br />
1.1.11 The time profile of expenditure<br />
Expenditure from the funding allocated was not spread evenly over the programming period but<br />
tended to build up relatively slowly and to be higher towards the end of the period. This reflects<br />
the time it takes to select suitable projects for funding as well as the lengthy delays in agreeing<br />
these in a number of countries, which reflect in turn the efficiency of the administrative<br />
procedures for managing funding and implemented programmes.<br />
The peak year for payments from the Funds under Objective 1 was 2006 or 2007 (Figure 1.1) but<br />
earlier under Objective 2 (Figure 1.2). (Both figures show payments made by the <strong>European</strong><br />
<strong>Commission</strong> in response to Member State requests, based on the expenditure incurred.) Much of<br />
the funding, therefore, was spent after the end of the programming period itself.<br />
Figure 1.1 Payments from the Structural Funds under Objective 1, 2000-2009<br />
EUR million<br />
16,000<br />
ERDF<br />
14,000<br />
ESF<br />
12,000<br />
EAGGF<br />
10,000<br />
FIFG<br />
8,000<br />
6,000<br />
4,000<br />
2,000<br />
0<br />
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009<br />
Source: DG Regio data as at March 2010<br />
Figure 1.2 Payment from the Structural Funds under Objective 2, 2000-2009<br />
EUR million<br />
4,000<br />
3,500<br />
3,000<br />
2,500<br />
2,000<br />
ERDF<br />
1,500<br />
ESF<br />
1,000<br />
500<br />
0<br />
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009<br />
Source: DG Regio data as at March 2010<br />
The time taken for expenditure to build up and the degree of concentration towards the end of<br />
the period varies markedly between Member States. At one extreme, in Greece, only just over 20%<br />
of payments from the ERDF under Objective 1 had been made by the end of 2003, four years into<br />
the programming period, and almost 60% of payments were made from 2006 onwards (Table<br />
1.5). At the other extreme, in Ireland, over half the payments from the ERDF had been made by<br />
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the end of 2003 and 90% by the end of 2006. Payments under Objective 2 showed less of a<br />
tendency to be concentrated at the end of the period (Table 1.6).<br />
Table 1.5 Payments from the ERDF under Objective 1 to Member States, 2000-2009<br />
Cumulative % of payments (by end of year)<br />
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009<br />
BE 7.1 7.7 23.0 27.7 42.7 61.9 75.2 86.7 100.0 100.0<br />
DE 3.7 12.2 22.2 33.0 47.9 62.4 76.9 92.2 99.8 100.0<br />
IE 6.9 15.5 35.2 51.2 69.2 80.5 90.3 94.2 100.0 100.0<br />
GR 0.0 10.2 16.2 21.9 31.8 40.7 55.1 75.8 95.0 99.9<br />
ES 0.0 12.9 26.9 41.6 57.7 70.6 78.5 87.5 94.6 99.8<br />
FR 3.9 7.0 10.7 21.9 36.2 50.8 64.3 79.6 93.6 100.0<br />
IT 6.1 7.1 13.9 27.5 38.6 53.3 70.0 84.4 96.2 100.0<br />
NL 6.9 6.9 7.4 23.4 27.0 52.4 74.3 89.4 100.0 100.0<br />
AT 7.1 12.4 26.5 41.8 56.8 66.8 75.2 87.3 100.0 100.0<br />
PT 6.9 14.8 27.2 42.8 57.1 68.6 77.9 86.1 97.6 100.0<br />
FI 7.0 8.7 24.3 34.7 49.4 63.2 76.6 92.0 100.0 100.0<br />
SE 7.0 9.0 23.9 43.4 59.5 75.1 88.6 99.7 99.7 100.0<br />
UK 5.6 6.9 15.1 23.5 35.5 57.5 69.2 85.5 95.6 98.3<br />
EU15 3.1 11.2 21.5 33.7 47.3 60.3 72.4 85.4 96.3 99.8<br />
CZ 10.5 19.7 38.9 75.2 97.9 100.0<br />
EE 10.2 28.4 52.1 85.3 100.0 100.0<br />
LV 10.2 19.7 28.4 70.5 100.0 100.0<br />
LT 10.5 24.9 40.6 69.7 100.0 100.0<br />
HU 10.6 24.1 50.3 90.8 100.0 100.0<br />
MT 10.5 18.4 38.5 79.4 100.0 100.0<br />
PL 10.5 19.5 40.1 71.3 98.9 100.0<br />
SI 10.5 33.5 66.6 90.3 100.0 100.0<br />
SK 10.6 17.2 31.7 66.7 100.0 100.0<br />
EU10 10.5 20.8 41.1 74.6 99.2 100.0<br />
Note: The figures relate to payments from the ERDF to the Member States over the period shown.<br />
They are based on information available as of March 2010 and more requests for payment might still<br />
be received. They exclude the 5% payment which will made once the programmes are closed.<br />
Source: Calculations based on DG Regio data as at March 2010<br />
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Table 1.6 Payments from the ERDF under Objective 2 to Member States, 2000-2009<br />
Cumulative % of payments (by end of year)<br />
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009<br />
BE 0.0 3.8 8.9 18.9 34.9 47.0 61.1 78.3 91.2 94.9<br />
DK 7.0 8.6 18.1 33.2 45.2 57.6 65.8 86.2 93.3 100.0<br />
DE 0.0 7.4 17.3 25.8 40.7 55.1 71.1 85.6 97.1 100.0<br />
ES 0.0 12.0 29.4 49.4 62.5 75.0 85.3 87.0 95.9 97.5<br />
FR 0.0 7.0 12.1 28.4 47.4 63.1 75.2 88.0 98.0 100.0<br />
IT 0.0 7.1 7.1 17.6 31.4 50.3 68.5 85.0 97.0 100.0<br />
LU 0.0 0.0 6.9 6.9 31.9 47.0 64.2 82.0 94.2 100.0<br />
NL 0.0 7.7 12.5 23.9 34.8 52.3 73.2 83.0 97.8 100.0<br />
AT 0.0 10.0 16.5 29.7 45.2 59.5 74.0 88.4 97.3 100.0<br />
FI 7.0 12.6 23.4 32.7 49.5 62.6 76.2 91.2 100.0 100.0<br />
SE 0.0 7.1 23.4 40.1 56.1 72.8 87.6 96.9 100.0 100.0<br />
UK 0.0 7.1 8.9 17.4 38.9 61.1 71.2 78.6 94.7 99.4<br />
EU15 0.2 7.8 14.1 26.7 43.7 60.5 73.8 85.0 96.7 99.5<br />
CZ 10.5 16.9 27.2 56.2 96.5 100.0<br />
CY 10.5 16.9 36.5 59.4 97.1 100.0<br />
SK 10.6 17.1 17.1 59.9 100.0 100.0<br />
EU10 10.5 16.9 26.3 57.9 97.6 100.0<br />
Note: See Note to Table 1.5<br />
Source: Calculations based on DG Regio data as at March 2010<br />
1.2 ALLOCATION OF ERDF FINANCING BETWEEN BROAD POLICY AREAS<br />
1.2.1 Objective 1 funding in the EU15<br />
The allocation of funding between broad policy areas indicates the relative weight given to<br />
different policy objectives over the period in different parts of the EU. Taking the Structural Funds<br />
as a whole, including national government co-financing, Transport and telecommunications was<br />
the largest single item, absorbing around a quarter of the total financial support provided in<br />
Objective 1 regions in the EU15 in the 2000-2006 period. Support for Human resources, which<br />
was mostly financed from the ESF, accounted for some 21%, Enterprise support for 18% and<br />
Agriculture and fisheries together with Rural development, which was predominantly financed by<br />
the EAGGF, for 14%.<br />
These proportions varied across the EU, with the share of funding going to Human resources<br />
ranging from a third in the UK to 14% in Italy and the share going to Agriculture and Rural<br />
development ranging from 21% in Finland to 8% in Belgium and the UK. The variations in the<br />
share of going to other policy areas are reflected in the division of the ERDF summarised below.<br />
Focusing on the financing provided by the ERDF, which, as noted above, accounted for around<br />
two-thirds of the overall Structural Funds support, Transport and telecommunications was even<br />
more important, accounting for 37% of the total (Table 1.7). The proportion reached 63% in<br />
Greece, 54% in Ireland and 43% in Spain, reflecting deficiencies in transport networks in the<br />
regions concerned at the beginning of the programming period. Very little, by contrast, went to<br />
this policy area in Belgium, Austria and Finland, again reflecting their needs. In these three<br />
countries, as well as in Sweden, funding for Enterprise support accounted for over 60% of the<br />
total. By contrast, well under 20% of funding went to this policy area in Greece, Ireland and France<br />
(where the DOMs made up most of the Objective 1 regions).<br />
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Table 1.7 Allocation of ERDF in Objective 1 regions in the EU15 by policy area, 2000-2006<br />
% ERDF allocated in each country<br />
BE DE IE GR ES FR IT NL AT PT FI SE UK EU15<br />
Total 1.Agriculture and fisheries 0.0 0.0 1.6 0.7 0.0 0.9 0.7 0.0 0.0 0.0 0.0 0.0 0.9 0.3<br />
1.1 Agriculture and forestry 0.0 0.0 0.0 0.0 0.0 0.1 0.7 0.0 0.0 0.0 0.0 0.0 0.6 0.2<br />
1.2 Fisheries 0.0 0.0 1.6 0.7 0.0 0.8 0.0 0.0 0.0 0.0 0.0 0.0 0.2 0.2<br />
Total 2.Enterprise Environment 72.7 44.1 15.5 11.4 22.1 13.8 31.3 26.2 61.0 22.2 87.0 60.2 43.7 26.3<br />
2.1 Assisting large businesses 11.1 6.5 0.0 1.0 4.5 2.6 4.4 1.9 12.8 6.6 16.3 0.0 3.9 4.4<br />
2.2 Assisting SMEs+craft sector 37.8 22.9 4.5 8.6 9.4 8.3 20.2 17.1 39.3 10.8 43.9 40.5 29.3 14.4<br />
2.3 RTDI 23.8 14.7 11.0 1.8 8.2 2.9 6.6 7.1 9.0 4.8 26.8 19.7 10.6 7.5<br />
Total 3.Human Resources 0.4 2.5 3.9 1.5 0.4 15.1 0.2 0.0 0.0 1.8 0.0 0.0 4.3 1.7<br />
3.1 Labour market policy 0.0 0.0 0.0 0.1 0.2 0.0 0.0 0.0 0.0 0.7 0.0 0.0 0.1 0.2<br />
3.2 Social inclusion 0.0 0.0 3.9 0.0 0.0 0.6 0.0 0.0 0.0 0.2 0.0 0.0 0.5 0.2<br />
3.3 Education and training 0.4 2.5 0.0 1.4 0.1 14.5 0.2 0.0 0.0 0.9 0.0 0.0 3.7 1.3<br />
Total 4.Transport and telecoms 2.4 29.8 62.9 53.6 42.9 24.3 29.4 13.2 3.5 29.0 4.4 19.1 21.2 37.0<br />
4.1 Transport 1.3 27.8 58.3 44.5 39.4 21.7 22.4 4.3 0.0 24.5 2.2 7.1 12.8 31.7<br />
4.2 Telecommunications and IS 1.1 2.0 4.6 9.2 3.5 2.6 7.1 8.9 3.5 4.5 2.2 12.0 8.4 5.2<br />
Total 5.Environment and energy 3.6 11.9 12.2 7.2 16.4 16.9 12.2 1.3 5.3 9.2 3.2 1.3 5.0 11.7<br />
5.1 Energy infrastructure 1.2 0.3 1.2 1.2 0.8 1.4 1.6 1.0 3.2 2.9 1.6 0.6 1.7 1.3<br />
5.2 Environmental infrastructure 2.4 11.6 11.1 6.0 15.6 15.5 10.7 0.3 2.1 6.3 1.6 0.6 3.4 10.4<br />
Total 6.Territorial policy 20.3 10.9 3.4 21.4 17.9 27.0 22.4 56.5 28.7 36.3 3.3 16.8 22.4 21.1<br />
6.1 Tourism 10.9 2.5 2.2 3.6 2.1 9.4 10.0 15.4 28.7 5.3 1.7 9.4 5.8 4.7<br />
6.2 Planning and rehabilitation 9.4 8.3 0.0 9.1 8.6 7.8 8.9 30.2 0.0 13.4 0.0 0.7 13.8 9.3<br />
6.3 Social infrastructure 0.0 0.0 0.0 8.5 7.2 8.0 1.8 4.4 0.0 14.0 1.6 0.9 2.4 6.1<br />
6.4 Development of rural areas 0.0 0.0 1.1 0.2 0.0 1.8 1.7 6.5 0.0 3.6 0.0 5.8 0.4 1.0<br />
7.Technical assistance 0.6 0.8 0.5 4.2 0.3 1.9 3.7 2.8 1.5 1.4 2.0 2.6 2.5 1.9<br />
Total Objective 1 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0<br />
Source: Calculations based on DG Regio data<br />
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Table 1.8 Allocation of ERDF in Objective 1 regions in the EU10 by policy area, 2000-2006<br />
% ERDF allocated in each country<br />
CZ EE LV LT HU MT PL SI SK EU10 EU25<br />
Total 1.Agriculture and fisheries 0.0 0.0 0.0 0.0 0.4 0.0 0.0 0.0 0.0 0.1 0.3<br />
1.1 Agriculture and forestry 0.0 0.0 0.0 0.0 0.4 0.0 0.0 0.0 0.0 0.1 0.2<br />
1.2 Fisheries 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.2<br />
Total 2.Enterprise Environment 25.5 23.8 40.9 16.9 25.6 2.2 18.9 36.7 3.4 20.6 25.8<br />
2.1 Assisting large businesses 3.3 1.0 11.0 3.3 2.4 0.0 2.8 5.7 1.1 3.0 4.3<br />
2.2 Assisting SMEs+craft sector 20.4 8.4 24.7 7.2 15.3 2.2 11.6 19.9 1.6 12.6 14.3<br />
2.3 RTDI 1.8 14.3 5.2 6.4 8.0 0.0 4.5 11.1 0.8 5.0 7.3<br />
Total 3.Human Resources 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.5<br />
3.1 Labour market policy 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.2<br />
3.2 Social inclusion 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1<br />
3.3 Education and training 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.2<br />
Total 4.Transport and telecoms 31.3 17.1 29.9 33.3 29.9 27.9 53.9 13.9 44.2 43.7 37.6<br />
4.1 Transport 26.8 14.2 24.5 24.4 22.2 26.5 43.3 5.4 42.3 35.3 32.0<br />
4.2 Telecommunications and IS 4.5 2.9 5.3 8.9 7.6 1.4 10.5 8.5 1.8 8.4 5.5<br />
Total 5.Environment and energy 14.2 3.7 12.9 11.4 6.4 41.7 10.2 10.8 16.8 10.7 11.6<br />
5.1 Energy infrastructure 2.8 2.3 5.2 10.3 1.4 0.4 2.2 5.4 0.8 2.7 1.4<br />
5.2 Environmental infrastructure 11.4 1.4 7.7 1.1 5.0 41.3 8.0 5.4 16.0 7.9 10.2<br />
Total 6.Territorial policy 25.8 49.1 12.4 35.7 33.5 22.9 15.1 33.3 22.2 21.5 21.1<br />
6.1 Tourism 11.8 9.8 2.6 14.7 6.5 10.7 4.8 27.8 5.8 6.9 4.9<br />
6.2 Planning and rehabilitation 9.0 3.6 0.0 2.0 8.6 5.9 5.5 5.4 1.6 5.5 9.0<br />
6.3 Social infrastructure 4.9 35.7 9.8 16.6 18.0 6.2 4.8 0.0 10.1 8.7 6.3<br />
6.4 Development of rural areas 0.0 0.0 0.0 2.4 0.4 0.0 0.0 0.0 4.7 0.5 0.9<br />
7.Technical assistance 3.2 6.3 3.9 2.7 4.2 5.3 2.0 5.3 13.3 3.4 2.1<br />
Total Objective 1 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0<br />
Source: Calculations based on DG Regio data<br />
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Territorial policy, comprising a mix of different types of measure, including support for the<br />
development of rural areas, planning and rehabilitation (the clean-up and renovation of urban<br />
and rural areas), social infrastructure and tourism, accounted for 21% in the EU15 and as much as<br />
36% in Portugal. Agriculture and fisheries (mostly agriculture) and the Environment and energy<br />
(mostly the former), each accounted for 7.5% of funding.<br />
The three general messages which are reflected in the division of Objective 1 funding are:<br />
• first, that it varied markedly between regions, which in turn reflects differences in relative<br />
priorities and the most pressing needs.<br />
• secondly, that funding tended to be relatively widely dispersed across policy areas in<br />
individual regions;<br />
• thirdly, that a significant proportion of funding in many cases went to policy areas not<br />
directly connected to economic development – to territorial policy and environmental<br />
infrastructure, especially.<br />
1.2.2 Objective 1 funding in the EU10<br />
In Objective 1 regions in the EU10 countries, the average division of ERDF support over the<br />
(shorter) period was similar to that in the EU15, except more went to Transport and<br />
telecommunications (44%) and less to Enterprise support (21%) (Table 1.8). An almost identical<br />
share of funding as in the EU15 went to Territorial policy and Environmental infrastructure, these<br />
two together accounting for almost a third of the total on average, and much more in Hungary,<br />
Lithuania, Slovenia and, most especially, Estonia. In the last, some 35% of total ERDF financing<br />
was assigned to Social infrastructure. In the EU10 as in the EU15, therefore, funding was<br />
distributed over a large number of policy areas, including those not closely linked to economic<br />
development per se.<br />
1.2.3 Objective 2 funding<br />
The main difference in the allocation of Objective 2 funding between policy areas from that of<br />
Objective 1 was the higher priority attached to Enterprise support (which accounted for 48% of<br />
the total ERDF in the EU15) and Territorial policy (31%) and the correspondingly lower priority<br />
attached to Transport and telecommunications (11%) (Table 1.9).<br />
In 6 countries, over half of funding went to Enterprise support, while in three (France,<br />
Luxembourg and the Netherlands), over 40% of funding went to Territorial policy, mainly to<br />
Planning and rehabilitation and Tourism, and in a fourth (Italy), the proportion was over a third.<br />
As in the case of Objective 1, therefore, Objective 2 funding differed across the EU according to<br />
the relative priority attached to the different policy areas and while there was some relative<br />
concentration on one or two broad areas, funding was fairly widely dispersed. Moreover, more<br />
than in the case of Objective 1, a significant part of funding was directed at policy areas which<br />
had more to do with social cohesion and territorial balance than economic growth.<br />
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Table 1.9 Allocation of ERDF in Objective 2 regions in the EU25 by policy area, 2000-2006<br />
% ERDF allocated in each country<br />
BE DK DE ES FR IT LU NL AT FI SE UK EU15 CZ CY SK<br />
Total 1.Agriculture and fisheries 0.0 0.0 0.0 0.0 0.3 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.0 0.0 0.0<br />
1.1 Agriculture and forestry 0.0 0.0 0.0 0.0 0.1 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0<br />
1.2 Fisheries 0.0 0.0 0.0 0.0 0.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.0 0.0 0.0<br />
Total 2.Enterprise Environment 43.0 47.4 54.1 52.4 30.0 38.6 11.5 25.6 70.8 59.3 52.5 70.0 48.1 15.3 43.9 20.4<br />
2.1 Assisting large businesses 7.7 5.6 3.6 1.3 3.3 0.2 0.5 0.4 22.2 0.0 0.4 0.3 2.6 0.0 0.0 0.0<br />
2.2 Assisting SMEs+craft sector 22.6 20.0 36.5 18.5 17.8 35.0 0.5 23.6 31.6 41.3 42.7 63.5 34.0 9.0 43.9 16.3<br />
2.3 RTDI 12.8 21.8 14.1 32.6 8.8 3.4 10.5 1.6 17.1 18.0 9.5 6.2 11.5 6.3 0.0 4.1<br />
Total 3.Human Resources 6.2 0.0 0.2 0.0 3.5 0.4 0.0 8.1 0.0 0.0 0.0 4.1 2.3 0.0 0.0 0.0<br />
3.1 Labour market policy 1.7 0.0 0.0 0.0 0.0 0.0 0.0 2.1 0.0 0.0 0.0 0.4 0.2 0.0 0.0 0.0<br />
3.2 Social inclusion 2.1 0.0 0.0 0.0 0.7 0.4 0.0 3.0 0.0 0.0 0.0 2.9 1.0 0.0 0.0 0.0<br />
3.3 Education and training 2.4 0.0 0.2 0.0 2.8 0.0 0.0 3.1 0.0 0.0 0.0 0.8 1.1 0.0 0.0 0.0<br />
Total 4.Transport and telecoms 10.9 14.5 5.1 14.1 15.2 13.0 10.7 10.9 1.4 11.3 18.5 5.2 10.5 33.6 15.5 0.0<br />
4.1 Transport 9.8 2.5 3.9 12.1 9.4 9.5 5.4 5.0 0.6 4.9 10.5 1.8 6.8 29.8 6.0 0.0<br />
4.2 Telecommunications and IS 1.1 11.9 1.1 2.0 5.8 3.5 5.4 5.9 0.8 6.4 8.0 3.4 3.7 3.8 9.5 0.0<br />
Total 5.Environment and energy 3.7 5.5 3.6 14.1 6.5 10.2 21.5 0.6 3.6 4.5 1.5 0.5 5.7 0.0 0.0 0.0<br />
5.1 Energy infrastructure 1.5 1.9 1.1 0.9 1.4 1.7 10.7 0.0 1.9 0.1 1.0 0.2 1.0 0.0 0.0 0.0<br />
5.2 Environmental infrastructure 2.1 3.6 2.5 13.2 5.2 8.5 10.7 0.6 1.7 4.4 0.5 0.3 4.7 0.0 0.0 0.0<br />
Total 6.Territorial policy 34.1 28.6 34.9 19.0 41.6 34.9 53.9 52.4 23.0 22.4 24.6 18.7 31.3 48.6 36.6 75.6<br />
6.1 Tourism 18.0 24.3 13.0 1.7 17.5 14.2 14.4 13.2 19.7 13.6 14.0 3.9 11.5 3.2 23.0 21.1<br />
6.2 Planning and rehabilitation 12.9 2.6 18.0 13.7 19.2 18.9 39.5 28.0 3.0 8.9 7.6 10.6 15.8 45.4 3.5 30.7<br />
6.3 Social infrastructure 0.3 0.0 0.1 3.2 1.6 1.2 0.0 2.1 0.4 0.0 1.1 0.9 1.3 0.0 10.0 0.0<br />
6.4 Development of rural areas 2.9 1.7 3.7 0.4 3.2 0.6 0.0 9.2 0.0 0.0 1.9 3.4 2.7 0.0 0.0 23.8<br />
7.Technical assistance 2.1 4.1 2.2 0.3 2.9 2.8 2.4 2.5 1.2 2.5 2.8 1.4 2.1 2.5 4.0 4.0<br />
Total Objective 2 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0<br />
Source: Calculations based on DG Regio data<br />
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1.3 ALLOCATION OF ERDF FUNDING BETWEEN TYPES OF AREA<br />
The evaluation was concerned to examine not only the allocation of ERDF funding between policy<br />
areas but also between types of geographical area at a more detailed level than NUTS 2 regions.<br />
The question addressed was whether there was a relative concentration of the expenditure<br />
financed by the ERDF in rural areas or urban areas. The analysis was conducted at a NUTS 3<br />
regional level and was concerned not only with the total amount of expenditure financed under<br />
Objective 1 and Objective 2 but also how this was divided between policy areas in the different<br />
types of region.<br />
The NUTS 3 regions were grouped into types of area according to the OECD classification system.<br />
Under this system, regions are defined as being predominantly urban, intermediate or rural<br />
depending on the proportion of population living in small areas, or what are termed ‘local units’,<br />
where population density is above or below a 150 people per square km (see Box). Rural and<br />
intermediate regions can be further divided into those which are close to a city and, therefore,<br />
have access to the services and amenities – as well as jobs – which it can provide, and those<br />
which are more remote, which essentially have to be more reliant on local services and jobs.<br />
Box – Definition of types of area<br />
The basis of the OECD classification of regions is the ‘local unit’, a small area for which there are at<br />
least some data for all EU Member States and which corresponds to a commune or district. NUTS 3<br />
regions are divided in the following way between types of area:<br />
• rural areas, if more than half of the population of the region live in local units with population<br />
density below 150 per square km<br />
• predominantly urban areas, if 85% or more people live in local units with a population density<br />
of over 150 per square km<br />
• intermediate areas, if 50-85% or more live in local units with population density of over 150<br />
per square km.<br />
The last two types of area can be further divided between those which are close to a city and those<br />
which are more remote. Specifically, the former are defined as areas where at least half the<br />
population can reach a town or city of over 100,000 people in less than an hour, which implies they<br />
have relatively easy access to a reasonable range of support services and amenities, the latter as<br />
those for which this is not the case.<br />
1.3.1 Objective 1 regions in the EU15<br />
Given that rural areas tend on average to lag behind more urban ones in terms of their GDP per<br />
head (partly, it should be noted, because of the depressing effect of outward commuting on this),<br />
it would be expected that much of the financial support provided by the ERDF went to such<br />
regions. In fact, over the 2000-2006 period as a whole, almost EUR 25 billion of the total amount<br />
of ERDF support to Objective 1 regions in the EU15 went to NUTS 3 regions defined as being<br />
rural. This represents some 27% of the total funding from this source, almost twice the<br />
proportion of population of the countries concerned living in these regions (just under 15%),<br />
signalling that there was indeed a relative concentration of financial support in rural areas (Table<br />
1.10, in which the data are based on commitments up to the end of 2006).<br />
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<strong>Synthesis</strong> <strong>Report</strong> Ex-post Evaluation of the ERDF 2000-2006<br />
Table 1.10 Division of ERDF in Objective 1 NUTS 3 regions in the EU15 by region type and division<br />
of population, 2000-2006<br />
Funding<br />
Population<br />
EUR million % Total % Country % Total in Obj 1<br />
BE Urban 380 89 85 82<br />
Intermed, near a city 47 11 12 18<br />
DE Urban 4652 38 57 42<br />
Intermed, near a city 4783 39 29 37<br />
Rural, near a city 2742 23 13 22<br />
IE Urban 516 27 28 28<br />
Rural, near a city 798 41 44 44<br />
Rural, remote 633 33 28 28<br />
GR Urban 4570 30 36 36<br />
Intermed, near a city 3450 23 24 24<br />
Intermed, remote 622 4 3 3<br />
Rural, near a city 768 5 6 6<br />
Rural, remote 5742 38 31 31<br />
ES Urban 4501 18 45 22<br />
Intermed, near a city 13271 52 38 52<br />
Intermed, remote 1851 7 4 7<br />
Rural, near a city 2780 11 8 10<br />
Rural, remote 2956 12 6 9<br />
FR Urban 1584 64 30 80<br />
Intermed, near a city 582 24 54 12<br />
Rural, near a city 237 10 13 4<br />
Rural, remote 63 3 4 3<br />
IT Urban 5148 32 54 38<br />
Intermed, near a city 7215 45 34 43<br />
Intermed, remote 723 5 3 5<br />
Rural, near a city 1950 12 7 9<br />
Rural, remote 882 6 3 6<br />
NL Intermed, near a city 82 100 16 100<br />
AT Rural, near a city 182 100 35 100<br />
PT Urban 5103 39 52 52<br />
Intermed, near a city 4298 32 27 27<br />
Rural, near a city 736 6 6 6<br />
Rural, remote 3094 23 15 15<br />
FI Rural, near a city 184 37 34 57<br />
Rural, remote 315 63 20 43<br />
SE Urban 7 1 21 37<br />
Intermed, near a city 0 0 30 30<br />
Rural, near a city 146 30 30 10<br />
Rural, remote 337 69 20 23<br />
UK Urban 2795 70 70 62<br />
Intermed, near a city 439 11 27 18<br />
Intermed, remote 349 9 1 9<br />
Rural, near a city 226 6 1 7<br />
Rural, remote 161 4 1 5<br />
EU15 Urban 29200 32 51 39<br />
Intermed, near a city 34236 37 33 34<br />
Intermed, remote 3529 4 1 3<br />
Rural, near a city 10784 12 10 13<br />
Rural, remote 14150 15 5 11<br />
Source: Based on database of commitments up to end-2006 by NUTS 3 region constructed by SWECO for DG Regio<br />
Such a concentration was particularly evident in regions remote from a city, which tend to be<br />
peripheral. These regions accounted for under 5% of the EU15 population but received just over<br />
15% of ERDF support, over three times as much. Regions which were rural but closer to a large<br />
town or city also received a larger share of ERDF funding (almost 12%) than their share of<br />
population (10%), but the difference between the two was much smaller.<br />
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More significantly, the share of Objective 1 funding going to remote rural areas was also greater<br />
than the share of population living in Objective 1 regions (15% as opposed to 11%). This means<br />
that within Objective 1 regions there was equally a relatively concentration of support on these<br />
areas. This was not the case for rural areas close to a large town or city, where the share of<br />
support was slightly smaller than their share of population.<br />
This pattern was common to nearly all EU15 countries. It was particularly evident in Finland and<br />
Sweden, where the funding was channelled to sparsely populated regions and where it was<br />
concentrated on the most ‘rural’ areas within these regions. It was also evident in Portugal. It was<br />
not evident in Italy, while in the UK, funding was concentrated in urban rather than rural areas,<br />
reflecting perhaps the greater problems in the former than the latter.<br />
1.3.2 Objective 1 regions in the EU10<br />
In the EU10, where nearly all regions were eligible for Objective 1 support, there was in general<br />
less concentration of funding in rural areas. Of the total of EUR 9 billion of ERDF funding, around<br />
a third went to rural areas, only marginally more than their share of population (Table 1.11).<br />
Only in Hungary did a significantly larger share of the ERDF go to remote rural areas than their<br />
share of population. In Poland, Latvia, Lithuania and, to a lesser extent, Slovenia, the share was<br />
smaller, in Estonia, much the same (in the other countries, there are no remote rural areas).<br />
If account is also taken of rural areas close to a city, the position is:<br />
• in Slovakia, Slovenia, the Czech Republic and Hungary, there was a relative concentration<br />
of Objective 1 funding on rural areas, if only comparatively small in the last three<br />
countries.<br />
• in Poland, Latvia and Lithuania, funding was concentrated in predominantly urban rather<br />
than rural areas, despite the expressed policy aim of pursuing balanced growth;<br />
• in Estonia, there was a balanced distribution of funding between rural and urban areas.<br />
The above figures, however, need to be interpreted with care. As argued elsewhere in this report,<br />
the fact that expenditure takes place in a particular area does not mean that its effects are<br />
confined to the area concerned. This is especially so in the case of NUTS 3 regions which tend to<br />
be relatively small in spatial terms and where, accordingly, any investment supported might bring<br />
significant benefits to those living in neighbouring regions. A stimulus to economic activity,<br />
therefore, can mean more jobs for those commuting from other regions as well as for those living<br />
in the region itself. Indeed, those living in a rural area might gain more from investment outside<br />
the area than from investment inside, particularly if business conditions are more favourable in<br />
the former area.<br />
This argument, however, tends to hold more for rural areas close to a city than those which are<br />
remote, where it more difficult to reach a sizable centre of economic activity or population.<br />
At the same time, it should also be bone in mind that the figures relate only to the ERDF rather<br />
than to the Structural Funds as a whole, and it may be that support from the other Funds was<br />
allocated across types of region in a different way. For example, it might be that support to rural<br />
areas was concentrated on education and training in order to improve the skills of the work force<br />
rather than on infrastructure or enterprise support.<br />
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<strong>Synthesis</strong> <strong>Report</strong> Ex-post Evaluation of the ERDF 2000-2006<br />
Table 1.11 Division of ERDF in Objective 1 regions by type of region and division of population in<br />
the EU10, 2004-2006<br />
Funding<br />
Population<br />
EUR million % Total % Country % Total in Obj 1<br />
CZ Intermed, near a city 854 93 84 94<br />
Rural, near a city 59 6 5 6<br />
EE Urban 25 11 13 13<br />
Intermed, near a city 146 63 64 64<br />
Intermed, remote 38 16 12 12<br />
Rural, remote 24 10 11 11<br />
LV Urban 145 38 32 32<br />
Intermed, near a city 52 14 16 16<br />
Intermed, remote 63 17 13 13<br />
Rural, near a city 88 23 28 28<br />
Rural, remote 34 9 11 11<br />
LT Urban 306 52 25 25<br />
Intermed, near a city 188 32 50 50<br />
Intermed, remote 14 2 5 5<br />
Rural, near a city 40 7 11 11<br />
Rural, remote 36 6 9 9<br />
HU Urban 181 15 17 17<br />
Intermed, near a city 544 44 42 42<br />
Rural, near a city 230 19 22 22<br />
Rural, remote 285 23 20 20<br />
MT Urban 47 100 100 100<br />
PL Urban 1388 28 22 22<br />
Intermed, near a city 1745 35 39 39<br />
Rural, near a city 1751 35 35 35<br />
Rural, remote 89 2 4 4<br />
SI Intermed, near a city 42 31 37 37<br />
Intermed, remote 9 6 5 5<br />
Rural, near a city 81 60 54 54<br />
Rural, remote 4 3 4 4<br />
SK Intermed, near a city 340 59 63 71<br />
Rural, near a city 234 41 25 29<br />
EU10 Urban 2097 23 19 17<br />
Intermed, near a city 3904 43 48 49<br />
Intermed, remote 124 1 1 1<br />
Rural, near a city 2484 27 27 28<br />
Rural, remote 473 5 6 6<br />
EU25 Urban 31298 31 46 30<br />
Intermed, near a city 38140 38 36 40<br />
Intermed, remote 3653 4 1 2<br />
Rural, near a city 13265 13 13 19<br />
Rural, remote 14624 14 5 9<br />
Source: Based on database of commitments up to end-2006 by NUTS 3 region constructed by SWECO for DG Regio<br />
1.3.3 Objective 2 regions<br />
Around 21% of Objective 2 funding went to rural areas in EU15 countries (around EUR 4.6 billion<br />
overall). Of this, some EUR 1.3 billion, or just under 6% of the total, went to rural areas remote<br />
from a city (Table 1.12). This, however, is well over twice the proportion of the population living<br />
in these areas (2.5%) if the population living in Objective 1 regions is excluded – i.e. if the<br />
comparison is confined to regions potentially eligible for support under Objective 2. The<br />
proportion of funding going to rural areas close to a city (15%) was also significantly larger than<br />
their share of population (9%).<br />
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Table 1.12 Division of ERDF in Objective 2 regions by region type and division of population<br />
Funding<br />
Population<br />
EUR million % Total % Country excl Obj 1 % Total in Obj 2<br />
BE Urban 338 81 85 77<br />
Intermediate 14 3 11 10<br />
Rural near a city 65 16 4 14<br />
DK Intermediate 27 19 32 15<br />
Rural near a city 64 46 18 47<br />
Rural remote 50 36 21 38<br />
DE Urban 1888 58 61 53<br />
Intermediate 759 23 28 26<br />
Rural near a city 575 18 11 19<br />
Rural remote 29 1 0 1<br />
ES Urban 1778 70 77 73<br />
Intermediate 614 24 19 22<br />
Rural near a city 116 5 3 4<br />
Rural remote* 46 2 1 1<br />
FR Urban 662 12 25 11<br />
Intermediate 3427 60 57 59<br />
Rural near a city 1163 20 14 22<br />
Rural remote 451 8 4 8<br />
IT Urban 1263 46 62 46<br />
Intermediate 935 34 31 38<br />
Rural near a city 321 12 6 13<br />
Rural remote 202 7 1 3<br />
LU Intermediate* 44 100 100 100<br />
NL Urban 328 38 85 60<br />
Intermediate 455 53 14 34<br />
Rural close to a city 75 9 1 6<br />
AT Urban 22 3 24 4<br />
Intermediate 116 16 32 14<br />
Rural near a city 378 54 33 54<br />
Rural remote 190 27 11 27<br />
FI Urban* 1 0 37 0<br />
Intermediate 34 8 30 20<br />
Rural near a city 242 59 24 60<br />
Rural remote 135 33 10 19<br />
SE Urban* 2 1<br />
Intermediate 60 16 30 16<br />
Rural near a city 159 41 54 42<br />
Rural remote 165 43 16 42<br />
UK Urban 3367 74 71 73<br />
Intermediate 1049 23 29 25<br />
Rural near a city 111 2 1 2<br />
EU15 Rural remote 9704 45 56 44<br />
Urban 7499 35 33 35<br />
Intermediate 3264 15 9 16<br />
Rural near a city 1254 6 2 5<br />
CZ Urban 71 100 100 100<br />
CY Intermediate 28 100 100 100<br />
SK Urban 37 100 100 100<br />
Note: Objective 2 includes Objective 2 phasing out regions. The population in these has been weighted by funding<br />
received per head, which in most cases was substantially smaller than in non-phasing out regions, in order to<br />
improve comparability between the two types of region.<br />
Source: Based on database of commitments up to end-2006 by NUTS 3 region constructed by SWECO for DG Regio<br />
Accordingly, Objective 2 funding was relatively concentrated in rural areas across the EU15,<br />
implying that these areas were regarded as the most problematic outside of Objective 1 and,<br />
therefore, most in need of support. This was the case in all Member States without exception, the<br />
37
<strong>Synthesis</strong> <strong>Report</strong> Ex-post Evaluation of the ERDF 2000-2006<br />
most extreme example being in Austria, where around 80% of Objective 2 funding went to rural<br />
areas, which accounted for only 44% of the population.<br />
Within Objective 2 regions, the allocation of funding between different types of area was broadly<br />
in line with population in most countries, so that – after adjusting for phasing out areas – there<br />
was only limited variation in the funding per head across areas.<br />
1.3.4 Division of expenditure by type of area in Objective 1 regions<br />
In practice, the division of Objective 1 funding did not tend to vary much between policy areas in<br />
the different types of region, at least at the EU15 level. The main difference was that a larger<br />
share of funding went to RTDI in urban areas than elsewhere, while a larger share went to<br />
transport in rural areas, especially in those remote from a city (Table 1.13).<br />
The relative concentration of RTDI in urban areas was common across countries, with the sole<br />
exception of the UK and to a lesser extent Sweden. Except for RTDI, however, there were few<br />
systematic differences in the allocation of expenditure between types of region. There was,<br />
therefore, no common mix of policy measures which was applied to urban or rural areas over the<br />
period across Member States and, accordingly, no common strategy for the development of each<br />
type of region. This might reflect differences in expenditure needs in particular types of region<br />
between countries or differences in the strategy for responding to those needs as well as in the<br />
priority attached to taking action in the different policy areas. For example, in Spain and the UK, a<br />
much larger share of funding went to planning and rehabilitation in urban areas than in other<br />
types, in Italy and Portugal, a relatively large share went to this policy area in rural areas,<br />
especially remote ones, rather than in urban areas.<br />
Nevertheless, a widespread feature which does emerge is that, except in Greece and Spain, a<br />
larger share of funding was devoted to enterprise support in rural areas remote from a city than<br />
in those close to a city. This could reflect the greater need to sustain economic activity in the<br />
former in order to maintain population, whereas, as noted above, in areas close to a city, there is<br />
a greater possibility of commuting and, therefore, more reliance on the economic activity and<br />
jobs which are present there.<br />
There were also no big differences across the EU10 countries in the division of funding in<br />
different types of region (Table 1.14). As in the EU15, apart from the share of funding for RTDI in<br />
urban areas being larger than elsewhere, there were no systematic differences in the allocation of<br />
expenditure.<br />
1.3.5 Division of expenditure by type of area in Objective 2 regions<br />
There were more systematic differences in the division of ERDF financing between the different<br />
types of area in Objective 2 regions (Table 1.15). In particular:<br />
• as in Objective 1 regions, but even more, so much larger share of funding went to RDTI<br />
in urban areas than others;<br />
• as a counterpart, a much larger share of funding went to support of tourism in rural areas<br />
than elsewhere;<br />
• a larger share of funding was allocated to planning and rehabilitation in urban areas than<br />
other;<br />
• a larger share of funding in rural than other areas went to environmental infrastructure.<br />
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Ex-post Evaluation of the ERDF 2000-2006 <strong>Synthesis</strong> <strong>Report</strong><br />
Table 1.13 Division of ERDF in Objective 1 NUTS 3 regions by region type in the EU15 by policy area, 2000-2006<br />
Agriculture<br />
and forestry<br />
Development<br />
of rural<br />
Fisheries Aid to<br />
firms<br />
Tourism RTDI Human<br />
resources<br />
Transport Telecoms Energy Environmental<br />
infra-<br />
Planning<br />
and<br />
Social infrastructure<br />
% total expenditure<br />
Total<br />
BE Urban 51.1 9.7 24.5 0.4 1.2 1.1 11.5 0.4 88.9<br />
Intermed, near a 45.7 17.7 22.4 0.8 2.0 1.5 9.3 0.6 11.1<br />
DE Urban 0.2 0.1 20.2 1.8 32.2 4.7 24.7 2.0 0.1 5.2 7.0 1.6 38.2<br />
Intermed, near a 0.3 0.0 28.4 2.8 9.8 2.8 26.3 2.0 0.2 18.7 8.6 0.1 39.3<br />
Rural, near a city 1.2 0.0 34.9 4.8 10.6 1.4 27.3 1.6 0.7 10.0 6.9 0.7 22.5<br />
IE Urban 1.2 3.4 1.8 13.0 3.9 59.3 3.7 0.8 8.6 3.8 0.5 26.5<br />
Rural, near a city 1.4 3.7 2.1 11.6 3.8 56.8 4.4 1.1 8.6 3.3 3.1 41.0<br />
Rural, remote 1.6 4.0 2.5 10.2 3.6 54.3 5.2 1.5 8.6 2.8 5.6 32.5<br />
GR Urban 0.1 8.1 1.1 2.6 1.7 44.4 15.9 1.7 3.1 10.0 8.6 2.6 30.2<br />
Intermed, near a 0.1 0.7 12.7 2.8 2.6 1.5 42.4 7.7 0.5 4.9 11.4 9.5 3.4 22.8<br />
Intermed, remote 1.3 7.6 11.5 1.2 1.5 23.1 9.2 0.7 12.8 13.8 15.6 1.6 4.1<br />
Rural, near a city 1.6 13.0 5.4 0.5 1.0 39.1 6.9 1.0 13.0 6.3 8.0 4.3 5.1<br />
Rural, remote 0.0 1.0 11.4 4.8 0.5 1.0 44.6 7.6 1.1 8.1 8.2 8.3 3.2 37.9<br />
ES Urban 0.1 14.8 0.4 14.7 3.4 19.4 1.2 0.2 11.1 30.8 3.6 0.3 17.7<br />
Intermed, near a cit 0.1 14.3 0.3 8.9 3.3 35.0 0.8 0.1 11.6 20.3 4.8 0.3 52.3<br />
Intermed, remote 0.1 10.4 0.2 9.5 1.6 33.3 1.7 0.5 13.7 21.8 6.9 0.2 7.3<br />
Rural, near a city 0.3 18.3 0.3 6.2 3.6 34.8 0.5 0.3 10.3 20.5 4.6 0.2 11.0<br />
Rural, remote 0.4 10.5 0.2 7.6 4.6 38.2 0.5 0.1 13.5 21.3 2.8 0.2 11.7<br />
FR Urban 0.0 3.5 0.1 11.0 10.7 4.6 7.9 20.2 2.2 2.2 14.8 15.5 6.1 1.2 64.2<br />
Intermed, near a 3.5 11.5 10.4 1.1 16.5 28.1 2.5 1.6 9.5 4.3 9.3 1.7 23.6<br />
Rural, near a city 5.5 1.5 1.2 31.3 28.9 0.5 0.9 10.3 7.9 7.9 4.2 9.6<br />
Rural, remote 3.3 7.9 7.9 2.7 20.2 5.7 1.3 36.8 0.7 13.6 2.6<br />
IT Urban 25.3 5.3 11.7 28.5 4.0 1.3 8.9 10.1 1.7 3.0 32.3<br />
Intermed, near a cit 30.7 7.2 5.5 24.3 3.5 2.0 8.8 14.4 1.6 2.1 45.3<br />
Intermed, remote 30.8 6.7 0.5 27.0 1.5 2.6 10.0 17.4 1.8 1.6 4.5<br />
Rural, near a city 31.1 7.4 4.3 16.1 10.1 0.5 12.5 12.8 3.1 2.1 12.3<br />
Rural, remote 37.1 6.5 1.0 12.8 2.3 0.6 14.4 20.9 3.1 1.4 5.5<br />
NL Intermed, near a 7.9 20.3 15.1 7.0 18.6 6.3 20.0 2.1 2.8 100.0<br />
AT Rural, near a city 58.0 28.7 4.2 1.5 3.1 3.0 1.5 100.0<br />
PT Urban 0.1 0.1 26.0 3.3 9.2 1.0 26.5 5.6 3.5 4.5 8.5 10.5 1.3 38.6<br />
Intermed, near a cit 0.2 1.1 0.1 25.1 2.6 4.6 1.2 22.5 4.7 2.9 6.5 11.4 16.3 0.8 32.5<br />
Rural, near a city 0.8 0.1 17.2 3.6 3.9 0.2 27.7 4.2 3.5 5.1 17.4 13.9 2.6 5.6<br />
Rural, remote 0.1 6.3 0.0 23.1 3.1 2.6 0.1 21.3 2.8 6.0 5.4 13.5 14.5 1.3 23.4<br />
FI Rural, near a city 3.4 46.2 28.6 7.2 8.9 3.7 0.3 1.7 36.8<br />
Rural, remote 4.4 44.5 23.6 10.7 9.8 3.2 1.6 2.1 63.2<br />
SE Urban 5.8 71.3 1.1 21.8 1.3<br />
Intermed, near a cit 100.0 0.0<br />
Rural, near a city 4.8 0.2 42.8 9.5 21.4 9.6 9.6 2.1 29.8<br />
Rural, remote 0.0 1.6 40.1 19.4 18.4 6.2 10.9 0.1 0.2 0.1 0.6 2.3 68.9<br />
UK Urban 0.2 28.5 8.2 10.4 7.7 9.3 5.4 0.7 0.8 23.8 2.6 2.5 70.4<br />
Intermed, near a cit 1.0 30.6 10.2 10.2 8.0 17.1 5.0 0.2 1.3 9.9 3.6 2.9 11.0<br />
Intermed, remote 0.1 44.2 9.0 26.9 0.1 9.1 2.7 0.7 0.8 2.3 1.8 2.5 8.8<br />
Rural, near a city 1.9 23.7 9.7 3.1 16.7 12.7 2.3 0.1 16.7 4.6 3.4 5.1 5.7<br />
Rural, remote 35.2 6.0 5.3 1.0 28.0 6.8 3.4 3.0 2.0 6.9 2.4 4.1<br />
EU15 Urban 0.0 0.3 0.1 19.8 3.5 13.3 2.9 26.6 5.4 1.4 6.4 13.9 4.6 1.8 31.8<br />
Intermed, near a 0.1 0.3 0.1 21.2 3.0 7.0 2.4 30.3 2.8 0.9 10.5 15.0 5.4 1.1 37.3<br />
Intermed, remote 0.1 0.2 17.3 4.4 7.9 1.1 27.9 3.1 1.0 11.6 17.6 6.9 1.0 3.8<br />
Rural, near a city 0.4 0.2 0.2 24.7 4.3 7.2 2.7 29.0 3.8 0.8 10.1 11.5 3.5 1.6 11.7<br />
Rural, remote 0.0 1.5 0.5 16.7 3.7 3.9 1.5 34.6 4.8 2.0 8.8 12.2 7.5 2.1 15.4<br />
Source: Based on database of commitments up to end-2006 by NUTS 3 region constructed by SWECO for DG Regio<br />
Technical<br />
assistance<br />
39
<strong>Synthesis</strong> <strong>Report</strong> Ex-post Evaluation of the ERDF 2000-2006<br />
Table 1.14 Division of ERDF in Objective 1 NUTS 3 regions by region type in the EU10 by policy area, 2000-2006<br />
Agriculture<br />
and forestry<br />
Development<br />
of rural<br />
Fisheries Aid to<br />
firms<br />
Tourism RTDI Human<br />
resources<br />
Transport Telecoms Energy Environmental<br />
infra-<br />
Planning<br />
and<br />
Social infrastructure<br />
% total expenditure<br />
Total<br />
CZ Intermed, near a cit 12.7 10.8 9.9 11.1 26.1 2.6 2.4 14.6 8.8 1.1 93.4<br />
Rural, near a city 7.9 5.6 2.8 9.6 35.0 2.8 1.6 31.1 2.6 0.9 6.5<br />
EE Urban 11.3 12.6 2.1 1.3 2.4 3.6 0.4 5.2 53.2 8.0 10.9<br />
Intermed, near a cit 8.3 9.7 25.5 9.3 3.0 1.6 1.0 1.6 30.1 9.8 62.7<br />
Intermed, remote 6.7 10.6 0.8 30.1 1.7 1.6 1.5 2.8 38.7 5.5 16.2<br />
Rural, remote 10.1 8.4 2.1 15.7 2.3 3.1 2.4 4.8 43.6 7.6 10.2<br />
LV Urban 14.0 1.0 13.4 5.2 40.4 7.9 0.9 0.4 6.6 10.3 37.9<br />
Intermed, near a 58.2 2.8 0.6 3.7 6.9 4.1 7.5 8.4 7.7 13.7<br />
Intermed, remote 60.5 3.4 2.7 1.9 9.0 3.1 5.8 6.3 7.4 16.5<br />
Rural, near a city 38.9 6.2 2.7 2.0 25.6 3.5 5.1 12.3 3.7 23.0<br />
Rural, remote 27.4 6.3 0.3 2.4 10.3 5.2 9.3 30.1 8.7 8.9<br />
LT Urban 3.5 7.5 5.5 7.1 34.5 15.0 6.3 0.2 0.0 15.3 5.1 52.4<br />
Intermed, near a cit 2.4 10.7 22.8 6.1 15.3 3.0 15.2 2.2 4.3 17.5 0.5 32.3<br />
Intermed, remote 2.4 12.6 12.3 15.4 0.1 29.9 4.2 0.1 22.9 0.1 2.4<br />
Rural, near a city 2.1 35.8 14.3 10.2 3.5 6.9 4.6 22.6 6.8<br />
Rural, remote 0.7 31.8 18.5 13.3 13.8 21.7 0.1 6.1<br />
HU Urban 20.5 26.8 7.5 0.2 11.0 2.0 2.3 4.4 1.2 24.1 14.6<br />
Intermed, near a 0.1 0.2 18.7 19.0 5.4 5.8 16.6 5.8 1.3 3.8 8.5 14.5 0.3 43.9<br />
Rural, near a city 0.1 0.8 24.3 5.0 6.7 3.4 18.7 10.6 2.4 7.7 8.7 11.1 0.3 18.5<br />
Rural, remote 0.5 1.4 12.6 9.8 1.7 4.8 40.0 5.9 0.2 8.7 7.2 7.3 0.0 23.0<br />
MT Urban 8.9 15.7 6.2 26.9 36.0 6.3 100.0<br />
PL Urban 18.9 1.2 5.3 49.3 6.7 0.0 2.3 4.5 6.1 5.8 27.9<br />
Intermed, near a cit 20.7 9.6 2.3 38.7 6.3 0.1 10.6 4.9 5.5 1.4 35.1<br />
Rural, near a city 21.6 1.4 1.5 50.0 3.6 0.1 10.6 4.4 5.5 1.3 35.2<br />
Rural, remote 18.6 2.1 1.2 39.8 4.5 0.1 11.8 11.5 9.2 1.2 1.8<br />
SI Intermed, near a 7.3 21.7 39.0 2.5 6.2 2.5 2.5 2.5 15.9 30.9<br />
Intermed, remote 3.6 42.4 43.5 0.7 9.9 6.3<br />
Rural, near a city 25.1 39.9 8.9 4.7 5.4 2.1 2.1 2.1 9.6 59.6<br />
Rural, remote 35.1 7.3 0.5 7.0 16.8 7.0 7.0 7.0 12.2 3.1<br />
SK Intermed, near a 5.0 15.4 15.0 1.4 22.6 6.2 0.8 18.3 3.5 5.3 6.4 59.2<br />
Rural, near a city 3.9 6.4 5.5 0.7 52.5 2.6 1.1 16.2 3.3 3.9 3.8 40.8<br />
EU10 Urban 0.5 16.7 2.2 7.8 1.1 41.2 8.1 1.2 2.6 3.5 7.6 7.5 23.1<br />
Intermed, near a cit 0.0 0.6 17.7 12.3 5.7 3.3 28.5 5.1 1.7 10.3 5.9 7.0 2.0 43.0<br />
Intermed, remote 0.3 34.6 9.3 4.7 1.0 15.5 2.1 6.9 4.1 0.9 18.2 2.4 1.4<br />
Rural, near a city 0.0 0.5 21.0 3.8 2.2 0.6 44.0 4.2 0.8 11.0 4.4 5.8 1.7 27.3<br />
Rural, remote 0.3 0.9 16.3 8.6 1.4 3.1 34.3 5.1 2.1 9.8 6.8 10.6 0.7 5.2<br />
0.0<br />
EU25 Urban 0.0 0.3 0.1 19.6 3.4 13.0 2.8 27.6 5.5 1.4 6.2 13.2 4.8 2.2 31.0<br />
Intermed, near a cit 0.1 0.3 0.1 20.8 3.9 6.9 2.5 30.1 3.0 1.0 10.5 14.1 5.6 1.2 37.8<br />
Intermed, remote 0.1 0.2 17.9 4.5 7.7 1.1 27.5 3.0 1.2 11.3 17.1 7.3 1.0 3.6<br />
Rural, near a city 0.3 0.3 0.2 24.0 4.2 6.3 2.3 31.8 3.9 0.8 10.3 10.2 3.9 1.6 13.1<br />
Rural, remote 0.0 1.5 0.5 16.7 3.9 3.8 1.6 34.6 4.8 2.0 8.9 12.0 7.6 2.1 14.5<br />
Source: Based on database of commitments up to end-2006 by NUTS 3 region constructed by SWECO for DG Regio<br />
Technical<br />
assistance<br />
40
Ex-post Evaluation of the ERDF 2000-2006 <strong>Synthesis</strong> <strong>Report</strong><br />
Table 1.15 Division of ERDF in Objective 2 NUTS 3 regions by region type in the EU15 by policy area, 2000-2006<br />
Agriculture<br />
and forestry<br />
Development<br />
of<br />
rural areas<br />
Aid to<br />
firms<br />
Tourism RTDI Human<br />
resources<br />
Transport Telecoms Energy Environmental<br />
infrastructure<br />
% Total expenditure<br />
BE Urban 4.1 29.8 17.0 16.6 5.0 5.1 0.4 0.3 2.2 16.6 2.4 0.5 81.1<br />
Intermediate 10.5 33.0 28.4 5.2 3.5 6.9 0.2 0.1 9.4 2.8 3.2<br />
Rural close to a city 57.0 26.3 7.3 1.9 6.7 0.7 15.7<br />
DK Intermediate 1.0 19.1 39.4 12.5 16.5 2.2 5.0 4.4 18.9<br />
Rural close to a city 2.4 35.2 27.2 20.2 4.1 6.6 0.1 3.8 0.3 45.5<br />
Rural remote 7.9 31.6 29.8 8.7 6.8 5.1 0.6 6.5 3.0 35.5<br />
DE Urban 3.0 0.3 36.1 6.1 15.5 0.8 4.8 1.8 0.3 1.0 19.9 4.0 6.3 58.1<br />
Intermediate 0.0 7.0 52.9 19.9 4.7 0.0 1.5 0.2 0.1 3.8 8.1 0.6 1.1 23.3<br />
Rural close to a city 0.0 10.7 34.4 20.7 2.9 5.9 0.1 0.4 18.2 5.3 1.4 17.7<br />
Rural remote 23.3 11.0 35.0 0.8 17.9 0.4 11.5 0.9<br />
ES Urban 17.5 34.3 2.0 14.5 2.4 0.6 10.9 13.2 4.3 0.3 69.6<br />
Intermediate 32.9 21.8 0.9 11.2 2.2 0.4 20.1 7.0 3.0 0.4 24.0<br />
Rural close to a city 11.9 14.0 0.7 15.9 4.4 1.4 21.4 11.7 18.1 0.6 4.6<br />
Rural remote 16.6 2.9 7.0 3.3 2.7 35.9 9.3 21.4 0.9 1.8<br />
FR Urban 2.1 14.1 8.3 20.1 5.3 14.0 2.9 1.3 2.4 27.1 0.0 2.3 11.6<br />
Intermediate 0.0 3.6 19.7 14.9 7.9 3.1 11.3 2.9 1.0 6.1 25.6 1.3 2.5 60.1<br />
Rural close to a city 0.0 4.2 21.5 21.5 5.6 5.5 9.0 4.2 1.6 4.8 18.7 1.3 2.0 20.4<br />
Rural remote 0.1 2.2 25.2 19.4 4.4 2.6 14.2 5.7 0.8 4.6 13.1 0.3 7.5 7.9<br />
IT Urban 40.8 6.4 5.5 10.7 2.2 1.7 6.1 21.6 2.1 2.9 46.4<br />
Intermediate 33.7 11.9 2.9 12.5 1.9 1.2 8.8 22.2 2.7 2.4 34.4<br />
Rural close to a city 35.1 12.8 0.3 9.4 6.4 2.4 8.1 21.3 1.9 2.3 11.8<br />
Rural remote 40.4 10.6 1.0 4.7 0.6 0.7 8.3 26.9 4.5 2.3 7.4<br />
LU Intermediate 7.7 16.1 12.5 7.9 2.1 21.3 25.1 6.3 1.1 100.0<br />
NL Urban 12.2 16.0 7.8 1.6 10.3 8.2 4.3 1.2 30.4 4.9 3.1 38.2<br />
Intermediate 39.0 21.6 2.8 1.7 8.7 2.0 0.3 22.9 1.1 53.0<br />
Rural close to a city 39.0 21.6 2.8 1.7 8.7 2.0 0.3 22.9 1.1 8.8<br />
AT Urban 30.5 4.3 17.6 1.6 1.2 6.8 34.1 0.3 3.6 3.1<br />
Intermediate 49.6 20.3 23.8 0.4 3.6 0.9 1.0 0.4 16.4<br />
Rural close to a city 48.2 19.7 18.9 2.9 1.9 6.2 1.5 0.3 0.5 53.6<br />
Rural remote 43.7 32.6 6.5 1.1 0.4 5.7 4.5 3.8 1.5 26.9<br />
FI Urban 6.1 4.2 6.0 47.2 23.0 13.4 0.3<br />
Intermediate 53.5 10.2 5.4 11.8 15.5 3.6 8.2<br />
Rural close to a city 46.0 18.3 7.8 10.0 15.7 2.2 58.7<br />
Rural remote 41.0 0.7 20.5 16.2 0.9 9.8 9.0 1.9 32.8<br />
SE Urban 12.8 14.4 8.9 23.5 24.9 3.5 11.9 0.5<br />
Intermediate 1.6 46.3 17.9 22.9 4.3 5.8 0.8 0.4 15.5<br />
Rural close to a city 1.6 40.0 18.4 5.7 5.9 17.8 0.1 0.6 4.7 0.1 5.0 41.2<br />
Rural remote 3.7 42.7 18.0 10.0 5.6 15.9 0.2 0.4 1.7 0.4 1.3 42.7<br />
UK Urban 1.8 63.4 3.5 5.1 3.6 1.0 3.8 0.2 15.3 0.9 1.5 74.4<br />
Intermediate 6.2 68.1 5.5 4.0 3.4 0.6 2.7 7.5 0.5 1.4 23.2<br />
Rural close to a city 4.3 75.3 0.9 3.8 7.1 0.4 6.4 0.0 1.8 2.4<br />
EU15 Rural remote 0.6 1.3 39.8 4.9 14.3 2.6 6.9 2.7 0.6 3.4 18.0 2.4 2.5 44.7<br />
Urban 0.0 3.3 34.1 13.0 7.7 2.1 8.6 2.3 0.7 6.3 18.5 1.4 1.9 34.5<br />
Intermediate 0.0 3.7 33.6 17.7 6.3 3.3 6.9 3.8 1.4 8.0 12.3 1.4 1.8 15.0<br />
Rural close to a city 0.0 2.1 33.8 18.2 4.6 2.6 9.2 4.8 1.4 6.0 11.7 1.7 3.8 5.8<br />
CZ Urban 7.7 10.0 27.2 3.1 29.8 19.5 2.6 100.0<br />
CY Intermediate 22.7 37.3 11.6 2.7 7.5 14.1 4.0 100.0<br />
SK Urban 32.8 8.5 21.5 3.0 3.4 27.4 3.4 100.0<br />
Source: Based on database of commitments up to end-2006 by NUTS 3 region constructed by SWECO for DG Regio<br />
Planning<br />
and<br />
rehabil.<br />
Social<br />
infrastructure<br />
Technical<br />
assistance<br />
Total<br />
expend<br />
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Moreover, in most countries, as for Objective 1 regions, enterprise support accounted for a larger<br />
share of funding in remote rural areas than in those close to a city, which added to the larger<br />
share going to tourism in the former. Accordingly, there was much more direct support for<br />
economic activity in remote rural areas than in less remote ones, again reflecting perhaps the<br />
greater need for an internal source of income and jobs.<br />
1.4 POLICY OBJECTIVES, ECONOMIC THEORY AND POLICY RECOMMENDATIONS<br />
As noted above, the division of funding between policy areas indicates the effort devoted to<br />
tackling problems and/or improving the situation and, accordingly the relative focus of policy in<br />
the different regions. The issue considered here is how far this focus was in line with both the<br />
findings of theories of economic development and the policy recommendations in this regard of<br />
international organisations and, accordingly, with the external advice available on the strategy to<br />
pursue to further economic development.<br />
Six different strands of theory can be identified from the literature which span the different<br />
models of growth developed over the years and which underlie the recommendations of<br />
international organisations. Each of these six strands puts emphasis on the need for policy to<br />
focus on a particular set of drivers of economic development:<br />
• a first strand emphasises the importance of economic integration, liberalisation of trade<br />
and markets and financial stability for sustained regional development, a view endorsed<br />
by international organisations;<br />
• a second strand stresses the role of investment and a favourable business environment as<br />
engines of growth; this is reflected in the wide array of measures recommended by<br />
international organisations in this regard, such as support for SMEs, incentives to attract<br />
FDI, the increased availability of venture capital and the provision of business support<br />
services;<br />
• a third strand focuses on human capital and policies for making fuller use of the potential<br />
of the work force, such as increasing the participation of various social groups as well as<br />
raising skills and competences through investing in education and training;<br />
• a fourth strand lays stress on innovation and technology and, accordingly, on measures<br />
for increasing both public and private investment in R&D as well as for strengthening<br />
links between research centres and business and the capacity to make effective use of<br />
new developments;<br />
• a fifth strand emphasises the economic benefits of agglomeration from technological and<br />
other externalities and a large market for skilled labour as well as for goods and services.<br />
This provides support for both the removal of constraints on the continuing growth of<br />
existing agglomerations and measures which encourage the development of new centres<br />
of economic activity;<br />
• a sixth strand stresses the importance of various aspects of the regional environment for<br />
growth, including social, political and institutional dimensions as well as economic, the<br />
emphasis being on the coherence of the system as a whole rather than on individual<br />
elements. Policy recommendations include measures to encourage cooperation between<br />
firms, a widening of participation in decision-making and the development of effective<br />
administrative authorities.<br />
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As is clear from consideration of the allocation of funding outlined above, elements of all six of<br />
these strands are evident in the regional policies followed across the EU over the period. All<br />
Member States receiving Structural Fund support implemented measures to increase physical<br />
capital endowment, enhance human resources, promote R&D and improve the economic, social<br />
and institutional as well as the business environment. They also endeavoured for the most part to<br />
maintain macroeconomic stability (a point picked up in Chapter 2 below).<br />
Moreover, the simultaneous focus of policy on different drivers of growth is compatible with<br />
theories and recommendations which stress the complementarity of action in different policy<br />
areas, such as investment in human capital and support for R&D or improving accessibility while<br />
at the same time strengthening business conditions. Indeed, such an integrated approach is a key<br />
aspect of the way that cohesion policy is intended to operate. The relative weight attached to<br />
each of the elements, however, varied across the EU as is also evident from the division of<br />
funding. Nevertheless, given the way that the division varied, this seems in broad terms to reflect<br />
the differences in the nature and scale of problems and in policy priorities.<br />
It could also reflect an additional factor which is not a driver of growth as such but which is a key<br />
constraint on the policy pursued. This is the need to ensure that the development path chosen is<br />
a sustainable one, an objective which all the main international organisations subscribe to and<br />
which has become a central part of EU policy. In a regional context, this means that the economic<br />
growth stimulated should be compatible with the protection of the environment and the<br />
preservation of natural assets and scarce resources. This further implies that development policy<br />
cannot be the same all regions but must be in line with the geophysical features, the ecology and<br />
so on, as well as the potential areas of specialisation which might be developed.<br />
Equally, theories of economic growth, as well as the policy recommendations linked to them, tend<br />
to leave out of account the two other objectives of policy, namely, the maintenance and<br />
improvement of social and territorial cohesion. Policy-makers across the EU, however, cannot<br />
afford to ignore the need for balanced development and to try to ensure that all social groups,<br />
wherever they live, share in the gains from such development. The dispersion of funding across a<br />
range of policy areas is consistent with this plurality of objectives.<br />
1.5 THE ABSORPTION OF THE ERDF ALLOCATED<br />
In all Member States, the finance allocated from the ERDF had mostly been spent by the end of<br />
2008, the initial deadline for expenditure for the 2000-2006 programming period. Since this<br />
deadline was extended into 2009 in the latter part of 2008 as a response to the recession<br />
induced by the financial crisis, it is likely that all or virtually all of the budget allocated for the<br />
period will have been spent in all, or nearly all, countries by the new deadline 10 .<br />
At the end of 2008, almost 89% of the resources allocated from the ERDF to Objective 1<br />
programmes in the EU15 had been spent, with the figure falling below 87% only in the UK (Table<br />
1.16). Given that 5% of the funding is held back until after the programmes have been formally<br />
closed, this means that only a very small proportion of the overall amount remained to be spent.<br />
10 Note that the data referred to here relate to the position at the end of 2008. Later data presented earlier on the<br />
time profile of payments (see Section 1.1.11) confirm this point.<br />
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Expenditure in Objective 2 regions was slightly less relative to the funding allocated (87%) and in<br />
Belgium, Spain and the Netherlands, it amounted to only some 80-82% of the allocation, implying<br />
that there might be some problems in spending all the funds available in these countries.<br />
Table 1.16 Expenditure from the ERDF in relation to the budget allocated, 2000-2006<br />
Expenditure as % allocated<br />
Objective 1 Objective 2<br />
AT 89.0 88.4<br />
BE 88.4 82.2<br />
DE 92.0 89.5<br />
DK 88.3<br />
ES 87.5 81.1<br />
FI 94.3 95.2<br />
FR 86.1 90.0<br />
GR 89.6<br />
IE 93.0<br />
IT 87.4 90.6<br />
LU 91.8<br />
NL 95.0 79.8<br />
PT 88.6<br />
SE 88.3 95.4<br />
UK 86.8 83.6<br />
EU15 88.7 87.2<br />
CY 80.4<br />
CZ 85.5 75.7<br />
EE 87.5<br />
HU 97.8<br />
LT 97.2<br />
LV 89.9<br />
MT 83.5<br />
PL 84.4<br />
SI 90.7<br />
SK 81.1 85.4<br />
EU10 87.4 79.2<br />
EU25 88.6 87.1<br />
Note: Expenditure as at end-2008<br />
Source: Calculations based on DG Regio data<br />
In the EU10 countries, expenditure in Objective 1 regions at the end of 2008 was virtually the<br />
same in relation to the amount allocated as in the EU15, with the proportion falling much below<br />
85% only in Malta and Slovakia, signalling perhaps a problem of absorption in the latter in<br />
particular. In Objective 2 regions, however, expenditure at end-2008 was only around 80% of<br />
allocation in Cyprus and only just over 75% in the Czech Republic, again indicating a possible<br />
problem of absorbing all the funding available. Nevertheless, overall, there is only limited sign of<br />
the absorption problems which were widely feared before these countries began to receive ERDF<br />
support.<br />
The division of expenditure between broad policy areas, as at the end of 2008, was much the<br />
same, in most Member States as the division of funding initially allocated. There were only few<br />
areas in which expenditure diverged significantly from what was planned. In particular:<br />
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• in Objective 1 regions in the EU15, the share of expenditure on enterprise support was<br />
less than the budget allocated in most countries, in some (such as Germany) because of<br />
less being taken up by SMEs, in others (Hainaut in Belgium, Spain, Flevoland and<br />
Burgenland in Austria) because of an under-spend on support for RTDI;<br />
• also in Objective 1 regions in the EU15, the share of expenditure on transport exceeded<br />
the amount allocated in all countries, but most especially in Spain, Ireland and Italy. This<br />
was accompanied by an under-spend on Telecommunications, reflecting difficulties of<br />
carrying out the measures planned;<br />
• in Objective 1 regions in the EU10, the share of expenditure on technical assistance,<br />
aimed at developing capacity to both manage and make use of development funding<br />
effectively, was less than the budget allocated in all countries apart from Estonia, most<br />
especially in the Czech Republic and Hungary;<br />
• again in Objective 1 regions in the EU10, the share of expenditure going to enterprise<br />
support, especially SMEs, was also less than the share of funding allocated in most<br />
countries, perhaps reflecting difficulties of finding suitable firms to take this up;<br />
• in Objective 2 regions in the EU15, the share of expenditure on support for RTDI fell short<br />
of that allocated in 9 of the 13 countries receiving funding, most especially in Denmark,<br />
Germany, Italy, Austria and, above all, in Spain;<br />
• again in Objective 2 regions in the EU15, the share of expenditure on territorial policy<br />
also exceeded the share allocated in 9 of the 13 countries;<br />
• in Objective 2 regions in the EU10, the shifts in the composition of expenditure relative to<br />
the shares allocated were more pronounced, especially in Praha and Bratislava, in the<br />
former from Territorial policy to Transport, in the latter from Enterprise support to<br />
Territorial policy. In all three regions, the share of spending on Technical assistance was<br />
less than budgeted, in Praha and Cyprus, markedly so.<br />
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2 Chapter 2 – Regional developments, 2000-2006<br />
2.1 INTRODUCTION<br />
The main concern in this chapter is to set out the economic developments which occurred at<br />
regional level across the EU25 over the 2000-2006 programming period and, in particular, to<br />
compare developments in the regions receiving funding under cohesion policy with those in nonassisted<br />
regions. The focus is mainly on the years from 2000 to 2006. Because of the special<br />
arrangements introduced in response to the financial crisis, however, the expenditure cofinanced<br />
by the Structural Funds extended well beyond 2006 into 2009, as indicated in the<br />
previous chapter. Accordingly, it potentially affected developments after the period which is the<br />
focus here and these ought ideally to be included in the analysis as well. This is difficult to do in<br />
practice, since at the time the evaluation was carried out, the regional accounts data covering all<br />
the EU25 countries on a comparable basis were available only up to 2006. Nevertheless, some<br />
account is taken of developments at national level after 2006 and of their potential impact on<br />
those at regional level.<br />
The first part of the chapter considers the macroeconomic context in which the development of<br />
the regions assisted, and the policy for assisting them, took place, which inevitably affected the<br />
growth they achieved or, indeed, were capable of achieving. It also considers the macroeconomic<br />
policies that were followed, which are likely to have influenced the finance available for regional<br />
policies and the priority attached to them. In addition, it examines the wider economic context<br />
and the effect on this of the continuing process of globalisation and EU enlargement during the<br />
period.<br />
The second part of the chapter reviews the growth of regional economies and the associated<br />
developments in employment and productivity which occurred over the programming period,<br />
distinguishing regions receiving funding under Objective 1 and under Objective 2 from others. It<br />
then goes on to consider the extent to which differential growth rates in GDP reduced disparities<br />
between regions in these terms as well as in terms of income per head which is, in principle, a<br />
more relevant indicator of social cohesion A distinction is made throughout between regions in<br />
the EU15 and those in the EU10 countries which only began to receive ERDF support (as well as<br />
support from the other Structural Funds and the Cohesion Fund) after entry into the EU in May<br />
2004.<br />
2.2 MACROECONOMIC DEVELOPMENTS OVER THE PERIOD 2000-2006<br />
The development of regions is intrinsically bound up with the development of the national<br />
economies of which they form part. The rate of growth they can achieve is greatly affected by the<br />
growth rate of the regions surrounding them as well as by the growth occurring in both the<br />
country in which they are located and other Member States, given the highly integrated nature of<br />
the EU economy. There are a number of reasons for this. Most importantly, a significant share of<br />
the goods and services produced in a region will go to markets outside, either in the country or in<br />
other part of the EU. In addition, the willingness of businesses to invest in the region, as well as<br />
the funds available to do so, is likely to be affected by conditions in the wider economy and not<br />
just in the region itself.<br />
The same applies to the willingness, and ability, of national governments to devote resources to<br />
regional development which will equally be affected by the state of public finances – itself<br />
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influenced by the rate of growth of the national economy – and by the macroeconomic policy<br />
pursued.<br />
2.2.1 Growth of GDP in the EU15 Member States<br />
The underlying economic conditions across the EU fluctuated markedly over the years 2000-2006<br />
and beyond. The formulation of programmes at the beginning of the period coincided with a<br />
relatively high rate of economic growth. In 2000, growth of GDP in the EU15 was particularly high,<br />
at close to 4%, following two years when it was also above the long-term trend. Although there<br />
were differences between countries, in all of them, growth averaged more than 2% a year in the<br />
first two years of the period (Table 2.1).<br />
Table 2.1 Growth in GDP in EU Member States, 1995-2008<br />
Annual average % change<br />
1995-99 1999-06 1999-01 2001-03 2003-06 2006-07 2007-08<br />
EU25 2.7 2.3 2.9 1.3 2.5 2.8 0.8<br />
EU15 2.6 2.2 2.9 1.2 2.4 2.6 0.6<br />
DE 1.7 1.3 2.2 -0.1 1.7 2.5 1.3<br />
PT 4.1 1.4 3.0 0.0 1.3 1.9 0.0<br />
IT 1.5 1.4 2.8 0.2 1.4 1.6 -1.0<br />
DK 2.7 1.9 2.1 0.4 2.7 1.6 -1.2<br />
NL 4.1 2.0 2.9 0.2 2.6 3.6 2.0<br />
FR 2.5 2.1 2.9 1.1 2.2 2.3 0.4<br />
BE 2.4 2.1 2.3 1.2 2.6 2.8 1.1<br />
AT 2.8 2.1 2.1 1.2 2.8 3.5 2.0<br />
UK 3.3 2.7 3.2 2.5 2.7 2.6 0.7<br />
SE 3.1 3.1 2.7 2.2 3.9 2.6 -0.2<br />
FI 4.8 3.2 3.9 1.7 3.8 4.2 1.0<br />
ES 3.9 3.6 4.3 2.9 3.6 3.7 1.2<br />
GR 3.2 4.3 4.3 4.5 4.1 4.0 2.9<br />
LU 5.6 4.7 5.4 2.8 5.4 5.2 -0.9<br />
IE 9.9 6.1 7.5 5.5 5.6 6.0 -2.3<br />
MT : 1.5 -1.6 1.1 2.7 3.7 2.1<br />
CY 3.5 3.6 4.5 2.0 4.1 4.4 3.7<br />
PL 5.7 3.7 2.7 2.6 5.1 6.6 5.0<br />
SI 4.4 4.1 3.6 3.4 4.9 6.8 3.5<br />
CZ 1.0 4.2 3.1 2.7 5.9 6.1 3.0<br />
HU 3.7 4.4 4.7 4.3 4.2 1.2 0.6<br />
SK 3.9 4.9 2.4 4.7 6.7 10.4 6.4<br />
LT 4.8 7.3 5.5 8.5 7.7 8.9 3.0<br />
EE 5.9 8.5 8.7 7.7 8.9 7.2 -3.6<br />
LV 5.0 8.6 7.5 6.8 10.5 10.0 -4.6<br />
Note: The EU15 and EU10 countries are ordered separately in terms of GDP growth over the period<br />
1999-2006<br />
MT: Data relate to 2000-06 and 2000-01<br />
Source: Eurostat, National accounts<br />
From mid- 2001 on, however, growth in the majority of EU15 countries slowed appreciably,<br />
falling to an average of only just over 1% a year in 2002 and 2003, so depressing government<br />
revenue across the EU and, potentially, the funds available for cohesion policy. This was<br />
particularly the case in Germany, where GDP fell over these two years, even if marginally, and<br />
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Portugal, where it remained unchanged. It was also the case in Italy and the Netherlands, where<br />
GDP increased barely at all.<br />
On the other hand, in 6 of the EU15 countries, growth hardly slowed down at all over these two<br />
years and in four countries, it averaged around 3% a year or more. These four included Greece<br />
and Spain, two of the Cohesion countries.<br />
In the subsequent three years, 2003-2006, GDP growth recovered everywhere. The recovery,<br />
however, was less in three countries in which cohesion policy was particularly important,<br />
Germany, Italy and Portugal, than elsewhere. This was especially the case in Portugal, where<br />
growth of GDP averaged only just over 1% a year over the period 2003-2006, considerably less<br />
than over the years before 2001. In Germany and Italy, growth was only slightly higher and less<br />
than experienced in the 1990s during the previous programming period.<br />
In the other EU15 Member States, growth was close to the long-term trend. The main exceptions<br />
were the Netherlands and Ireland, where it was slightly lower than in the earlier programming<br />
period but still relatively high. By contrast, in both Greece and Sweden growth was higher than in<br />
the earlier period, at around 4% a year.<br />
While growth in 2007 was for the most part much the same or higher than over the preceding<br />
three years, there was a marked slowdown in 2008 in most countries as the financial crisis began<br />
to take effect. The economic climate for the conduct of regional development policy, therefore,<br />
became unfavourable. By then, however, the funding made available for the 2000-2006<br />
programming period had already been committed, so it is likely to have had a minimal effect on<br />
policy.<br />
In Italy and Portugal, together to a lesser extent in Germany, the national economic context was<br />
unfavourable throughout much of the period. On the other hand, in Greece and Spain, the other<br />
major recipients of Structural Fund support, the reverse was the case and regional development<br />
policy was implemented in the context of relatively high and sustained rates of economic growth.<br />
2.2.2 Growth of GDP in the EU10 Member States<br />
In the EU10 countries, with the exception of Malta, growth was universally higher than in most<br />
EU15 countries throughout most of the period, during both the pre-accession years and the years<br />
after entry.<br />
In most EU10 countries, entry into the EU was accompanied by an increase in the rate of growth.<br />
In all except Malta (where growth was still higher than before), growth of GDP averaged over 4% a<br />
year in the three years 2004-2006 and in all apart from Cyprus, Hungary and Slovenia (where it<br />
was only marginally below), 5% a year or more. The growth rate was particularly high in Slovakia<br />
and the three Baltic States.<br />
In 2007, growth slowed down only in Hungary, where macroeconomic problems predate the<br />
financial crisis. Growth was also reasonably high in most countries in 2008. In Estonia and Latvia,<br />
however, the reversal of fortunes was dramatic. In both, GDP fell sharply after rising markedly for<br />
many years before then. In Hungary, growth continued to slow down, while in Lithuania, growth<br />
was considerably less than in preceding years.<br />
Only in these four countries, therefore – though in Lithuania only to a minor extent – and then<br />
only at the very end of period, is regional development likely to have been adversely affected by<br />
unfavourable economic conditions at the national level.<br />
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2.2.3 Budget policy over the programming period<br />
Since there are no data readily available on the amount of national funding going to regional<br />
development across the EU, the only way of getting an indication of its scale and how it changed<br />
over the period is by examining the stance of budgetary policy and the size of government<br />
investment 11 .<br />
The national funds made available to support regional development in Member States will tend to<br />
be affected by budgetary policy. The more restrictive the policy, on average the less the funding<br />
is likely to be and vice versa. Figures for the budget balance, if related to the growth of GDP,<br />
suggest that budgetary policy was relatively expansionary during the first three years of the<br />
period (i.e. public expenditure increased relative to revenue from taxes) and then became<br />
relatively restrictive from 2003 or so onwards (see Box).<br />
Box – Budgetary policy and the budget balance<br />
The restrictive or expansionary nature of policy cannot be judged from movements in the budget<br />
balance alone. This is because both government revenue and expenditure, and accordingly the<br />
balance between them, are affected not only by decisions to increase or reduce tax rates and public<br />
spending programmes but by the rate of economic growth. The higher the rate of growth, the<br />
larger the increase in revenue yielded by a given set of tax rates and the lower the increase in<br />
spending on a given set of expenditure programmes (largely because of the social protection<br />
element) and correspondingly, the more the budget deficit will tend to shrink or the surplus<br />
increase. Conversely, the lower the rate of growth, the more the deficit will tend to increase without<br />
any changes in tax rates or expenditure programmes.<br />
This is less the case in Belgium, where concern to reduce the high level of accumulated<br />
government debt led to the budget being restrictive throughout most of the period, the only<br />
exception being in 2005. The tightening of the budget was particularly pronounced in Germany,<br />
the Netherlands, Sweden and Denmark from 2003 on.<br />
On the other hand, in the UK, budgetary policy was significantly expansionary over the first four<br />
years of the period and then remained broadly unchanged from then on. In Greece, policy was<br />
also expansionary during the period up until 2004 when the Olympic Games took place and then,<br />
according to the official figures at least, was tightened in 2005 and 2006 before being relaxed<br />
again.<br />
In Italy and Portugal, alone among the EU15 countries, the budget deficit increased between 2003<br />
and 2006, though it was then reduced in 2007. The rise, however, was small and given the low<br />
rate of economic growth in both countries, it suggests some budget tightening over the period.<br />
Moreover, in Portugal, it followed two years of zero growth when the budget deficit was kept<br />
unchanged implying a significant tightening of policy.<br />
In the EU10 countries, the budget deficit was in most cases smaller – or in Estonia, the surplus<br />
larger – in 2006 than in 2003 before the countries entered the Union. The exceptions are Hungary<br />
11 A recent study carried out for DG Regional Policy, Distribution of Competences in relation to Regional<br />
Development Policies in the Member States of the <strong>European</strong> Union (Ismeri <strong>Europa</strong> and Applica sprl) attempted to<br />
compile data for national expenditure on regional development for a selected number of Member States but was<br />
unable to do so for most of the countries. Moreover for the few countries for which it was possible, the data were<br />
not entirely satisfactory nor directly comparable with the data on the deployment of the Structural Funds. This has<br />
the further implication that it is not possible on the basis of published data to verify that the additionality<br />
requirement has been respected.<br />
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and Slovakia, especially the former, where the deficit increased between these two years,<br />
signifying an expansionary fiscal policy. In Hungary, this led to financial problems and a<br />
significant tightening of policy in 2007 and 2008.<br />
Policy was also expansionary in the three Baltic States, where the high rate of growth would<br />
otherwise have led to a much more substantial reduction in the deficit or increase in the surplus.<br />
In the Czech Republic, Poland and Slovenia, fiscal policy seems to have been largely neutral over<br />
the period. In both Cyprus and Malta, however, there is evidence of some tightening in budgetary<br />
policy after entry into the EU.<br />
2.2.4 Government fixed investment over the programming period<br />
The budgetary policy pursued over the period is reflected to some extent in the funding made<br />
available for public investment 12 , which tends to be the category of government expenditure<br />
which can most easily – or less painfully – be postponed. There is still, however, a political choice<br />
over the items of expenditure to be reduced if government spending is cut back when the budget<br />
is tightened, so there is no automatic link between fiscal restraint and reductions in investment.<br />
Nevertheless, in most of the countries in which budgetary policy was relatively restrictive over the<br />
period, especially the latter part, public investment was comparatively low in relation to GDP. This<br />
was the case in Germany, Austria, Belgium, Denmark and Italy, while in the Netherlands, public<br />
investment was much higher but was reduced after 2003 (Table 2.2). It was not the case in<br />
Sweden, however, where despite the tightening of fiscal policy, public investment remained<br />
relatively high and was increased slightly as a share of GDP. This was also the case in France,<br />
where policy also seems to have been tightened over the period, if by less.<br />
In Portugal, the tightening of fiscal policy was reflected in a marked cutback in public investment<br />
which was reduced from almost 4% of GDP in 2001 to only just over 2% of GDP in 2008.<br />
In Greece, public investment was relatively high in the early years of the period up until the<br />
Olympic Games and then was reduced significantly in 2005.<br />
In Spain and Ireland, public investment remained high throughout the period, while in the UK,<br />
there was some increase, reflecting the expansionary nature of policy, even if the level of<br />
investment was relatively low 13 .<br />
12 For regional development, government investment is the most relevant category of government expenditure.<br />
Ideally, as argued above, the focus should be directly on national government expenditure on regional development,<br />
but this cannot be identified in the public sector accounts of any country. Nor can the necessary data be extracted<br />
easily from national published sources. Indeed, in most cases, the data cannot be extracted at all, so there are no<br />
statistics on development expenditure at national level which can be compared with the expenditure financed by the<br />
Structural Funds. A further problem is that the data for government investment are defined in the ESA 95 system of<br />
national accounts to be net of sales less purchases of assets. This means that they do not measure ‘new’ fixed<br />
investment as such if there are asset transactions (if the government, for example, sells a building or a piece of land<br />
or shares in a public company), Since such transactions have tended to become more important over time, with the<br />
trend towards privatisation, the figures for government investment have become less and less reliable as a measure<br />
of new investment. It is assumed here that asset transactions are small and do not have a significant distorting<br />
effect on the investment, figures, but this may well not be the case.<br />
13 It should be noted that in the UK especially, the figures for government investment are distorted by the sales of<br />
assets, which are counted as negative expenditure and so as an offset to expenditure on fixed investment, and<br />
which tend to be more important than in other countries, The decline in investment in 2005 seems to be entirely a<br />
consequence of an increase in such sales.<br />
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In the EU10 countries, public investment was generally higher than in the EU15 Member States<br />
from the time of their accession to the Union. By 2006, public investment was around 4% of GDP<br />
or above in all of the countries, except Slovenia, where it was only slightly lower, Cyprus and<br />
Slovakia. It was particularly high in the three Baltic States, where it increased to over 5% of GDP in<br />
2007.<br />
At the same time, public investment was cut back markedly in Hungary in 2007 and 2008 as part<br />
of the measures to reduce the budget deficit.<br />
With the exception of Hungary, therefore, and to a much lesser extent, Slovakia, the provision of<br />
EU funding on a significant scale was reflected in an increase in public investment.<br />
It should be reiterated, that the above figures for government investment do not necessarily<br />
reflect investment in regional development but that, in the absence of the relevant data, they<br />
provide an indication of the scale of this and how it might have changed over the period.<br />
Table 2.2 General government fixed capital formation in relation to GDP, 2000-2008<br />
% GDP<br />
2000 2001 2002 2003 2004 2005 2006 2007 2008<br />
EU25 2.3 2.4 2.3 2.4 2.4 2.2 2.5 2.5 2.6<br />
EU15 2.2 2.3 2.2 2.3 2.3 2.2 2.4 2.4 2.5<br />
LU 3.8 4.3 4.9 4.6 4.2 4.5 3.6 3.4 3.9<br />
IE 3.5 4.3 4.3 3.7 3.5 3.5 3.7 4.4 5.4<br />
ES 3.2 3.3 3.5 3.6 3.4 3.6 3.7 3.8 3.8<br />
NL 3.1 3.3 3.5 3.6 3.2 3.3 3.3 3.3 3.3<br />
GR 3.6 3.6 3.4 3.6 3.7 2.9 3.0 3.0 2.9<br />
FR 3.1 3.0 2.9 3.1 3.1 3.3 3.2 3.3 3.2<br />
SE 2.8 2.9 3.1 2.9 2.9 3.0 3.1 3.1 3.3<br />
PT 3.8 3.9 3.5 3.1 3.1 2.9 2.4 2.3 2.1<br />
FI 2.5 2.6 2.7 2.9 2.9 2.6 2.4 2.5 2.5<br />
IT 2.3 2.4 1.7 2.5 2.4 2.4 2.3 2.3 2.2<br />
DK 1.7 1.9 1.8 1.6 1.9 1.8 1.9 1.7 1.8<br />
BE 2.0 1.7 1.7 1.7 1.6 1.8 1.6 1.6 1.6<br />
DE 1.8 1.7 1.7 1.6 1.4 1.4 1.4 1.5 1.5<br />
UK 1.2 1.4 1.5 1.5 1.7 0.7 1.8 1.8 2.3<br />
AT 1.5 1.2 1.3 1.2 1.1 1.1 1.1 1.0 1.0<br />
CZ 3.6 3.5 3.9 4.5 4.8 4.9 5.0 4.7 4.8<br />
EE 3.8 4.1 5.3 4.4 3.8 4.0 5.1 5.4 5.6<br />
CY 2.9 2.9 3.0 3.4 4.0 3.1 3.0 3.0 3.0<br />
LV 1.3 1.1 1.3 2.4 3.1 3.1 4.6 5.7 4.9<br />
LT 2.4 2.2 2.9 3.0 3.4 3.4 4.1 5.2 4.9<br />
HU 3.2 3.7 4.9 3.5 3.5 4.0 4.4 3.6 2.8<br />
MT 3.9 3.4 4.1 4.7 3.9 4.9 4.1 4.0 2.7<br />
PL 2.4 3.4 3.4 3.3 3.4 3.4 3.9 4.1 4.6<br />
SI 3.2 3.2 3.0 3.2 3.5 3.2 3.7 3.7 4.2<br />
SK 2.8 3.1 3.3 2.6 2.4 2.1 2.2 1.9 1.8<br />
Note: Countries are ordered according to the average over the period<br />
Source: Eurostat, General Government accounts and national accounts<br />
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2.2.5 Globalisation and enlargement<br />
As noted in the previous chapter, regional development over the period was affected not only by<br />
the rate of growth of national economies and by budgetary policy, but also by the continuing<br />
process of globalisation as well as by the enlargement of the EU in 2004. In economic terms, the<br />
two had a similar effect on regions in the EU15 by increasing the competitive pressure on local<br />
businesses in both the internal market and markets in other parts of the world.<br />
The pressure was especially acute on manufacturers in traditional industries, such as textiles or<br />
clothing, where the process of globalisation meant that specialisation in labour-intensive<br />
activities was no longer a viable option. These activities in a wide range of sectors, and not just<br />
traditional industries, could potentially be shifted to wherever wage costs were lowest, so that<br />
regions reliant on them had to seek new areas of specialisation.<br />
The transition of the Central and Eastern countries from the early 1990s on expanded the<br />
possibilities open to companies seeking low cost locations in which to produce. They were,<br />
moreover, closer to home than developing countries in South-East Asia or Latin America and,<br />
accordingly, posed fewer logistical problems. Their accession to the EU added to their<br />
attractiveness as business locations.<br />
In consequence, there was a significant relocation of labour-intensive parts of the production<br />
process from EU15 regions to those in the EU10, as well as in Bulgaria and Romania, over the<br />
programming period. This was not confined to basic industries, such as textiles, but extended to<br />
more advanced sectors, such as motor vehicle manufacture and electrical and electronic<br />
engineering, where assembly plants, in particular, have been moved to regions where labour<br />
costs were lower.<br />
As a result, while the regions specialising in labour-intensive and more basic activities, especially<br />
in manufacturing, have in most cases been more affected by globalisation and EU enlargement<br />
than others, the effects have been felt by other regions as well. The regions which have been hit<br />
hardest, therefore, include those with car plants, electronic component factories, computer<br />
assembly plants and similar medium-to-high tech manufacturing as well as those specialising in<br />
textiles and clothing, steel production, wood products and other low-to-medium tech industries.<br />
These regions include many which were already experiencing a decline in traditional industries,<br />
such as the Objective 1 regions in ‘Northern’ Member States, though also regions in some parts<br />
of the South, such as Norte, the textile-producing region, in Portugal. They include as well many<br />
of the regions receiving funding under Objective 2 in both the South and North of the Union.<br />
In addition, however, they include regions which have to some extent lost investment because of<br />
the globalisation process and EU enlargement. These are Objective 1 regions, in particular, in the<br />
South of Italy or the Eastern part of Germany, which represented alternative potential locations for<br />
labour-intensive activities but can no longer compete in terms of wage costs with regions in the<br />
less developed parts of the EU10 or in developing countries outside of the EU. In some sense,<br />
therefore, these regions have been deprived of a possible development path as a result of these<br />
events.<br />
The differential effect of globalisation and enlargement on regional economies needs to be taken<br />
into account when interpreting the economic performance of different regions over the<br />
programming period. To the extent that both Objective 1 and Objective 2 regions are likely to<br />
have been more affected than others means that, other things being equal, they would be<br />
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expected, on average, to have experienced lower growth of output than other, non-assisted,<br />
regions.<br />
2.3 THE GROWTH PERFORMANCE OF ASSISTED AND NON-ASSISTED REGIONS, 2000-2006<br />
Regions in the EU15 receiving Objective 1 funding over the 2000-2006 programming period had<br />
on average a higher rate of economic growth during these years than regions which received no<br />
EU funding at all under cohesion policy. This was true not only across the EU15 as a whole but<br />
equally in all Member States with the sole exception of Belgium, where the one Objective 1 region<br />
grew by less over the period than non-assisted regions in the country (Table 2.3).<br />
Objective 1 Objective 2 > 45% Objective 2 20-45% Other regions<br />
Table 2.3 Growth of GDP per head in Objective 1, Objective 2 and other NUTS 2 regions, 1995-<br />
2000 and 2000-2006<br />
1995-<br />
2000<br />
2000-<br />
2006<br />
1995-<br />
2000<br />
2000-<br />
2006<br />
1995-<br />
2000<br />
2000-<br />
2006<br />
1995-<br />
2000<br />
2000-<br />
2006<br />
BE 1.9 1.2 1.8 1.0 2.6 1.4 2.8 1.7<br />
DK 2.5 1.6<br />
DE 2.3 1.7 2.3 1.4 1.7 1.3 2.2 1.3<br />
IE 9.1 4.3<br />
GR 3.5 3.8<br />
ES 3.6 2.4 4.1 2.1 4.3 1.4<br />
FR 2.7 1.5 2.1 1.2 2.3 1.2 2.6 0.8<br />
IT 1.9 0.9 1.4 0.5 1.6 0.8 1.6 0.8<br />
LU 4.7 3.3<br />
NL 2.7 2.0 2.6 2.4 3.7 1.5<br />
AT 3.3 2.1 2.8 2.1 3.2 2.1 2.6 1.2<br />
PT 3.5 1.0<br />
FI 3.6 3.4 4.7 2.9 5.2 2.2<br />
SE 1.7 3.3 2.4 2.8 3.7 2.8 3.5 2.5<br />
UK 2.9 2.3 2.5 1.7 3.2 1.9 3.8 1.8<br />
EU15 3.1 2.0 2.6 1.6 2.5 1.3 2.7 1.4<br />
CZ 0.8 4.1 3.9 4.6<br />
EE 7.1 8.9<br />
CY 2.4 1.9<br />
LV 6.4 9.3<br />
LT 5.6 7.8<br />
HU 4.6 4.2<br />
MT 0.9<br />
PL 5.2 3.4<br />
SI 4.3 3.8<br />
SK 3.7 4.2 3.6 4.9<br />
EU10 4.5 4.2 3.4 3.9<br />
EU25 3.7 3.0 2.6 1.6 2.5 1.4 2.7 1.4<br />
Note: Regions are defined at the NUTS 2 level<br />
Objective 2 >45% are regions in which over 45% of the population lived in areas receiving funding<br />
under Objective 2<br />
Objective 2 20-45% are regions in which 20-45% of the population lived in areas receiving funding<br />
under Objective 2<br />
GDP growth is measured at constant prices and takes account of the broad sectoral division of valueadded<br />
in the different regions<br />
Source: Eurostat, Regional Accounts, Cambridge Econometrics for price deflators where Eurostat data<br />
are not available and own calculations<br />
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Between 2000 and 2006, therefore, growth of GDP per head in the Objective 1 regions in the<br />
EU15 taken together averaged some 2% a year as against growth of 1.4% a year in regions not<br />
receiving any assistance from the Structural Funds (or, more precisely, not receiving a significant<br />
amount of assistance, since the comparatively few regions with small areas which were eligible<br />
for Objective 2 funding are included in this category).<br />
In all Member States, apart from Belgium, the growth rate achieved in Objective 1 regions was<br />
higher than that in non-assisted ones (defined as indicated above). This was particularly the case<br />
in Austria, Sweden and France, where the difference in growth rates was close to 1%, and it was<br />
even the case in Italy, if only marginally, despite the relatively low rate of growth in Objective 1<br />
regions.<br />
Only in Belgium, Italy and Portugal was the growth performance of Objective 1 regions over this<br />
period inferior to that in non-assisted regions at EU15 level. In these terms, therefore, there was<br />
some convergence of GDP per head in the weakest regions towards that in the strongest. This<br />
was especially so for the Greek regions, though in this case, growth was heavily concentrated<br />
around Athens and in some regions, there was little growth at all.<br />
It was equally the case, again with the exception of Belgium, that growth in Objective 1 regions<br />
was higher than that in those receiving smaller, though still significant, amounts of funding under<br />
Objective 2.<br />
In addition, in the majority of countries, regions receiving more support under Objective 2<br />
experienced a higher rate of GDP per head than those receiving a smaller amount of funding or<br />
no funding at all.<br />
The growth performance of assisted regions relative to others over the period was in most cases<br />
significantly better than in the preceding programming period. Since the great majority of the<br />
regions receiving Objective 1 or Objective 2 funding between 2000 and 2006 also received<br />
funding in the period before, this might imply that it takes time for structural support to be<br />
reflected in increased economic growth.<br />
In Objective 1 regions on average, therefore, growth of GDP per head over the years 1995-2000<br />
was slightly higher than in other regions, though less so than in the later years. This, however,<br />
masks the fact that, in most of the countries, growth in Objective 1 regions was either lower than<br />
in other regions or much the same. The only two countries where this was not the case were<br />
Austria and Italy.<br />
In Objective 2 regions, the growth rate achieved over the period 1995-2000 was either similar to<br />
that in non-assisted regions or lower.<br />
In the EU10 countries, growth of GDP per head in all the Objective 1 regions, except Malta,<br />
outstripped the EU average over the period 2000-2006, so that in all cases there was some<br />
convergence towards the level in the rest of the Union. Growth was especially high, as noted<br />
above, in the three Baltic States.<br />
At the same time, growth in the capital city regions in both the Czech Republic and Slovakia<br />
exceeded that in the rest of the respective countries, so that internal disparities in GDP per head<br />
widened over the period. Internal disparities also widened in Hungary and Poland, where in each<br />
case, there was equally a relative concentration of growth in the capital city region, and in Poland<br />
in the other more developed regions with relatively high levels of GDP per head (changes in<br />
regional disparities within countries are examined below).<br />
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These findings are modified to some extent if account is taken of the effect of commuting. As<br />
indicated below, the increased scale of commuting from Objective 1 regions to others over the<br />
period means, first, that the GDP per head figures exaggerate the widening of regional disparities<br />
in the EU10 countries. Secondly, it means that the economic growth of Objective 1 regions is<br />
slightly understated.<br />
2.3.1 Narrowing disparities in employment rates<br />
The relatively high rate of growth in Objective 1 regions in the EU15 indicated above led to more<br />
of those living in the regions concerned being able to find work, which as, noted above, was a<br />
major aim of cohesion policy at the start of the programming period. The significant gap in the<br />
proportion of working-age population in employment, which existed in most countries between<br />
these regions and others, therefore, narrowed appreciably over the programming period. The<br />
average employment rate in Objective regions in the EU15 rose from 55.5% of working-age<br />
population in 2000 to 60.1% in 2006, whereas in non-assisted regions, it rose by much less –<br />
from 69.1% to 70.3% (Table 2.4).<br />
Table 2.4 Employment rates in Objective 1, Objective 2 and other regions, 2000-2006<br />
% population 15-64<br />
Objective 1 Obj 2 >45% Obj 2 20-45%<br />
Other<br />
2000 2006 2000 2006 2000 2006 2000 2006<br />
BE 53.6 52.2 54.9 56.8 59.2 60.7 62.9 63.3<br />
DK . . . . . . 76.3 77.4<br />
DE 61.7 63.9 62.0 64.3 64.4 66.9 67.4 69.5<br />
IE 65.2 68.6 . . . . . .<br />
GR 56.5 61.0 . . . . . .<br />
ES 52.5 61.2 62.3 69.5 60.3 70.2 . .<br />
FR na na 60.0 62.4 61.1 62.8 65.8 64.8<br />
IT 41.5 45.9 55.0 59.7 57.6 62.9 62.6 66.9<br />
LU . . . . 62.7 63.5 . .<br />
NL 76.9 75.6 69.7 71.9 . . 73.2 74.6<br />
AT 68.2 69.5 65.8 68.9 69.6 72.0 69.0 69.2<br />
PT 68.4 67.9 . . . . . .<br />
FI 60.4 63.7 65.9 68.3 71.2 72.6 . .<br />
SE 68.9 72.4 70.2 70.8 73.4 76.1 73.1 73.2<br />
UK 63.7 66.5 67.4 69.5 70.2 70.1 75.5 74.3<br />
EU15 55.5 60.1 62.7 66.0 63.1 66.1 69.1 70.3<br />
CZ 64.1 64.4 . . 71.7 71.6 . .<br />
EE 60.4 68.1 . . . . . .<br />
CY . . . . 65.4 69.6 . .<br />
LV 57.4 66.3 . . . . . .<br />
LT 59.6 63.6 . . . . . .<br />
HU 56.3 57.3 . . . . . .<br />
MT 54.5 54.8 . . . . . .<br />
PL 55.0 54.3 . . . . . .<br />
SI 62.8 66.6 . . . . . .<br />
SK 55.0 58.1 . . 70.0 69.8 . .<br />
EU10 57.0 57.7 . . 69.6 70.6 . .<br />
EU25 56.2 59.1 62.7 66.0 63.2 66.2 69.1 70.3<br />
Source: Eurostat, <strong>European</strong> Labour Force Survey and own calculations<br />
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While there was an increase in employment rates in Objective 1 regions in most countries over the<br />
period, the rise was not universal. In Hainaut in Belgium, Flevoland in the Netherlands and the<br />
Objective 1 regions in Portugal, there was a reduction in employment rates rather than an<br />
increase. In Hainaut and in the Portuguese regions, this reflects increasing difficulty of finding<br />
work in a context of relatively slow economic growth. (In Flevoland, the employment rate was<br />
already well above the EU average in 2000 and, despite the small fall, it remained so in 2006.)<br />
By contrast, in Spain, the average employment rate in Objective 1 regions increased by almost 9<br />
percentage points, narrowing the gap markedly with regions elsewhere in the EU. The increase,<br />
however, was much the same as in other Spanish regions, so the gap with these regions remained<br />
as wide as before.<br />
In Sweden, the gap in the employment rate between Objective 1 regions – the sparsely populated<br />
areas in the North and Centre of the country – and non-assisted ones narrowed significantly<br />
between 2000 and 2006, whereas before then it had been widening.<br />
In regions receiving significant amounts of Objective 2 funding, employment rates rose either by<br />
more than in non-assisted regions or by much the same extent in all EU15 countries.<br />
In the EU10 Objective 1 regions, there was relatively little or no increase in employment rates in<br />
the Czech Republic, Hungary and Malta, while in Poland, the rate fell slightly. In all three Baltic<br />
States, however, where employment growth was accompanied by a significant reduction in<br />
working-age population, employment rates increased markedly.<br />
There was also an increase in employment rates in Slovenia and Slovakia, in the latter, in contrast<br />
to the capital city region (Bratislava), where the rate remained broadly unchanged. This was also<br />
the case in Praha, just as in the rest of the Czech Republic.<br />
2.3.2 Narrowing of disparities in GDP per head across the EU<br />
The higher rate of economic growth in the lagging regions across the EU, described above, was<br />
associated with a narrowing of disparities in GDP per head across regions, which is one of the<br />
main goals of cohesion policy. While it is not possible to attribute this directly to the measures<br />
carried out with the aid of the Structural Funds, it is, nevertheless, consistent with these having<br />
the intended effect. This is especially the case in view of the damaging consequences that<br />
globalisation is likely to have had on economic growth in many of the lagging regions as<br />
compared with others. Other things being equal, therefore, the expectation is that these regions<br />
together with others assisted under cohesion policy would have, on average, experienced slower<br />
growth than non-assisted regions.<br />
Between 2000 and 2006, the extent of regional dispersion in GDP per head across the EU25<br />
considered as a whole declined significantly, as measured by a commonly-used indicator of<br />
dispersion (the mean, population-weighted, logarithmic deviation index – see Box). This followed<br />
a similar, though slightly smaller, decline over the preceding 5 years (Table 2.5).<br />
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Box The mean logarithmic deviation index<br />
The mean logarithmic deviation index is defined as:<br />
1<br />
I =<br />
n<br />
∑<br />
i<br />
ln<br />
⎛ μ<br />
⎟ ⎞<br />
⎜<br />
⎝ y ⎠<br />
i<br />
Where n is the number of observations, μ is the average GDP per head, and yi is the GDP per head<br />
of a region i.<br />
In calculating the index, each region is weighted by its population in order to allow explicitly for<br />
the large variation which exists in the size of regions and to give a more accurate measure of<br />
regional disparities across the EU. This is important since unweighted indices, which are often<br />
used, show significantly different changes. Other measures of disparity, such as the standard<br />
deviation or variance show similar results, so long as they are population weighted.<br />
This overall reduction in disparities was a result primarily of the catching up of regions in the<br />
EU10 countries where in both periods, as seen above, GDP growth was much higher than in the<br />
EU15. If regions in the EU15 and the EU10 are considered separately, the change over the period<br />
was less clear-cut.<br />
Table 2.5 Dispersion of GDP per head in PPS between NUTS 2 regions in the EU25, 1995, 2000<br />
and 2006<br />
Mean log deviation index<br />
1995 2000 2006<br />
IE 1.6 2.2 1.9<br />
NL 0.7 0.9 1.0<br />
AT 2.7 2.3 1.8<br />
SE 0.9 1.7 1.6<br />
UK 3.6 5.0 5.4<br />
BE 5.0 5.2 5.2<br />
DE 2.7 2.7 2.4<br />
FI 1.1 1.7 1.3<br />
FR 3.0 3.4 3.2<br />
ES 2.3 2.6 2.0<br />
IT 4.1 4.0 3.8<br />
GR 3.0 2.4 4.2<br />
PT 2.4 2.9 2.9<br />
EU15 3.8 3.9 3.7<br />
CZ 2.5 4.5 5.3<br />
HU 4.0 6.4 8.5<br />
SK 5.9 6.0 8.0<br />
PL 1.4 2.5 3.1<br />
EU10 4.9 4.9 5.5<br />
EU25 8.3 7.5 6.3<br />
Note: Countries are ordered within the EU15 and EU10 according to<br />
GDP per head in PPS terms in 2006.<br />
Source: Estimates based on Eurostat, Regional Accounts<br />
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In the EU15 countries, the extent of the narrowing of regional disparities over the period 2000-<br />
2006 was relatively small (the mean logarithmic deviation index falling from 3.9 to 3.7). This,<br />
however, followed a widening of disparities, even if small, over the preceding 5 years (from 3.8 in<br />
1995). Disparities in GDP per head in 2006 in the EU15, therefore, were marginally narrower than<br />
they had been 11 years earlier.<br />
In the EU10 countries, regional disparities widened between 2000 and 2006, largely because of<br />
the stronger growth of the capital city regions than others. This differs from the preceding 5-year<br />
period when the index remained unchanged, primarily as a result of the relatively high growth in<br />
regions with the lowest GDP per head – in the three Baltic States and in Poland, especially – which<br />
offset the capital city effect.<br />
Within EU15 countries, regional disparities narrowed over the period 2000-2006 in 8 of the 13<br />
countries in which there was more than one NUTS 2 region. The extent of this was particularly<br />
large in Austria and Spain. In another two countries, Belgium and Portugal, disparities remained<br />
unchanged. There were only three countries, therefore, where regional disparities widened – the<br />
Netherlands (marginally), the UK and Greece.<br />
In Greece, the extent of widening was substantial as a result of the much higher growth in Attiki,<br />
where Athens is situated, than in other regions (Between 2000 and 2006, GDP per head in Attiki<br />
grew by over 5% a year as against growth of 3% a year in the other regions taken together.) In the<br />
UK, the widening was associated with increased commuting as indicated below.<br />
The experience over the 2000-2006 period is almost the exact reverse of that in the previous 5<br />
years when disparities narrowed in only three countries – Austria, Italy (marginally) and Greece –<br />
remained unchanged in one (Germany) and widened in the other 9.<br />
In all four of the EU10 Member States with more than one NUTS 2 region, regional disparities<br />
widened between 2000 and 2006, the increase in the index being particularly large in Hungary<br />
and Slovakia.<br />
Regional disparities also widened in all four countries over the period 1995-2000, most<br />
especially in the Czech Republic and Hungary for the same reason as in the subsequent years –<br />
i.e. the much higher growth in the capital city regions than in others.<br />
As a result of the widening in internal disparities, regional inequality in GDP per head in the<br />
Czech Republic, Hungary and Slovakia was among the highest in the EU25 in 2006, and in the last<br />
two much higher than in any other country.<br />
In general, therefore, while disparities in EU15 countries in most cases narrowed over the period<br />
2000-2006, those in the EU10 widened. This followed a 5-year period when the reverse was the<br />
case, when disparities widened in nearly all EU15 countries.<br />
At the same time, it should be recalled, as noted above, that GDP per head in all EU10 regions<br />
apart from Malta increased relative to the EU25 average over the period 2000-2006. There was,<br />
therefore, almost universal convergence in these regions towards the EU average during these<br />
years.<br />
2.3.3 Narrowing of disparities in commuter-adjusted GDP per head and household<br />
income per head<br />
As noted at the outset, the NUTS 2 regions which are the focus here – and which equally tend to<br />
be the focus of cohesion policy – do not in many cases correspond to functional regions from an<br />
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economic perspective. One of the consequences of this is that commuter flows, instead of taking<br />
place largely within regions, cross regional boundaries to a significant extent and, moreover, tend<br />
to be in one direction, either into or out of regions. This means that the commuters concerned<br />
contribute to the GDP in the region in which they work but are not counted as part of its<br />
population, which accordingly pushes up GDP per head. It also pushes down GDP per head in the<br />
region where commuters live since they do not contribute to its GDP but are counted in the<br />
‘heads’ over which it is measured.<br />
Commuting is an important reason for the pronounced disparities in GDP per head between<br />
regions in a number of countries indicated above (see Box). It is also a potential reason for the<br />
differential rates of GDP per growth indicated above. If, for example, people living in an Objective<br />
1 region moved out to live elsewhere but continued to work in the region, then GDP per head<br />
would have risen because of the fall in population without any growth in GDP occurring as such<br />
(see Box for examples). It is, therefore, important to make an explicit adjustment for commuting<br />
in order to distinguish ‘genuine’ increases in GDP per head from spurious ones, so as to be sure<br />
that the narrowing of disparities in GDP per head over the period was a real phenomenon 14 .<br />
In practice, according to the data available – which are relatively uncertain and, accordingly<br />
should be regarded as indicative only – commuting did not change a great deal over the<br />
programming period. Indeed, net outward commuting from Objective 1 regions seems on average<br />
to have increased slightly, which suggests that the rate of growth of GDP per head indicated<br />
above may understate the increase in their economic potential which occurred.<br />
The small increase in outward commuting from lagging regions, by depressing their GDP per<br />
head, tends in itself to widen regional disparities measured in these terms. Adjusted for the effect<br />
of commuting, disparities in GDP per head between regions in the EU15, therefore, narrowed by<br />
slightly more than indicated above (Table 2.6).<br />
The effect of commuting is especially marked in the UK, where the relatively wide disparity in GDP<br />
per head between regions owes a great deal to this effect. After adjusting for commuting, the<br />
degree of disparity in GDP per head in 2006 was much the same as in 2000. The effect of<br />
commuting on regional disparities is even more pronounced in Belgium, but here the effect is<br />
slightly weaker in 2006 than in 2000 because of a small decline in flows. Adjusted for<br />
commuting, therefore, regional disparities in GDP per head widened a little over the period. This<br />
was also the case in Portugal, though the degree of widening was less.<br />
14 The adjustment is made by relating the number of people employed in a region, including both those who are<br />
resident there and those who live elsewhere, to the number of people living in a region who are employed either in<br />
the region or outside. This gives a ratio which can be applied to GDP to allow for the effect of commuting:<br />
(Er+Eo)/(Er+Or)<br />
where Er is the number in employment in the region who live there, Eo is the number employed in the region who<br />
live in another region and Or is the number in employment in a region who work in another region. If the ratio is 1,<br />
then the same number of people travel to work outside the region as travel in to work and commuting has no effect<br />
on regional GDP per head. If it is positive, then more travel in to work than travel out and vice versa if it is negative.<br />
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Box – Adjusting GDP per head for commuting<br />
Although there are no direct data available on the scale of commuting, estimates can be made from<br />
Labour Force Survey data 15 . These suggest that there were 22 NUTS 2 regions in 2006 where<br />
commuters added 5% to employment relative to population and 15 where the figure was over 10%.<br />
In Brussels, commuters added over 80% to employment and in Inner London, around 75%. GDP per<br />
head is likely, therefore, to have been inflated to a similar extent. Many of the regions where net<br />
inward commuting is large contain capital cities, Praha and Bratislava being cases in point, while<br />
others contain large conurbations. The implication is that these regions diverge significantly from<br />
‘functional’ regions, which effectively cover a wider area, in some cases a much wider area 16 .<br />
There are many more regions where net outward commuting occurs on a significant scale,<br />
reflecting the fact that economic activity tends to be more concentrated regionally than population.<br />
Estimates also suggest that there were 53 NUTS 2 regions where commuting reduced employment<br />
by over 5% relative to population and 23 where it reduced it by over 10%, depressing GDP per head<br />
by similar proportions. These regions include many of those close to capitals and other large cities,<br />
including a number of Objective 1 regions, such as Hainaut in Belgium, Burgenland in Austria and,<br />
most notably, Flevoland in the Netherlands.<br />
Changes in commuter flows can increase or reduce GDP per head in a region without any change in<br />
GDP occurring. If people move out of a city region to live in a surrounding region but continue to<br />
work in the city, then GDP will not necessarily change but population will decline so increasing GDP<br />
per head as measured. Conversely, if people working in a city move into the region instead of<br />
commuting, then GDP again might remain unchanged but GDP per head will decline since it is<br />
calculated in relation to a larger population. In general, a reduction in the scale of commuter flows<br />
will tend to reduce disparities in GDP per head as more people work in the region where they live.<br />
Belgium and Portugal, along with Greece were the only countries in the EU15 where regional<br />
disparities widened between 2000 and 2006. In 8 of the 13 countries with NUTS 2 regions, they<br />
narrowed and in two they remained the same.<br />
The effect of commuting is also pronounced in both the Czech Republic and Slovakia, in both of<br />
which there are large-scale inward flows into the capital city regions from neighbouring ones. In<br />
both cases, these flows increased between 2000 and 2006, so widening disparities between<br />
regions in terms of GDP per head. Adjusted for commuting, there was in fact no change in<br />
disparities in Slovakia and a relatively small increase in the Czech Republic.<br />
In Hungary, the widening of regional disparities over the period is also reduced if commuting is<br />
allowed for, though by less, and there remains a significant increase over the period. In Poland,<br />
commuting is on a smaller scale and has a minor effect on disparities in GDP per head between<br />
regions.<br />
15 The <strong>European</strong> Labour Force Survey contains information on the region in which those surveyed live and on the<br />
region in which they work. The fact that the survey is based on a relatively small sample of respondents means that<br />
the information is inevitably subject to a margin of error. This margin is especially large in relation to changes<br />
between survey years because those surveyed may not necessarily be representative of commuters. To reduce the<br />
margin of error, the change between the average of the two years 1999-2000 and 2005-2006 has been taken. See<br />
Ex post evaluation, WP1, Regional developments and trends,<br />
http://ec.europa.eu/regional_policy/sources/docgener/evaluation/expost2006/wp1_en.htm.<br />
16 This is illustrated by comparing London and Paris. Whereas London is split into two NUTS 2 regions with<br />
substantial commuting between them, Paris is part of the Ile de France NUTS 2 region which is much more akin to a<br />
functional region where commuting is largely internal.<br />
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Table 2.6 Disparities between NUTS 2 regions according to different indicators, 2000 and 2006<br />
Mean log deviation index<br />
GDP per head unadjusted GDP per head adjusted Income per head<br />
2000 2006 2000 2006 2000 2006<br />
BE 5.2 5.2 1.2 1.4 0.5 0.5<br />
DE 2.7 2.4 1.7 1.5 0.6 0.7<br />
IE 2.2 1.9 2.2 1.9 0.2 0.2<br />
GR 2.4 4.2 2.4 4.2 1.5 1.9<br />
ES 2.6 2.0 2.4 1.8 1.6 1.4<br />
FR 3.4 3.2 2.2 2.0 0.9 0.6<br />
IT 4.0 3.8 3.6 3.3 2.3 2.3<br />
NL 0.9 1.0 0.5 0.5 0.1 0.2<br />
AT 2.3 1.8 0.8 0.5 0.2 0.0<br />
PT 2.9 2.9 2.6 2.7 1.3 1.4<br />
SE 1.7 1.6 1.1 1.0 0.3 0.3<br />
FI 1.7 1.3 1.6 1.2 0.4 0.3<br />
UK 5.0 5.4 2.1 2.1 1.1 1.1<br />
EU15 3.9 3.7 2.8 2.5 1.9 1.7<br />
CZ 4.5 5.3 3.1 3.3 0.7 0.9<br />
HU 6.4 8.5 5.4 6.8 2.9 2.6<br />
PL 2.5 3.1 2.3 2.9 1.1 1.0<br />
SK 6.0 8.0 3.8 3.8 1.2 1.7<br />
EU10 4.9 5.5 4.2 4.5 2.2 1.7<br />
EU25 7.5 6.3 6.6 5.1 5.8 4.7<br />
Notes: For France, the effect of commuting is assumed to be the same in 2000 as in 2006<br />
because of a break in the LFS series. For all countries, apart from Germany and Italy, the<br />
commuting effect for 2000 is an average of the two years 1999 and 2000 and for 2006, an<br />
average of 2005 and 2006. For Germany and Italy, figures for 1999 have been used for 2000<br />
because of problems with the figures for the latter.<br />
Income per head refers to mean household disposable income<br />
Note that the three EU aggregates include disparities across the relevant countries, including<br />
those comprised of a single NUTS 2 region<br />
Source: Estimates based on Eurostat, Regional Accounts and <strong>European</strong> Labour Force Survey<br />
2.3.4 Narrowing of disparities in household income per head<br />
While GDP per head gives an indication of the economic strength of a region, it does not<br />
necessarily reflect the well-being and living standards of the people living there, which are<br />
relevant for judging social cohesion.<br />
There are many reasons for this. In the first place, the income produced by GDP does not<br />
necessarily go to individuals. It can equally go to companies, which might transfer their income,<br />
or profits, elsewhere, or to government in the form of taxes. Secondly, it does not include<br />
transfers into the region from outside, whether by government (such as social benefits),<br />
companies or individuals. Thirdly, it does not capture other non-monetary aspects of well-being,<br />
such as health, education or various amenities which individuals might have access to, as well as<br />
living in a pleasant and attractive environment. These aspects include the availability of public<br />
goods and services which may be part of government expenditure in the region and, indeed,<br />
partly funded under cohesion policy.<br />
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It is difficult to capture the multiplicity of aspects which contribute to well-being, but it is<br />
possible to measure one major dimension at least, which is the income per head of people living<br />
in different regions. Since cohesion policy is concerned with social disparities as well as economic<br />
ones and with maintaining and strengthening social cohesion, it is important to consider<br />
disparities in income levels between regions and how they changed over the programming period.<br />
A key question, therefore, is how far the reduction in regional disparities in GDP per head noted<br />
above was accompanied by a similar reduction in disposable household income per head.<br />
Unfortunately the data available at EU-level to investigate this question are not entirely<br />
satisfactory 17 . The figures presented in Table 2.6, therefore, should be regarded as indicative only<br />
and illustrative of the differences which exist between the series being compared. Moreover, it<br />
should be emphasised that the figures for disposable income per head do not take account of<br />
differences in the access of households to various services and amenities which are paid for out<br />
of taxes, such as childcare facilities as well as education, healthcare and so on. Such access tends<br />
to be much more similar across regions within countries, because they tend to share the same<br />
social protection systems and institutional arrangements, than across countries. Consequently,<br />
the figures in Table 2.6 are indicative of the changes in regional disparities in income per head,<br />
broadly defined, which occurred over the period but less so of the changes which occurred across<br />
the EU as a whole.<br />
Leaving the uncertainty aside, the data suggest that there was indeed a parallel narrowing of<br />
disparities in income per head across regions in the EU15 between 2000 and 2006 in line with the<br />
reduction in disparities in GDP per head. It also suggests that there was equally a narrowing of<br />
disparities in household income per head in the EU10 countries over the period in contrast to the<br />
widening in terms of GDP per head.<br />
2.3.5 Other aspects of well-being and territorial cohesion<br />
While data on income per head give some insight into how one major aspect of social disparities<br />
changed between regions over the programming period, as noted above, they give only a partial<br />
insight. To obtain a fuller picture, there is a need to take account of other aspects of well being<br />
and living standards which are more difficult both to identify indicators for and to find the data<br />
required to attach values to these indicators.<br />
One important aspect in this regard, as also noted above, is access to public goods and services,<br />
which governments across the EU have sought to make more equal between regions over the<br />
period and, indeed, have used financing from the Structural Funds for this purpose (as described<br />
in Chapter 4 below). No data exist, however, on the availability of various types of public good or<br />
on social benefits in kind (such as child or elderly care services) which could be used in order<br />
either to judge the achievements in this respect or to gauge the extent of regional disparities<br />
which exists in different countries 18 .<br />
17 Although Eurostat compiles and publishes data on disposable household income per head for NUTS 2 regions, the<br />
fluctuations from year to year in the figures suggests that they are subject to a relatively high degree of uncertainty.<br />
This applies especially to changes over time.<br />
18 There are data on government expenditure on goods and services of various kinds as well as on expenditure n<br />
social benefits in kind, but these exist only at the national level and, moreover, in the case of public goods, do not<br />
reflect the past investment which has been made in providing amenities of various kinds.<br />
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Other, less tangible, aspects are even more difficult to find indicators for, such as the natural or<br />
physical environment or the quality of life which people living in different places enjoy, which<br />
were aspects that cohesion policy was aimed at evening up over the period. Measurement<br />
problems, however, should not mean that aspects of this kind are ignored when judging the<br />
performance of cohesion policy, even if they can only be taken into account in qualitative rather<br />
than quantitative terms.<br />
The same applies to territorial cohesion which is equally difficult to find indicators for, though<br />
those used to assess social cohesion might also be relevant.. Since improving the territorial<br />
balance of development was an important aim of policy in many cases across the EU, the outcome<br />
in this regard also needs to be assessed in qualitative terms.<br />
Both social cohesion and territorial balance are also relevant for assessing the sustainability of<br />
development which is a key objective of cohesion policy, since in the absence of the two,<br />
development is unlikely to be sustainable for any length of time. Equally, of course, sustainability<br />
implies that development is not at the expense of environmental damage, increased emissions,<br />
the loss of natural assets and the depletion of exhaustible resources. Indicators of these are just<br />
as important in assessing how far this objective is being achieved. As for the other aspects, they<br />
largely remain to be developed.<br />
2.4 MAIN POINTS TO EMERGE<br />
The main points to arise from the analysis of regional developments over the programming<br />
period are:<br />
• Growth of national economies which formed the context in which regional development in<br />
the EU15 took place over the period varied markedly; in particular, it was relatively high<br />
and, accordingly, favourable to development, in Greece and Spain, as well as Finland,<br />
Sweden and the UK, and relatively low, and less favourable in Germany, Italy and Portugal.<br />
• The restrictive nature of budgetary policy was reflected in a significant reduction in public<br />
investment in Portugal over the period; in Germany, Austria, Belgium, and Italy, policy<br />
restriction meant that public investment was relatively low over most of the period. In<br />
Greece, public investment was expanded markedly up until the Games in 2004 and was<br />
then reduced.<br />
• The continuing process of globalisation reinforced by EU enlargement led to increasing<br />
competitive pressure on producers in traditional industries in the EU15 as well as those<br />
specialising in labour-intensive activities more generally; many of these were located in<br />
lagging regions and others receiving funding under cohesion policy. Accordingly, growth<br />
in these regions might be expected to have been less than elsewhere over the period other<br />
things being equal.<br />
• Growth of GDP per head over the period 2000-2006 was higher on average in Objective 1<br />
regions in the EU15 than in non-assisted regions. This was also the case in all EU15<br />
Member States, with the sole exception of Hainaut in Belgium. In the EU10 countries, the<br />
already high growth rates increased further after accession.<br />
• Growth of GDP per head in regions receiving significant amounts of funding under<br />
Objective 2 was also slightly higher on average than in non-assisted regions over the<br />
period.<br />
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• The experience of the 2000-2006 period contrasts with that in the previous programming<br />
period when the growth of assisted regions in most countries was lower than in nonassisted<br />
regions. Since the great majority of the regions receiving assistance in 2000-2006<br />
also received assistance in 1994-1999, this suggests that it might take time for Structural<br />
Fund support to be reflected in higher GDP growth.<br />
• The relatively high rates of growth achieved by Objective 1 regions in the EU15 was<br />
accompanied by a marked narrowing of the gap in employment rates with other regions;<br />
this was especially so in Spain, Italy and Greece, where the gap had been particularly wide.<br />
• The consequence of the better growth performance, on average, of regions receiving<br />
cohesion policy funding over the 2000-2006 period was a narrowing of disparities in GDP<br />
per head between regions in the EU15. This was the case in all countries, apart from<br />
Greece, the Netherlands and the UK, where disparities widened, and Belgium and Portugal<br />
where they remained the same. This contrasts with the 1995-2000 period when disparities<br />
widened in most countries.<br />
• Adjusted for commuting, regional disparities in the EU15 narrowed by slightly more<br />
between 2000 and 2006 than the crude figure show. In the UK and the Netherlands,<br />
disparities remained unchanged instead of widening. Taking account of the increase in<br />
commuting reduces the widening of regional disparities in the EU10 countries and<br />
eliminates it completely in Slovakia.<br />
• Household income per head is a better measure of well-being and of social cohesion than<br />
GDP per head; it also indicates a reduction in disparities over the programming period in<br />
both EU15 countries and EU10 countries.<br />
• There are no accepted indicators available at EU level of the quality of life in different<br />
regions and territorial balance; both are important aims of cohesion policy, which are likely<br />
to become of increasing importance in the future.<br />
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3 Chapter 3 – Policy outcomes and effects in main policy<br />
areas<br />
As indicated at the outset, the evaluation did not attempt to cover all policy areas which were the<br />
target of Structural Fund support over the programming period. Instead, it concentrated on<br />
examining the main ones in some detail, in particular<br />
• enterprise support, which covers innovation but only to a very limited extent, which is a<br />
gap in the evaluation 19<br />
• transport, which has historically been a major focus of EDRF support<br />
• the environment, for which the evaluation was largely concentrated on infrastructure<br />
investment.<br />
While support for making good deficiencies in infrastructure has been a traditional focus of<br />
cohesion policy in less developed regions since its inception, increasing attention over the years<br />
has turned to attempts to strengthen the competitiveness of businesses. This is particularly so as<br />
disparities in the endowment of infrastructure have narrowed in the EU15, not least as a result of<br />
policy efforts.<br />
A number of other issues, including horizontal aspects which cut across policy areas were also<br />
examined in the evaluation. These are:<br />
• the cost effectiveness of large projects, as reflected in their unit costs, which is an issue<br />
in particular in respect of transport and environmental infrastructure;<br />
• climate change and sustainable development which became of increasing relevance over<br />
the period;<br />
• the development of rural areas which were a specific target of EAGGF support but to<br />
which the ERDF contributed substantial resources;<br />
• gender equality and demographic change, which were coupled together in the evaluation<br />
largely because the issues involved are similar, though it should be noted that only the<br />
first was specified as horizontal priority in the Structural Fund guidelines.<br />
Taking account of these various aspects as well as the specific policy areas covered means that<br />
the evaluation considered almost all of the broad items of expenditure co-financed by the ERDF<br />
in one way or another. Though it did not directly include telecommunications, social<br />
infrastructure and energy, which were important areas of funding in some regions, these were<br />
covered to some extent by the horizontal studies.<br />
The main findings of the studies carried out are examined in turn in each of the sectors below.<br />
3.1 ENTERPRISE SUPPORT<br />
Support from the Structural Funds for businesses, both directly through grants or loans for<br />
investment and indirectly through the provision of specialised services and infrastructure, is the<br />
main direct measure for stimulating economic growth in the regions assisted. It is also the<br />
19 Innovation was included with enterprise support as a policy area to be covered in the evaluation but the study<br />
commissioned failed to be completed.<br />
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measure which most needs careful justification. This is because the intervention involved is<br />
explicitly aimed at influencing the efficiency of firms and their ability to compete in both the<br />
internal market and markets in the rest of the world. As such, it potentially distorts competition<br />
by assisting some firms rather than others.<br />
The rationale for enterprise support is that it is aimed at correcting market failure, that without it,<br />
businesses in lagging regions or in regions historically reliant on traditional industries would have<br />
little or no prospect of survival and expanding into new markets. If market forces were left free to<br />
operate, competition, it is argued, would drive firms out of business before they had the<br />
opportunity to invest and modernise. This argument applies, in particular, to SMEs which possess<br />
neither the resources to develop and expand nor the access to borrowing to do so because of<br />
gaps in the financial market and the reluctance of lenders to invest in small firms, especially if<br />
they wish to innovate and enter new, and uncertain, areas of business.<br />
In the EU10, the argument applies more generally. In Poland, for example, the programming<br />
documents emphasise the problems facing Polish firms on accession to the EU, given their<br />
concentration in activities in which they can compete only in terms of cheap labour. Since this is a<br />
transitory comparative advantage, firms of all sizes need support in order to invest in new<br />
technology and more efficient methods of production.<br />
In Objective 1 regions in the EU15, as well as in Objective 2 regions, the case is essentially to help<br />
bring about the restructuring of the economy which is unlikely to occur, or at least, not for a long<br />
time 20 , without intervention. The need is to provide SMEs with funding as well as various support<br />
services to assist them make the necessary changes in methods of production or in the kinds of<br />
product produced. It is equally to support the creation of new firms through similar means.<br />
Once the case for intervention is accepted, it is still necessary to identify firms which not only<br />
need support but are capable of using that support productively to become profitable and grow.<br />
The risk is that the funding provided is either likely to be lost as the firms assisted eventually go<br />
out of business or it will lead to the continuing need for support to keep the firms in operation.<br />
The opposite risk is that funding is given to firms which do not actually need it, that they would<br />
have made the investment concerned even without financial help. The funding provided in such<br />
cases, therefore, is a waste of public resources. This ‘deadweight’ cost, it is widely argued, is<br />
most likely to occur in respect of support to large enterprises, which can be expected to have<br />
greater access to financing opportunities as well as to business expertise.<br />
A further consideration is that if the investment turns out to be successful, the profits that result<br />
will accrue to the firm and not to the public authority which provided the finance. For this reason,<br />
there has been an increasing concern – made explicit in the guidance to managing authorities at<br />
the beginning of the programming period – to shift support from (non-repayable) grants to<br />
(repayable) loans and equity finance. This has the further advantage of the firms concerned<br />
sharing in the risk of the venture, which should add to their incentive to make it a success.<br />
In addition, in many cases, there were conflicts between the objective of maintaining and, if<br />
possible, expanding employment, which was a major concern when programmes were drawn up,<br />
and that of restructuring, which almost inevitably involved allowing traditional industries to<br />
20 It is possible that market forces would eventually bring about the desired change without intervention, but these<br />
tend to be very slow working. The case for intervention can, therefore, be expressed in terms of accelerating the<br />
restructuring process rather than in term of market failure as such.<br />
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decline. A further frequent problem was a lack of demand for support in the sectors which it was<br />
intended to stimulate, precisely because of the limited number of companies in the more<br />
technologically advanced, high value-added activities concerned.<br />
3.1.1 The global context<br />
Underlying market conditions and the general context in which business support was conducted<br />
changed over the programming period. As indicated in the previous chapter, there was an<br />
economic downturn in a number of Member States, including Portugal, Germany and Italy in<br />
particular, from 2001, soon after measures began to be implemented. This led to a decline in<br />
demand for assistance to expand and innovate and increased demand for support from firms to<br />
keep them in business and prevent job losses.<br />
As the period went on, the process of globalisation and the industrialisation of developing<br />
countries, especially China and other South-East Asian economies, led to increased competitive<br />
pressure on firms in traditional labour-intensive activities. This took the form not only of<br />
increased imports into the internal market but the relocation by multinationals of such activities<br />
to low wage countries, a process reinforced by EU enlargement.<br />
In both Objective 1 and Objective 2 regions, regional strategies to support businesses shifted in<br />
the second part of the period towards restructuring and the development of new growth sectors<br />
and away from supporting firms in traditional industries. This was aided by an increased rate of<br />
growth in most Member States and an expansion of employment which resulted in maintenance<br />
of jobs being less pressing. In Portugal, it was stimulated by the publication of Mid-term<br />
Evaluations which criticised the concentration of enterprise support on existing areas of<br />
specialisation.<br />
3.1.2 What was the scale of ERDF support?<br />
In total, ERDF-financed expenditure on enterprise support in Objective 1 regions in the EU15 over<br />
the programming period amounted to EUR 21.3 billion (total up to the end of 2008), equivalent to<br />
just over a quarter (26%) of total expenditure in these regions (Table 3.1). A further EUR 3.6<br />
billion of expenditure (just over 4% of the total) went on support for tourism, much of it going to<br />
businesses in the industry as well as to improving the facilities available.<br />
In addition, expenditure on enterprise support financed by the ERDF under Objective 2 amounted<br />
to some EUR 9 billion in the EU15 (Table 3.2). This was equivalent to 48% of the total spending<br />
from the ERDF, emphasising the weight attached to this in development strategies in the regions<br />
concerned. Support for tourism added a further EUR 2.4 billion, or 12% of total spending in these<br />
regions. Overall, therefore, some 60% of ERDF-financed expenditure in Objective 2 regions went<br />
on business support measures broadly defined.<br />
In the EU10 countries, expenditure from the ERDF on business support amounted to EUR 1.6<br />
billion, or just over 20% of the total, while support for tourism added a further EUR 0.5 billion (7%<br />
of total spending).<br />
The relative weight given to business support in the allocation of the ERDF varied markedly<br />
between countries. In Objective 1 regions in the EU15, it ranged from around 87% of the total in<br />
Finland to 15% or less in Ireland, Greece and France (where, as noted above, the regions<br />
concerned were mostly the DOMs). In general, much less expenditure went on business support<br />
in the four Cohesion countries as well as in the South of Italy (31%) than in Objective 1 regions in<br />
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the rest of the EU15, partly reflecting the ongoing need of the former for infrastructure over the<br />
period.<br />
Table 3.1 Expenditure from the ERDF on enterprise support in Objective 1 regions, 2000-2006<br />
Large<br />
firms<br />
SMEs RTDI Total Tourism<br />
support<br />
Large<br />
firms<br />
SMEs RTDI Total Tourism<br />
support<br />
EUR million % Total support % Total expend<br />
BE 46 145 88 279 43 16.6 51.9 31.5 73.8 11.4<br />
DE 658 2,461 1,645 4,764 272 13.8 51.7 34.5 42.5 2.4<br />
IE 0 85 191 276 23 0.0 30.7 69.3 15.2 1.3<br />
GR 123 1,277 232 1,633 534 7.6 78.2 14.2 12.0 3.9<br />
ES 984 2,120 1,644 4,748 482 20.7 44.6 34.6 21.4 2.2<br />
FR 54 179 65 298 199 18.3 60.1 21.7 14.1 9.4<br />
IT 603 2,917 891 4,411 1,091 13.7 66.1 20.2 31.7 7.8<br />
NL 1 12 5 18 13 7.1 65.9 27.1 23.5 16.5<br />
AT 21 63 13 97 49 21.8 65.1 13.1 59.8 30.5<br />
PT 749 1,220 549 2,519 599 29.7 48.5 21.8 21.5 5.1<br />
FI 74 199 134 408 9 18.2 48.9 32.9 86.8 1.8<br />
SE 0 174 88 262 41 0.0 66.3 33.7 60.7 9.6<br />
UK 139 1,022 382 1,543 204 9.0 66.2 24.8 44.7 5.9<br />
EU15 3,454 11,874 5,927 21,255 3,558 16.3 55.9 27.9 26.1 4.4<br />
CZ 25 154 13 193 91 13.1 80.1 6.8 24.6 11.6<br />
EE 2 18 29 49 20 4.5 36.5 59.0 24.2 9.7<br />
LV 38 84 15 138 9 27.9 61.1 11.0 40.1 2.5<br />
LT 19 40 38 97 79 19.4 41.8 38.8 17.1 13.9<br />
HU 30 179 110 319 81 9.4 56.2 34.4 26.4 6.7<br />
MT 0 1 0 1 4 0.0 100.0 0.0 2.5 10.5<br />
PL 94 467 198 759 191 12.4 61.5 26.1 18.1 4.6<br />
SI 7 24 14 46 35 16.1 53.5 30.4 36.9 28.6<br />
SK 5 6 3 15 29 32.8 44.3 22.9 3.1 6.3<br />
EU10 221 975 420 1,616 539 13.6 60.3 26.0 20.4 6.8<br />
EU25 3,675 12,849 6,347 22,870 4,098 16.1 56.2 27.8 25.6 4.6<br />
Note: Expenditure up to end-2008<br />
Source: Estimates based on DG Regio data<br />
Expenditure on business support in the EU10 countries accounted for less than a quarter of total<br />
ERDF funding in all apart from Hungary (26%), Slovenia (37%) and Latvia (40%). In Malta and<br />
Slovakia, it made up only around 3% of the total.<br />
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Table 3.2 Expenditure from the ERDF on enterprise support in Objective 2 regions, 2000-2006<br />
Large<br />
firms<br />
SMEs RTDI Total Tourism<br />
support<br />
Large<br />
firms<br />
SMEs RTDI Total Tourism<br />
support<br />
EUR million<br />
% Total support % Total expend<br />
BE 32 83 44 158 60 19.9 52.5 27.6 46.3 17.4<br />
DK 7 25 26 58 32 11.7 42.6 45.6 46.2 25.6<br />
DE 106 1,078 387 1,572 400 6.8 68.6 24.6 54.0 13.8<br />
ES 31 412 644 1,088 36 2.9 37.9 59.2 52.5 1.8<br />
FR 155 934 444 1,533 927 10.1 60.9 29.0 29.9 18.1<br />
IT 4 833 64 901 339 0.5 92.5 7.1 36.6 13.7<br />
LU 0 0 4 4 6 3.9 3.9 92.1 10.7 14.8<br />
NL 4 172 13 189 95 2.0 91.2 6.8 27.6 13.8<br />
AT 140 198 102 440 125 31.9 45.1 23.1 70.6 20.0<br />
FI 0 154 71 226 55 0.0 68.4 31.6 57.5 14.0<br />
SE 1 157 35 193 52 0.7 81.1 18.2 52.4 14.1<br />
UK 12 2,409 230 2,651 138 0.5 90.9 8.7 70.0 3.6<br />
EU15 493 6,456 2,064 9,012 2,265 5.5 71.6 22.9 47.6 12.0<br />
CZ 0 5 4 9 2 0.0 57.8 42.2 16.3 3.2<br />
CY 0 10 0 10 5 0.0 100.0 0.0 43.4 21.4<br />
SK 0 4 1 5 6 0.0 86.1 13.9 14.9 19.1<br />
EU10 0 19 4 23 13 0.0 81.2 18.8 21.6 11.7<br />
EU25 493 6,474 2,069 9,036 2,277 5.5 71.7 22.9 47.4 12.0<br />
Note: Expenditure up to end-2008<br />
Source: Estimates based on DG Regio data<br />
The overall funding of enterprise support which the ERDF contributed to was much larger as a<br />
result of national government co-financing and private sector contributions 21 . Overall, it<br />
amounted to an estimated EUR 89.7.billion in Objective 1 regions in the EU15 and to EUR 49.1<br />
billion in Objective 2 regions (Table 3.3).<br />
How far the ERDF was responsible for levering the substantial amount of private sector financing<br />
which it was associated with, is difficult to determine. It is almost certainly the case that some of<br />
the investment would have been undertaken anyway, even without ERDF financing. Equally, some<br />
would almost certainly not have been.<br />
In the EU10, national government and private sector contributions were smaller, the overall<br />
amount of funding being estimated at just under EUR 4 billion, still substantially larger than the<br />
ERDF contribution alone.<br />
21 The figures for private contributions included in Table 3.3 involves a good deal of estimation. See WP1, Task 2 of<br />
the ex post evaluation. Financial implementation of the Structural Funds, May 2009 –<br />
http://ec.europa.eu/regional_policy/sources/docgener/evaluation/pdf/expost2006/wp1_tsk2_report_final_29052009.pdf.<br />
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Table 3.3 Expenditure on enterprise support by source of funding, 2000-2006<br />
Objective 1 Objective 2<br />
EUR million<br />
ERDF Total public Private ERDF Total public Private<br />
BE 279 569 1,085 158 389 337<br />
DK 58 142 35<br />
DE 4,764 8,457 9,112 1,572 3,346 4,710<br />
IE 276 800 323<br />
GR 1,633 2,544 3,152<br />
ES 4,748 7,126 22,301 1,088 2,243 5,237<br />
FR 298 646 715 1,533 4,422 4,113<br />
IT 4,411 8,596 7,864 901 2,435 7,212<br />
LU 4 19 5<br />
NL 18 62 22 189 478 650<br />
AT 97 140 241 440 931 2,026<br />
PT 2,519 5,163 3,653<br />
FI 408 870 989 226 576 826<br />
SE 262 556 379 193 465 291<br />
UK 1,543 2,879 1,445 2,651 6,601 1,612<br />
EU15 21,255 38,408 51,283 9,012 22,049 27,053<br />
CZ 193 258 156 9 18 32<br />
EE 49 69 22<br />
CY 10 21 36<br />
LV 138 206 18<br />
LT 97 181 21<br />
HU 319 449 573<br />
MT 1 2 1<br />
PL 759 1,051 766<br />
SI 46 68 78<br />
SK 15 27 20 5 11 34<br />
EU10 1,616 2,312 1,654 23 49 103<br />
EU25 22,870 40,720 52,937 9,036 22,098 27,156<br />
Note: ERDF and total public expenditure up to end-2008. Figures for private<br />
expenditure involve a good deal of estimation<br />
Source; Estimates based on DG Regio data. See WP1, Task 2, Financial Implementation of<br />
the Structural Funds, May 2009<br />
3.1.3 What was ERDF support spent on?<br />
In Objective 1 regions in the EU15, well over half of the finance from the ERDF for business<br />
support went on assisting SMEs either directly through investment grants or indirectly through<br />
the provision of various services. Most of the rest went on support for RTDI (28% of the total)<br />
while a relatively small amount (16% - though still totalling some EUR 3.4 billion) went to support<br />
of large enterprises (see Table 3.1 above).<br />
The broad division in Objective 2 regions was more concentrated on SMEs, support to these<br />
amounting to almost 72% of the total, with RTDI amounting to 23%. Only around 5-6% of total<br />
Objective 2 funding for business support, therefore, went on assisting large enterprises.<br />
In the EU10 countries, the division was similar, though a slightly larger proportion went to SMEs<br />
(60%) than in the EU15 and a smaller proportion to large enterprises (14%).<br />
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Again this division of support varies across countries. In Objective 1 regions in the EU15, a<br />
relatively large share of funding went directly to large enterprises in Portugal (30%), Spain (21%)<br />
and Austria (22%), while share of support for RTDI was particularly large in Ireland (69%).<br />
In Objective 2 regions, support to large enterprises accounted for over 20% of overall business<br />
support only in Austria (32%). The share going to RTDI was particularly large in Spain, Denmark,<br />
Finland and Luxembourg and small in Italy, the UK and the Netherlands. In the first two countries,<br />
in particular, however, support to SMEs was directed to a significant extent at encouraging<br />
innovation.<br />
Although direct support for RTDI was limited in scale, it was significantly larger than in the<br />
previous programming period. In a number of Objective 1 regions in the EU15, it went mainly to<br />
establishing the preconditions for developing a regional innovation strategy through investing in<br />
infrastructure and research centres and encouraging cooperation between these and businesses.<br />
In some regions, significant funding also went on supporting industrial applied research in<br />
individual firms (in Italy and Germany, in particular).<br />
In addition, in absolute terms, the ERDF made a perceptible contribution to R&D expenditure in<br />
Objective 1 regions, adding some 12% to national spending in Portugal, 7% in Greece and 6% in<br />
Spain and even more in some of the EU10 countries, especially Estonia (where total R&D was twice<br />
as large in relation to GDP in 2006 as in 2000).<br />
3.1.4 What was the mix of direct and indirect support?<br />
ERDF support to enterprises was divided between direct assistance primarily to SMEs, in the form<br />
of investment grants, loans and equity capital, and indirect assistance, in the form of support<br />
services of various kinds, the provision of businesses premises and support for networking, the<br />
formation of clusters, closer links with research centres and so on. The 30 largest enterprise<br />
support programmes examined as part of the evaluation give a good indication of the mix of<br />
these measures across the EU. In Objective 1 regions in Spain and Germany, support took the<br />
form mainly of direct grants or loans. In the UK regions, both Objective 1 and Objective 2, more<br />
weight was given to indirect assistance than to direct aid. In other regions, there was a more even<br />
division of the two.<br />
The varying combinations of measures used within the broad categories of direct and indirect<br />
support in the 30 programmes are indicated in Table 3.4.<br />
Table 3.4 Number of business support packages by type of measure included in the 30 largest<br />
enterprise support programmes, 2000-2006<br />
a) b) c) d) e) f) Single<br />
measure<br />
% single<br />
a) Non-repayable grants 122 25 15 46 33 13 46 38%<br />
b) Repayable loans 25 44 20 14 9 5 9 21%<br />
c) Equity-based finance 15 20 26 8 3 2 4 14%<br />
d) Support services 46 14 8 105 45 20 30 29%<br />
e) Intangible mechanisms 33 9 3 45 72 22 9 13%<br />
f) Business infrastructure 13 5 2 20 22 77 42 55%<br />
Source: Ex post evaluation, WP6b – Enterprise support, Interim report, Ramboll Management<br />
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‘Intangible mechanisms’ in the table refer to support for technology transfer, collaboration<br />
between firms and with research centres, and for clusters or ‘poles’ of excellence. The shaded<br />
figures show the total business support packages which include the measure in question (in the<br />
case of non-repayable grants, 122) while the other figures show the number of instances where<br />
the measure was combined with others (the figures do not sum to the total since a combination<br />
of more than two measures were often used). The last two columns show the number of instances<br />
of the measure being used on its own and the proportion of instances where this was the case.<br />
Non-repayable grants were, therefore, the most frequently used measure over the period, these<br />
often being used in combination with support services or with intangible mechanisms. There was<br />
a clear tendency to focus non-repayable grants on selected sectors, rather than making them<br />
generally available for investment, as the period went on.<br />
Support services were the next most frequently used (in 105 cases). Their focus varied across<br />
regions. In some cases, for example, they were directed towards helping firms gain access to<br />
export markets (in Objective 1 regions in Spain and Eastern Germany), in others, especially the UK<br />
regions, they were concentrated on increasing the rate of business start-ups.<br />
Equity-based finance was the least used measure. They were employed most in the UK, where<br />
they were included in all regional programmes, and to a significant extent in Germany (in 5 of the<br />
7 programmes examined).<br />
In the case of nearly all programmes, there was a clear tendency over the period to move to loans<br />
and equity finance. This was partly to meet the need for support at lower cost. Problems arose,<br />
however, in the implementation of equity financing both because of a lack of experience in<br />
setting up the funds and because of the difficulties of finding suitable projects to invest in. On<br />
the other hand, the contribution of equity finance to business performance was reported as being<br />
significant in a number of regions (including in the Objective 2 regions of Scotland and the North<br />
East of England according to the analysis of their equity funds carried out).<br />
3.1.5 What were the results of enterprise support?<br />
The difficulties of estimating the effects of enterprise support are compounded by the mix of<br />
indicators used and the various methods applied to putting values on them, which in most cases<br />
were not made explicit.<br />
The central indicator which managing authorities were intended to use was the net number of<br />
new jobs created and safeguarded as a result of support measures, which was supposed to make<br />
explicit allowance for deadweight and displacement effects. In practice, partly because of the<br />
significant difficulties of estimating such effects, the figures produced were often in gross terms<br />
and sometimes related to the total number employed in a firm rather than the additional number<br />
of jobs created as a result of the measure. Where estimates in net terms were made, the<br />
techniques used were rarely explained or justified 22 .<br />
22 This was less so in UK regions, where in most cases, serious attempts were made to estimate net job creation. In<br />
South Yorkshire, for example, an elaborate econometric model, constructed by an external consultancy and<br />
incorporating explicit estimates of deadweight effects, was used to compare actual employment growth with that<br />
which would have occurred without the support of the programme.<br />
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Moreover, in many cases, employment creation or maintenance was not the main aim of the<br />
support provided. Instead, the immediate purpose was to increase business efficiency and<br />
competitiveness which might well imply a reduction in employment, or at least no increase.<br />
Accordingly, the lack of job creation, or a low rate of creation, cannot be taken as evidence of a<br />
lack of success.<br />
Bearing in mind these qualifications, enterprise support co-financed by the ERDF in the 30 largest<br />
enterprise support programmes across the EU, encompassing both Objective 1 and Objective 2<br />
regions, is reported to have led to the creation of just under 640,000 jobs over the 2000-2006<br />
period. This is slightly more than the aggregate target set across the regions concerned, which<br />
does not mean that all targets were achieved – in some cases, the outcome fell well short of the<br />
target, in some, it exceeded it by some way.<br />
The implication from the programmes examined is that over the EU as a whole, at least 1 million<br />
new jobs were created in Objective 1 and Objective 2 regions as a result of enterprise support<br />
according to the estimates of the authorities concerned.<br />
This total is based on estimates from less than half of the business support measures identified<br />
in the evaluation (130 out of 272). The rest did not report figures for job creation, either because<br />
of the difficulties of doing so or because direct employment creation was not a central aim of the<br />
support provided.<br />
Whatever the shortcomings of the estimates, they suggest that ERDF made a substantial<br />
contribution to employment creation in the regions assisted over the period.<br />
3.1.6 Reflections on the results<br />
Perhaps the most relevant indicator to use to measure the effects of enterprise support is the<br />
increase in productivity which resulted from the assistance received. This is linked in some<br />
degree with competitiveness, which to a large extent was a major aim of policy in most if not all<br />
regions, especially in the later years of the programming period. In some regions, attempts were<br />
made to measure this, but in none of them were these considered to have been successful.<br />
According to the evaluation, enterprise support undoubtedly led to increased employment and, in<br />
some cases, to increased productivity, though precisely how much in each case is uncertain<br />
because of measurement problems.<br />
3.2 EVALUATING ENTERPRISE SUPPORT IN EASTERN GERMANY USING COUNTERFACTUAL<br />
METHODS<br />
As indicated above, there is an acute problem of assessing the effects of enterprise support from<br />
the evidence available. In particular, the methods used to evaluate programmes across the EU<br />
over the period tended to be relatively crude, in few cases attempting to make any allowance for<br />
what would have happened in the absence of funding. Partly to encourage more studies to be<br />
undertaken of a rigorous kind in this important area, a pilot study was commissioned as part of<br />
the evaluation to explore the possibilities of applying counterfactual methods to micro-data on<br />
enterprise performance. The results are summarised below and although they give only a limited<br />
view of the results of the funding provided by the ERDF, they represent an important start to the<br />
task of assessing the real effects of enterprise support and an example of the type of method<br />
which should be used to do this.<br />
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The study concerned was aimed at measuring the effects, first, of grants for investment in the<br />
Eastern German Länder, all of which were Objective 1 regions in the period, and, secondly, of<br />
support of R&D expenditure in one of these regions, Thüringen. In both cases, the basis of the<br />
analysis was a survey of enterprises, the first covering all of the Eastern German Länder for the<br />
period 1997-2007 and the second, enterprises in Thüringen over the period 2000-2003. The<br />
data collected allowed a comparison of performance between firms which received grants and<br />
similar firms which did not Specifically, the aim of the analysis was to estimate, in the first case,<br />
the effect of the grants in increasing investment per employee in the firms receiving support and,<br />
in the second, the effect in increasing R&D expenditure per employee.<br />
The common element in the different techniques which were applied was the use of the firms not<br />
receiving grants as a comparison group, to estimate the expenditure on investment and R&D<br />
which the firms receiving grants would have carried out had they not been assisted in this way. In<br />
other words, attempts were made to estimate the counterfactual behaviour of the firms<br />
concerned in the absence of grant receipts 23 .<br />
In so doing, explicit account was taken of various characteristics of the firms which might have<br />
affected their investment and R&D behaviour – including, in particular, their size, age export<br />
share, ownership, the skill composition of the workforce, the sector of activity in which they<br />
operate, the capital intensity of production, and the age of plant and machinery.<br />
In the case of the analysis of investment grants in the Eastern German Länder, the findings were<br />
that:<br />
• investment per employee was around 2.4 to 2.5 times higher in firms receiving<br />
investment grants than in those not doing so;<br />
• the difference in investment per employee, moreover, was significantly greater than the<br />
value of the grants themselves, so that the financial support led to firms making<br />
additional investment which was around a third larger than the value of the grant, so that<br />
grants can be regarded as a relatively efficient way of increasing investment per worker.<br />
In the case of grants for R&D in Thüringen, the findings were that:<br />
• firms receiving grants had a level of R&D expenditure per employee which averaged<br />
around EUR 11,500 as compared with EUR 4,000 for firms not receiving grants;<br />
• as in the case of investment grants, the additional level of R&D expenditure per employee<br />
was greater than the value of grants, so again the measure can be regarded as relatively<br />
efficient in increasing expenditure on R&D.<br />
As indicated above, further analysis of this kind needs to be undertaken to assess enterprise<br />
support measures in different parts of the EU using data on individual firms to isolate the effects<br />
of such measures on aspects such as productivity or export performance which are indicators of<br />
competitiveness, which tends to be the main focus of policy.<br />
23 The methods used included linear regression, controlled Difference-in-Difference, Propensity Score Matching and<br />
Instrumental variable.<br />
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3.2.1 Other evidence of the effect of enterprise support<br />
One other study which was carried out using similar methods was an evaluation of the ERDF<br />
support provided to firms in Southern Italy. This was undertaken in 2005 and was not part of the<br />
present evaluation but it reported relevant findings (see Box).<br />
Box – Enterprise support in Italy 24<br />
In Italy, there were two national programmes for enterprise support covering all Objective 1 regions<br />
and co-financed by the ERDF. One was the PON Sil which provided investment grants to firms,<br />
partly for investment in environmentally-friendly technology and energy saving. The other was for<br />
support of RTD and higher education.<br />
Overall expenditure funded by the PON Sil amounted to EUR 4.3 billion (up to end-2008), 90% of<br />
which went on investment grants. Of this, 70% went to SMEs, 20% to large companies and 8% to<br />
investment in environmentally-friendly technology 25 . Monitoring data indicated an increase of<br />
36,193 in employment (an average of around 6 additional employees in each of the 6751 firms<br />
supported) as at April 2005, 60% more than the target.<br />
Field research on 50% of the projects (some 4,051 firms), however, revealed that there were no<br />
evident effects on the sectoral structure of economic activity in the regions. Instead, direct grants<br />
reinforced the existing structure of low and medium tech sectors. Nevertheless, 9% more firms<br />
started to export and there was a significant increase in the average size of small firms.<br />
In addition, analysis based on counterfactual methods (using statistical matching techniques) found<br />
that investment grants were associated with a deadweight effect of up to 50%. It was still the case,<br />
however, that sales growth in the recipient firms was 11-18% higher over the period than in the<br />
control group, growth of investment 36-49% higher and employment growth 28-49% higher. On<br />
the other hand, there was a negative effect on productivity, due to grants being heavily biased<br />
towards employment creation.<br />
EU funding for the research and innovation programme amounted to EUR 1.3 billion, mostly from<br />
the ERDF, which mainly went on investment grants to SMEs and, to a lesser extent, to large firms to<br />
co-finance industrial applied research, research networks and university spin-offs.<br />
Field research on over 250 firms receiving support found that over two-thirds (69%) of projects<br />
were of a high and medium-to-high tech nature, around 83% of research activities led to<br />
commercialisation of the results and 19% led to patents (26% in the case of SMEs). Some 92% of<br />
firms reported a positive effect on jobs, with an average increase of 15%. In addition, 87% of the<br />
projects led to the creation or strengthening of public-private collaboration, especially between<br />
businesses, universities and public research centres.<br />
3.3 RESTRUCTURING IN OBJECTIVE 2 REGIONS<br />
The evaluation also included a study of restructuring in Objective 2 regions in the context of<br />
globalisation. This consisted, first, of an overall analysis of structural change over the period<br />
1990-2005 across regions in the EU15 in order to try to detect differences in performance<br />
between regions with different sectoral specialisations, distinguishing between those specialising<br />
in traditional industries, those in capital-intensive – or heavy – industries and those in equipment,<br />
24 See Ismeri <strong>Europa</strong> – Nova, Intermediate evaluation of NOP SIL, 2005 and Ismeri <strong>Europa</strong> – IZI, Intermediate<br />
evaluation of NOP Research.<br />
25 The programme accounted for around 17% of total expenditure in the EU25 from the ERDF on this particular area<br />
of intervention and 15% of that on environmental technology.<br />
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or engineering, industries. The second, and main, part of the analysis consisted of case studies of<br />
12 regions receiving Objective 2 funding. The aim in each case was to examine the efforts of the<br />
regions concerned to restructure in the face of increased competitive pressure from globalisation<br />
and the contribution of Objective 2 funding in this regard 26 .<br />
The main findings of the analysis can be summarised as follows:<br />
• A number of Objective 2 regions (defined at the NUTS 2 level) across the EU changed their<br />
specialisation over the period examined, shifting from traditional industries to capital<br />
intensive ones or from capital intensive to equipment industries. In both cases, this was<br />
associated with a positive economic performance and, in most cases, an improvement in<br />
their estimated international trade balance 27 .<br />
• Of the 12 case study regions, only Steiermark (Austria) had succeeded over recent years in<br />
changing its area of specialisation, emphasising the difficulties of achieving this and<br />
breaking free from an historical development path on to a new one. The strategy adopted<br />
in the region succeeded in building up an automotive sector almost from scratch based<br />
on inward investment, with the regional agency pursuing a selective policy to attract<br />
suitable foreign companies given the end objective.<br />
• The experience of Steiermark as compared with that of the Ruhr area of Nordrhein-<br />
Westfalen highlights two important aspects of restructuring. The first is that it takes many<br />
years, and even decades, to bring about an effective change in areas of specialisation,<br />
even with continuous support. The second is that, it is easier to accomplish if the area<br />
concerned is smaller rather than larger.<br />
• Long-standing policy efforts to diversify the economies in many of the industrial<br />
Objective 2 regions have not led to the intended shifts in their sectoral pattern of<br />
economic activity. The pattern inherited from the past, and often in place for a century or<br />
more, has proved highly resistant to change. In Nordrhein-Westfalen, the Ruhr remains<br />
adversely affected by the past dominance of heavy industry, despite numerous policy<br />
initiatives and substantial investment aimed at developing and expanding new activities.<br />
Even in Steiermark, the case study found no evidence so far for the further diversification<br />
of the economy away from relative reliance on the automotive industry into higher-tech<br />
and more knowledge-intensive sectors.<br />
• The case studies demonstrated that enterprise support focused on increasing the<br />
innovation capacity of firms, especially SMEs and their performance on international<br />
markets can strengthen competitiveness and assist restructuring, as in Steiermark, País<br />
Vasco and, to a lesser extent, Toscana. Measures that proved to be the most effective<br />
were those aimed at encouraging new clusters of activity in specific sectors and in<br />
particular areas of technology.<br />
• In some case study regions (Bretagne and Rhône-Alpes, for example), the regional<br />
development strategy was not so much directed at structural change as at maintaining the<br />
internal territorial balance and safeguarding employment. Since the evaluation was<br />
26 See the Annex to this report for a list of these.<br />
27 Since no data exist on exports and imports at regional level, estimates were made for each region on the<br />
assumption that trade performance in each broad sector was the same in each region as at the national level.<br />
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concerned explicitly with restructuring and with the development of regional economies,<br />
it did not investigate the effectiveness of this strategy.<br />
• The evidence is that three regions which showed the clearest signs of restructuring were<br />
also the ones where the regional authorities were the earliest to be aware of the need for<br />
structural change. They accordingly reacted to the threat of globalisation sooner than<br />
those in other regions by promptly developing strategies for encouraging the<br />
diversification of their economies. This demonstrates the importance of looking ahead<br />
and trying to anticipate the need for change in areas of specialisation,<br />
• Analysis of the relationship between Objective 2 programmes and the broader set of<br />
regional policy measures suggest that the most effective programmes were those which<br />
were in line with and, therefore, reinforced, the main thrust of development strategies<br />
being pursued in the regions. Support of the ERDF for ‘mainstream’ measures contributed<br />
more than where additional ‘complementary’ objectives were pursued.<br />
• At the same time, the possibility of using ERDF finance to support these strategies was<br />
hampered in some regions by the ‘micro-zoning’ which concentrated funding on small<br />
areas with very specific territorial needs.<br />
• The effectiveness of intervention was closely related to the competence and expertise of<br />
local institutions and their strategic vision. The evidence is that these attributes can<br />
change the path of development – and overcome historical ‘path dependency’ – by<br />
persistent, focussed and concentrated policy effort.<br />
• The evidence from the evaluation is that, despite its small scale, the funding provided<br />
under Objective 2 was of major importance for the regions examined. A large majority of<br />
those interviewed in the course of the case studies confirmed that ERDF support was<br />
instrumental in encouraging the adoption of a long-term strategic view of development,<br />
which was vital for both designing and building effective support for restructuring. It,<br />
accordingly, played a key role in setting the agenda for change as well as providing<br />
valuable funding which could be used to lever larger-scale financial support. In short, it<br />
acted as a catalyst for change, encouraging regional authorities to prioritise and enabling<br />
them to innovate as well as to put in place long-term action programmes.<br />
3.4 TRANSPORT<br />
Transport infrastructure is an important driver of regional development. An efficient transport<br />
network is essential for sustained economic growth as well as territorial balance. The problems of<br />
economic development faced by lagging regions stem partly from having inadequate transport<br />
systems and poor links with other regions in the countries concerned and in other parts of the<br />
EU. It is not a coincidence that most Objective 1 regions in the EU15 are located on the periphery<br />
of the EU, away from both the national and EU centres of economic activity.<br />
Improvement of transport networks has, therefore, long been considered essential to increase the<br />
accessibility of lagging regions and of less economically central areas within regions. Efficient<br />
links between centres of economic activity and surrounding areas are vital if the growth<br />
generated in the former is to benefit these areas to the maximum. It is especially important for<br />
rural areas that there are good connections with the main regional centres both for businesses<br />
and individuals, to ensure that support services of various kinds and social and cultural amenities<br />
are within easy reach. The efficiency of transport systems in urban areas is equally important for<br />
business competitiveness and for limiting the time lost from travelling from one place to another.<br />
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At the same time, there has been a growing concern over the past decade to reduce the pollution<br />
and emissions from transport and to save energy. This has led to an increasing need to shift<br />
between modes of transport, in particular, from road to rail and, where possible, to shipping or<br />
waterways. It has also given rise to a need in cities to expand the public transport system in order<br />
to reduce the traffic on urban roads.<br />
The Structural Funds have historically been a major source of finance for the investment needed<br />
to reduce imbalances in transport endowment in lagging regions across the EU. Despite<br />
substantial investment in Objective 1 regions in previous programming periods, there remained<br />
major disparities in endowment across the EU at the beginning of the 2000-2006 period as<br />
regards both fast means of travel between regions and efficient connections within regions. This<br />
was particularly the case in Greece, Ireland and parts of southern Italy. In addition, there were<br />
acute problems of congestion in major cities in the regions concerned, especially in Athens and<br />
Dublin but also in Lisbon, Thessaloniki and Naples.<br />
The transport problems in the EU10 countries were even more pressing. Here the main deficiency<br />
was not so much gaps in the networks but the state of roads and railways. Journey times were<br />
typically much longer than they needed to be both because many roads and railways were in<br />
urgent need of repair after many years of neglect and because they were not designed for<br />
present-day traffic volumes. There were few dual carriageway roads and even fewer motorways.<br />
In Poland, for example, there were just 358 kms of motorway in 2000, only just over a third of<br />
those in Denmark, a country only one seventh its size in terms of both land area and population.<br />
3.4.1 What were the policy objectives?<br />
The deficiencies outlined above were reflected in the objectives of investment in transport as set<br />
out in the various Operational Programmes, especially in Objective 1 regions. The aim was<br />
essentially to alleviate problems as regards:<br />
• the excessive use of roads for transporting goods and for individual travel<br />
• congested major routes<br />
• an inadequate rail network<br />
• the poor quality of roads at regional and local level<br />
• bottlenecks and missing links in transport networks especially between major national<br />
and <strong>European</strong> routes and local and regional networks<br />
• a lack of intermodal transport links<br />
• inadequate public transport, especially in urban areas.<br />
This range of problems, which was common to many lagging regions, led to transport being the<br />
largest single policy area to which finance from the ERDF was allocated over the 2000-2006<br />
period in Objective 1 regions. This was the case in the EU10 as well as in the EU15.<br />
In general, ERDF support was used to further both national and regional transport strategies<br />
aimed at alleviating these problems, which were accorded differing levels of priority across the<br />
EU. In some cases, as in the EU10 countries, Greece or Portugal, the action taken regionally was<br />
determined nationally, in others, as in Spain or Italy, action was determined regionally but in line<br />
with national objectives. Overall, a reasonable degree of consistency was reported between<br />
regional and national policies.<br />
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In Objective 1 regions in Spain, Greece and Ireland, the aim was primarily to build new roads and<br />
railway lines, to expand the network in order to establish efficient links between regions or<br />
centres of population and economic activity which did not exist before as well as to develop<br />
urban transport systems. Elsewhere, especially in the EU10 countries, the aim was mostly to<br />
upgrade and to improve existing roads and, to a much lesser extent, railway lines. This, in part,<br />
reflects the relatively short time which the EU10 countries had to plan and spend the finance they<br />
received, which inevitably limited the transport projects which could be undertaken, given their<br />
typically long duration. Because of the poor state of much of the road network, however, bringing<br />
this up to international standards was identified as a main priority in many of the countries and of<br />
key importance in furthering regional development.<br />
3.4.2 What was the scale of funding?<br />
Overall, some EUR 29.1 billion from the ERDF was allocated to transport in Objective 1 regions in<br />
EU15 countries over the 2000-2006 period, almost a third of the total amount of funding going<br />
to these regions (see Table 3.5). In addition, around EUR 1.5 billion went to Objective 2 regions,<br />
or only around 7% of the total amount of funding. This much smaller figure reflects the relatively<br />
small overall amount of funding available under Objective 2 combined with the fact that transport<br />
projects tend to involve large amounts of expenditure if they are to make an impact. It also,<br />
however, reflects the fact that in most Objective 2 regions, the transport system was already<br />
relatively efficient and was not, accordingly, a major constraint on development.<br />
In the EU10 countries, some EUR 3.25 billion of the ERDF provided was allocated to transport<br />
once these countries became eligible for support, almost all of this going to Objective 1 regions.<br />
(Only around EUR 21 million went to transport in Praha under Objective 2 and just EUR 2 million<br />
in Cyprus, while in Bratislava, no funding was allocated to transport at all.)<br />
Overall, therefore, some EUR 33.8 billion was allocated to transport from the ERDF over the<br />
programming period. Around half as much again was made available from the Cohesion Fund, a<br />
large proportion of this going to EU10 countries. To give an indication of the relative importance<br />
of funding from these two sources, the amounts involved can be compared with national funding<br />
for transport. Although the figures compiled in the evaluation relate to expenditure in the years<br />
2000-2006 and, accordingly, do not cover spending in 2007 and 2008, which was significant as<br />
noted in Chapter 1, they should, nevertheless, be reasonably representative of the relative scale<br />
of the different sources.<br />
In the EU15, the ERDF accounted for some 3% of the total investment on transport financed from<br />
public sources (i.e. most of it) over the period, while the Cohesion Fund was responsible for 1%,<br />
this mostly going on completing the trans-<strong>European</strong> transport network of major routes. The scale<br />
of funding in Objective 1 regions was, of course, considerably larger than this, since total<br />
investment covers all regions and not just the Objective 1 ones which at EU15 level undoubtedly<br />
accounted for only a minor part of overall investment. It is likely in fact that the ERDF alone was<br />
responsible for financing around 15% of investment in transport in Objective 1 regions in the<br />
EU15 over the period 28 .<br />
28 This figure is based on the reasonable assumption that investment in transport funded from national sources over<br />
the period in the different regions was proportionate to GDP. Since the GDP of Objective 1 regions in the EU15 was<br />
around 18% of the total, this would imply a figure of 16% of investment being financed from the ERDF. A figure of<br />
15% would, therefore, allow for investment in Objective 1 regions being slightly higher than in others.<br />
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Table 3.5 Public funding sources of investment in transport, 2000-2006<br />
National<br />
Govt<br />
ERDF<br />
Cohesion<br />
Fund<br />
EUR million<br />
Total<br />
public<br />
EIB National<br />
Govt<br />
ERDF Cohesion<br />
Fund<br />
% Total<br />
BE 4,699 27 4,726 516 99.4 0.6 10.9 0.2402<br />
DK 8,271 3 8,274 1,705 100.0 0.0 20.6 0.61<br />
DE 147,326 2,953 150,279 4,080 98.0 2.0 2.7 0.98<br />
IE 15,335 1,096 294 16,725 681 91.7 6.6 1.8 4.1 1.71<br />
GR 6,583 4,185 1,490 12,258 4,286 53.7 34.1 12.2 35.0 1.02<br />
ES 83,968 9,523 4,814 98,305 15,403 85.4 9.7 4.9 15.7 1.77<br />
FR 109,481 774 110,254 5,934 99.3 0.7 5.4 0.98<br />
IT 134,071 2,652 136,722 7,638 98.1 1.9 5.6 1.46<br />
LU 1,024 2 1,026 386 99.8 0.2 37.6 0.55<br />
NL 74,155 96 74,251 624 99.9 0.1 0.8 2.21<br />
AT 13,894 3 13,897 871 100.0 0.0 6.3 0.87<br />
PT 4,903 2,592 1,635 9,130 5,987 53.7 28.4 17.9 65.6 0.94<br />
FI 15,422 23 15,445 410 99.9 0.1 2.7 1.49<br />
SE 13,304 63 13,367 1,277 99.5 0.5 9.6 0.68<br />
UK 158,182 416 158,599 4,259 99.7 0.3 2.7 1.30<br />
EU15 790,618 24,408 8,233 823,258 54,057 96.0 3.0 1.0 6.6 1.21<br />
CZ 9,371 95 546 10,012 2,039 93.6 0.9 5.5 20.4 3.63<br />
EE 414 20 213 647.6 8 63.9 3.1 32.9 1.2 2.08<br />
CY 1,073 - 25 1,098 84 97.7 2.3 7.7 2.95<br />
LV 439 56 353 848 52 51.8 6.6 41.6 6.1 2.30<br />
LT 727 82 126 935 75 77.8 8.8 13.5 8.0 1.62<br />
HU 63 145 724 976 1,516 6.5 14.9 74.2 155.3 0.41<br />
MT 229 4 9 243 94.2 1.6 3.7 0.0 1.86<br />
PL 11,046 539 2,694 14,279 2,389 77.4 3.8 18.9 16.7 2.17<br />
SI n.a. 4 122 n.a. 829 n.a. n.a. n.a. n.a.<br />
SK 3,036 100 381 3,523 275 86.2 2.8 10.8 7.8 3.30<br />
EU10 26,398 1,041 5,071 32,562 7,267 81.1 3.2 15.6 22.3 2.24<br />
EU25 817,016 25,449 13,304 855,819 61,324 95.5 3.0 1.6 7.2 1.23<br />
Note: Data up to the end of 2006. All data are in current price terms. Data for Belgium cover only one<br />
region. Data for Hungary and Lithuania relate only to the period from 2004<br />
Data for Greece for National Government expenditure is estimated (to be the same in relation to<br />
ERDF+Cohesion Fund as in Portugal)<br />
Source: Ex post Evaluation, Work Package 5a, Transport, Final <strong>Report</strong>, p.44<br />
The ERDF was even more important in Greece and Portugal, in the former accounting for an<br />
estimated third of investment in transport over the period and in Portugal for around 28%. In both<br />
countries, the Cohesion Fund was also a significant source of finance, adding a further 12% in the<br />
former and 18% in the latter, so that together, EU funding was responsible for almost half of total<br />
investment between 2000 and 2006.<br />
In Spain, where the ERDF provided the largest amount of finance for transport in absolute terms,<br />
it accounted for close to 10% of the overall investment funded from public sources and for around<br />
20% of the investment in Objective 1 regions.<br />
EIB<br />
Total<br />
as %<br />
GDP<br />
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In the other two countries where large-scale finance for transport was provided by the ERDF, it is<br />
estimated to have accounted for around 11-12% of investment in the Eastern Länder in Germany<br />
and around 9-10% of investment in the South of Italy 29 . Elsewhere, the ERDF was less important<br />
as a source of finance, though it was still responsible for almost 7% of total investment funded<br />
from public sources in Ireland over the period.<br />
In all these countries, it should be noted that the contribution of the ERDF and the Cohesion Fund<br />
to transport investment was still less than loans from the <strong>European</strong> Investment Bank (EIB), which<br />
added just under 7% to overall funding and probably a much larger proportion to funding in<br />
Objective 1 regions.<br />
The contribution of the ERDF and the Cohesion Fund helped to increase investment in transport<br />
to relatively high levels relative to GDP in both Spain and Ireland (to around 1.7-1.8% of GDP),<br />
more than in any other EU15 country apart from the Netherlands. EU funding added much more<br />
to investment in Greece and Portugal, though it still left overall spending on transport relative to<br />
GDP much less than in the UK or Finland and less than half that in the Netherlands.<br />
In the EU10, investment in transport financed from public sources was almost twice as high in<br />
relation to GDP over the 2000-2006 period as in the EU15 (around 2.2% of GDP). It was<br />
particularly high in the Czech Republic and Slovakia, amounting to over 3% of GDP. In Hungary,<br />
on the other hand, investment in transport is estimated to have been lower than anywhere in the<br />
EU25 apart from Belgium, most of this coming from the Cohesion Fund.<br />
The ERDF made a slightly smaller contribution to investment in transport in these countries than<br />
in the EU15. While it accounted for only just over 3% of total investment over the period, given the<br />
fact that it was operational only from May 2004, it was probably responsible for closer to 10% of<br />
the investment carried out from then until the end of 2006. The ERDF was particularly important<br />
in Latvia and Lithuania, as well as in Hungary, accounting for perhaps 15-20% of investment over<br />
the last two years of the period. It was also relatively important in Poland, accounting for perhaps<br />
close to 10% of investment over the latter period. In all three cases the Cohesion Fund added<br />
considerably to this.<br />
The Cohesion Fund generally was much more important as a source of funding in EU10 countries,<br />
accounting for almost 16% of the total investment over the period 2000-2006 and probably over<br />
a third of the total carried out over the last two years of the period. Loans from the EIB, however,<br />
were again larger in scale than funding from the ERDF and the Cohesion Fund, adding around<br />
22% to total public funding.<br />
3.4.3 What was the funding spent on?<br />
A large part of the finance from the ERDF allocated to transport over the programming period<br />
went on roads. In Objective 1 regions in the EU15, some 14% went on motorways and another<br />
44% went on other roads, making almost 60% altogether (Table 3.6 – some 2% of expenditure was<br />
unclassified, much of it probably going on roads; it should be noted that the figures in the table<br />
relate to the total allocation of the ERDF to transport for the 2000-2006 programming period; the<br />
figures are, therefore, larger than in the previous table which relate to expenditure over the<br />
period 2000-2006 only).<br />
29 These estimates as well as that for Spain are based on the same assumption as for the EU15 as a whole.<br />
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This is much larger than the share of funding going to rail, which because of environmental<br />
concerns was stressed as being important at the beginning of the period. Of the rest, 6% went on<br />
developing urban transport systems, 5% on ports, 3% on airports and 3% on intermodal links.<br />
In Objective 2 regions in the EU15, a much smaller proportion of the ERDF than in Objective 1<br />
regions went on roads (just 23% in total) and more went on modernising or expanding ports (18%)<br />
and intermodal links (16%), though the amounts involved were relatively small.<br />
The share of the ERDF going to roads was especially large in the four Cohesion countries in the<br />
EU15, this amounting to almost 70% in Ireland, over 60% in Greece, most of it going on motorway<br />
construction, almost 60% in Spain and 54% in Portugal. The share going to investment in roads<br />
was even larger in Germany – over 75% - most of the investment occurring in Objective 1 regions.<br />
In the other EU15 Member States, a smaller weight was given to roads, though except for Italy,<br />
the amounts involved were relatively small. In Italy, a slightly larger share of funding was devoted<br />
to investment in rail than roads (35% as against 31%). This was larger than in any other country,<br />
with only Spain and Austria of the other countries allocating over 30% of the ERDF to rail, though<br />
in the last, the amount involved was extremely small (only just over EUR 1 million).<br />
Leaving aside Austria, of the other transport modes, the share of funding for transport going:<br />
• to airports was less than 5% in all countries apart from Italy (8%) and the UK (5%);<br />
• to ports, less than 10% in all apart from the UK (10%), France (23%) and the Netherlands<br />
(11% - where again the amount involved was very small);<br />
• to urban transport, less than 10% in all except Ireland (31%), Portugal (16%0, the UK (20%)<br />
and the Netherlands (26%) and zero, or close to zero, in 8 of the 15 countries, including<br />
Spain and Germany;<br />
• to intermodal links, less than 3% in all except Finland, Portugal, the UK, France, Italy and<br />
the Netherlands, and zero in 6 countries.<br />
In the EU10 countries, the focus of funding on roads was equally marked and more general,<br />
though here improving the poor state of the road network had been accorded priority at the<br />
beginning of the programming period. Overall, some 52% of the ERDF was allocated to motorways<br />
or other roads - the latter, except in Poland – and only 16% to rail. In addition, 14% of funding<br />
went to urban transport and the same to waterways, but only very small shares to the other<br />
categories.<br />
This overall division of funding, however, largely reflects the division in Poland, which accounted<br />
for around two-thirds of the total ERDF allocated to transport in the EU10 countries. In a number<br />
of the other countries, the division was very different, though in most, roads absorbed well over<br />
half of the funding going to transport and in all, it was by far the largest item.<br />
Rail accounted for a significant share of funding only in the Czech Republic, Slovakia and<br />
Lithuania apart from in Poland.<br />
Investment in ports was significant only in Estonia and Malta, and investment in urban transport<br />
only in the Czech Republic, Latvia and Lithuania, apart from in Poland. Other areas of investment<br />
were of minor importance in all countries, with the exception of waterways in Poland.<br />
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Table 3.6 Division of ERDF allocated to transport by category of expenditure, 2000-2006<br />
programming period<br />
Rail Roads Motorwayportmodased<br />
Air-<br />
Ports Urban Inter-<br />
Other Unclas-<br />
Total<br />
EUR<br />
% of total ERDF allocated<br />
million<br />
BE 2 3 0 0 0 1 2 0 92 46<br />
DK 0 0 0 0 0 0 0 0 100 4<br />
DE 20 60 16 0 1 0 0 1 1 3,513<br />
IE 0 69 0 0 0 31 0 0 0 1,134<br />
GR 24 19 43 2 5 5 0 1 1 6,736<br />
ES 31 56 2 3 5 1 1 0 0 10,307<br />
FR 5 32 1 4 23 2 11 2 21 1,078<br />
IT 35 22 9 8 9 8 7 0 2 3,810<br />
LU 0 0 0 0 0 0 0 0 100 2<br />
NL 6 14 0 0 11 26 14 31 0 46<br />
AT 33 0 0 32 32 0 2 0 0 4<br />
PT 5 54 0 0 2 16 15 1 6 3,229<br />
FI 0 43 0 0 0 0 22 0 35 31<br />
SE 0 0 0 0 0 0 0 0 100 75<br />
UK 12 29 10 5 10 20 12 0 1 579<br />
EU15 23 43 13 3 5 6 3 1 2 30,594<br />
EU15 Obj 1 24 44 14 3 5 6 3 0 2 29,103<br />
EU15 Obj 2 12 22 1 1 18 6 16 3 20 1,470<br />
CZ 14 55 0 2 2 19 1 7 0 267<br />
EE 2 53 0 6 31 0 0 9 0 33<br />
CY 0 100 0 0 0 0 0 0 0 2<br />
LV 0 52 0 0 4 32 0 0 13 94<br />
LT 23 41 0 8 2 24 0 2 0 142<br />
HU 4 85 0 0 4 3 4 0 0 276<br />
MT 0 89 0 0 11 0 0 0 0 12<br />
PL 17 41 5 0 1 16 2 19 0 2,172<br />
SI 0 0 0 0 0 0 0 0 100 8<br />
SK 28 69 0 2 0 0 0 2 0 243<br />
EU10 16 49 3 1 2 14 2 14 1 3,250<br />
Obj 1 (€mn) 7487 14245 4205 884 1439 2113 923 562 495 32,353<br />
Obj 1 (%) 23 44 13 3 4 7 3 2 2<br />
Obj 2 (€mn) 183 350 12 14 263 90 240 42 296 1,491<br />
Obj 2 (%) 12 23 1 1 18 6 16 3 20<br />
Total (€mn) 7670 14594 4217 898 1702 2204 1163 604 791 33,844<br />
Total (%) 23 43 12 3 5 7 3 2 2<br />
Note: 'Other' includes waterways and intelligent transport systems<br />
Source: Ex post Evaluation, Work Package 5a, Transport, Final <strong>Report</strong>, p.50<br />
3.4.4 What was the effect of ERDF support for transport?<br />
The evidence compiled by the evaluation indicates that much of the investment in transport cofinanced<br />
by the ERDF helped to alleviate some of the main problems in this area confronting<br />
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lagging regions in both the EU15 and the EU10, though to a lesser extent in the latter given the<br />
much shorter period involved 30 . The tangible outputs from the investment supported include:<br />
• the co-financing of around 24% of the 8,509 kms of motorway, which were added to the<br />
EU transport network over the programming period, and of around 26% of the 7,734 kms<br />
constructed in the EU15;<br />
• the co-financing of 1,512 kms of new motorway construction in Spain, or half of the total<br />
completed over the period;<br />
• the co-financing of around 300 kms of motorway in Objective 1 regions in Germany;<br />
• the co-financing of most of the Egnatia Odos motorway which extends for 680 kms from<br />
the port of Igoumenitsa in the west of Greece and the border with Turkey and which<br />
reduced travel time between the two by almost half (see Box);<br />
• helping to begin the process of bringing the road network in EU10 countries up to<br />
international standards;<br />
• the co-financing of 27% of new high-speed railway lines in Spain and 25% of those in Italy<br />
constructed over the period;<br />
• the co-funding of the modernisation or upgrading of over 3,000 kms of standard railway<br />
line, or, more, specifically, of 20% of the rail network in Spain and Greece, 8% of the<br />
network in Portugal and 4% of that in Italy;<br />
• the co-financing of the modernisation of 31 airports across the EU;<br />
• the co-financing of 45 projects to improve or expand port facilities, 33 of them in<br />
Objective 1 regions.<br />
Box – Egnatia Odos<br />
The Egnatia Odos project involved the construction of 680 kms of motorway between the port of<br />
Igoumenitsa in the west of Greece and the border with Turkey. This has served to reduce travel<br />
time between the two points from over 11 hours to just over 6 hours. In addition, it has taken<br />
traffic away from congested urban areas, so reducing pollution as well as travel times. The<br />
motorway has bought isolated regions such as Epirus and Western Macedonia closer to the rest of<br />
Macedonia and Thrace, linking 5 NUTS 2 regions, 10 cities, 332 towns and villages, 4 ports and 6<br />
airports. The expectation is that it will boost trade and tourism in all the regions concerned, while<br />
helping to halt rural depopulation.<br />
The result of these outputs was to improve links between regions, as well as between regional<br />
and local road networks and the main national routes, and to reduce journey times substantially<br />
in many cases. In Spain, for example, the new motorways constructed provided high-speed links<br />
between major centres across the country, especially in Andalucía and Galicia. Overall, time<br />
savings of 3.5 millions hours a year were reported by managing authorities. In Ireland, the<br />
30 It should be noted that the initial intention was to include estimates by the Joint Research Centre in Seville of the<br />
impact of 107 major transport projects co-financed by the ERDF across the EU on the regions in which they took<br />
place on the basis of the changes in traffic resulting and the cost savings produced. This was to be done using the<br />
TRANSTOOLS model. However, on carrying out a preliminary analysis, it was concluded that TRANSTOOLS was not at<br />
present set up to undertake such an analysis, that while it could produce estimates of the overall network effects of<br />
transport projects it did not contain sufficient detail to estimate the impact on any particular region.<br />
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completion of 5 major roads between Dublin and other main towns and cities in the country is<br />
estimated to have resulted in time savings of over 40%.<br />
In Portugal as well as in Poland and Lithuania, the investment carried out is reported to have<br />
increased the capacity of the network and enabled speeds to be increased and journey times to<br />
be reduced.<br />
In addition, and no less importantly, the ERDF helped to finance investment in urban transport<br />
systems in a number of large cities, again predominantly in lagging regions, so helping to relieve<br />
congestion and reduce traffic emissions as well as cutting journey times. The main examples are<br />
the Lisbon and Athens metros (see Box) and the LUAS light railway in Dublin.<br />
Box – The Athens metro<br />
The construction of the Athens Metro, including the extensions co-financed by the ERDF over the<br />
1000-2006 period, has served to reduce the number of car journeys in Athens by an estimated<br />
120,000 a day. This has reduced congestion below what it otherwise would have been (cutting<br />
journey times by an average of 20 minutes) relieved pressure on car parking space in the city and<br />
cut traffic emissions (by an average of 25%).<br />
The steady increase in car ownership, however, which continues to expand traffic, tends to conceal<br />
these gains. Nevertheless, as compared with what the situation would be without the metro, it has<br />
markedly improved the quality of life for those living in Athens. It has also added to tourist<br />
numbers, created, directly and indirectly, an estimated 600 permanent jobs and boosted the<br />
economic development of areas that were previously not accessible by public transport.<br />
The co-financing of investment in regional airports in a number of Member States has helped to<br />
remove capacity constraints which limited traffic growth prior to the beginning of the<br />
programming period, as indicated by the case studies carried out as part of the evaluation. For<br />
example, in Merseyside, the expansion of John Lennon Airport, coupled with the construction of<br />
links with the surrounding areas, has led to an expansion of economic activity in the region. Even<br />
more so in Bari, the expansion has stimulated economic development by increasing the number<br />
of tourists visiting the region.<br />
The case studies also highlighted the importance of intermodal links, of establishing good<br />
connections between ports and airports and the road and rail network. These include the Galicia<br />
study, which demonstrated the gains from creating a seamless transport system between ports in<br />
the region and the road network and removing a bottleneck which was hindering regional<br />
development. They also include the Haute-Normandie study which highlighted the use of ERDF<br />
financing to improve connections to the main port at Le Havre and the benefits to the regional<br />
economy which stemmed from this.<br />
3.4.5 Issues raised by the evaluation<br />
A number of issues emerged from the evaluation which have implications for future cohesion<br />
policy. First, it is evident that the main contribution of the ERDF over the period in respect of<br />
transport was to improve the road network As well as helping to construct new motorways, it also<br />
contributed to improving road links at regional and local level. It made less of a contribution to<br />
improving the rail network and despite the emphasis on bringing about a shift from road to rail at<br />
the beginning of the period, it achieved relatively little in this regard.<br />
Moreover, most of the expenditure supported by the ERDF in the EU10 especially but also in the<br />
EU15 was on road improvements rather than on new construction. While, in many regions, this<br />
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was important to relieve congestion and to speed up journey times, in some cases, it was difficult<br />
to differentiate improvements, such as road widening, from maintenance in the data recorded.<br />
In addition, a significant amount of funding in a number of regions went on improving local<br />
roads. Although these might have been in a poor state and the support provided might well have<br />
improved the quality of life for those living in the areas concerned, the projects undertaken were<br />
not always linked effectively into the planning of the wider regional and national network.<br />
Potential development opportunities were, therefore, lost as a result. This seems partly to be a<br />
consequence of funding spread across a large number of projects in order to distribute support<br />
across the region.<br />
According to the evaluation, however, it is also a consequence of management and planning<br />
difficulties, stemming in part from a lack of expertise in the authorities concerned. These<br />
difficulties also contributed to the relative weight given to investment in roads as compared with<br />
rail and to the shift of funding from one to the other which occurred over the period.<br />
The evidence from Italy and Spain as well as from Poland and in Lithuania is that it was usually<br />
easier to invest in road than in rail because of problems in implementing rail projects which<br />
included:<br />
• a longer design, planning and approvals process than for roads projects, which made it<br />
difficult to complete the process within the programming period;<br />
• the more complex nature of rail projects, because of the mix of different technologies –<br />
electrification, signalling, engineering and so on.<br />
The length of time typically required for a large-scale transport projects had wider effects than<br />
just shifting funding from roads to rail. It also affected the quality of the projects undertaken and<br />
their capacity to alleviate transport problems in the most effective way. Since the construction of<br />
a new road or railways from planning to completion can take 10 years or more, this means that it<br />
tends to extend over more than one programming period. This can lead to authorities, in some<br />
cases, breaking up projects into smaller parts which can be completed within 7 years. In other<br />
cases, it can mean ERDF financing being used for smaller projects which are quicker to complete<br />
and easier to manage, though often less relevant in relation to the main transport problems.<br />
The difficulties in this regard, compounded by the n+2 rule, led authorities in a number of<br />
countries, including Italy, to allocate ERDF financing during the period to what are termed<br />
“coherent” projects. These are projects which had already received funding from other sources<br />
and which in many cases had been completed. In other words, the ERDF was effectively used to<br />
cover expenditure which had already been carried out. While this could mean that national<br />
sources of finance were then used to undertake the projects for which the ERDF was initially<br />
intended, the evaluation was unable to find evidence of this occurring.<br />
In addition, the case studies revealed that ongoing monitoring of programmes, particularly in<br />
terms of results, was limited. In some cases, such as in Andalucía, Galicia and Mazowieckie, this<br />
was due to the poor definition of the indicators to be monitored. In others, such in Attiki, Puglia<br />
and Lithuania, it was a result of a lack of sufficient effort being devoted to monitoring, reflecting<br />
the low importance attached to it by the authorities concerned.<br />
Whatever the reasons for the relatively large allocation of funding to roads, the evaluation<br />
concluded that it led to the neglect of other areas, despite these being explicit aims at the start of<br />
the programming period. In particular, as indicated above, improvements in urban transport<br />
systems were confined to a small group of countries and even here the aim of reducing<br />
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congestion was achieved only to a limited extent in the sense that they have not prevented a<br />
continuing growth in traffic.<br />
Equally, at most only a relatively small amount of funding was devoted in most cases to<br />
improving intermodal links despite the common recognition of the environmental importance of<br />
those which take traffic and freight off of roads and onto rail, sea transport or waterways.<br />
Although examples of investment on such links emerged from the case studies – such as in<br />
Andalucía or Merseyside, in the form of Liverpool South Parkway railway station with improved<br />
links for bus and car users – the priority given to roads over the period tended to discourage<br />
investment in inter-modality.<br />
Questions were also raised in the course of the evaluation about the case for allocating ERDF<br />
support to high-speed rail projects, which in some cases are of limited relevance for regional<br />
development, especially for intermediate points along the route where there are no stations.<br />
Moreover, it is argued that the reduction in journey time needs to be set against the high cost of<br />
construction as compared with investment in more standard railways. Equally account needs to be<br />
taken of the other sources of finance which might well be available, not least the Cohesion Fund<br />
and the TEN-T budget.<br />
Similarly decisions to allocate funding to modernising regional airports need to give serious<br />
consideration to the question of whether they will lead to sufficiently larger numbers of<br />
passengers, who will in turn add to economic activity in the region, to justify the cost. They also<br />
have to consider whether there might be commercial as well as social returns which would attract<br />
private finance and obviate the need for public funding.<br />
The same applies to the modernisation and expansion of ports, which tend to be competing in a<br />
commercial market for international freight and where the allocation of public funding might<br />
distort competition for no obvious social gain.<br />
3.4.6 Concluding points<br />
The evidence from the evaluation of the transport programmes undertaken in different countries<br />
and the case studies carried out is that ERDF funding of investment in transport made a major<br />
contribution to tackling the main problems identified at the beginning of the period.<br />
Nevertheless, many of the problems remain. In particular, it led at best to a minimal shift from<br />
road to rail in most regions, had a limited impact on urban congestion and established only a<br />
small number of intermodal links. These results together with other concerns identified by the<br />
evaluation raise a number of questions about the future funding of transport investment under<br />
cohesion policy:<br />
• Given the growing concern with the environmental damage caused by road transport in<br />
particular, together with the substantial investment which the ERDF has co-financed over<br />
the past 20 years, should funding in future be provided for road construction or<br />
improvement in EU15 countries?<br />
• Given the uncertain nature of the benefits for regional development stemming from<br />
investment in high-speed rail coupled with the alternative sources of funding available,<br />
should the ERDF be used to finance their construction in future?<br />
• Given the expansion of airports in many regions across the EU and perhaps the limited<br />
scope for a significant net expansion of passenger numbers in future years, should<br />
funding any longer be allocated to their development, especially in the EU15?<br />
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• Given the commercial nature of the market in which ports compete and the profits which<br />
investment in them can often realise, is there any case for the ERDF being used to support<br />
their expansion or upgrading in future years?<br />
In contrast to the questionmark over the use of the ERDF for these purposes, there is a strong<br />
case in terms of both economic and social gains as well as environmental considerations for<br />
greatly expanding the support given to investment in urban transport systems. The same applies<br />
to intermodal links, especially if they are designed to take traffic off roads.<br />
3.5 UNIT COSTS OF MAJOR PROJECTS<br />
An issue examined in the evaluation, which is relevant for assessing the support provided to<br />
transport, was the unit costs of major construction projects co-financed by the ERDF. The aim<br />
was to compare these across different parts of the EU for similar types of project to gain not only<br />
an indication of the way that they varied but also an insight into the value for money they<br />
represented.<br />
The investigation, which covered the construction of roads, railways, urban transport systems,<br />
infrastructure for water supply and treatment and energy supply, revealed, first, that major<br />
projects were prone to have a high incidence of delays in completion and of cost overruns. Some<br />
three-quarters of projects were subject to some delay, with the average time amounting to<br />
around 26% of the initially estimated period of completion. Just over half of the projects<br />
investigated exceeded their budget, with an average cost overrun of 21%.<br />
These figures, however, are not unusual and are very much in line with the incidence and scale of<br />
delays and cost overruns of major projects funded from national sources across the EU or in other<br />
parts of the world. For the most part, they do not vary systematically between countries or<br />
different types of project. For the projects examined, however, some differences were evident:<br />
• costs overruns were less of a problem in Germany then elsewhere and more of one in<br />
Poland (averaging 50% for the four projects investigated);<br />
• delays were particularly lengthy in Portugal (averaging 85% of the initial estimates for the<br />
5 projects covered);<br />
• urban transport projects tended to be subject to larger cost overruns and delays than<br />
other types, average 45-50% in each case.<br />
It is difficult to draw conclusions about efficiency from this evidence, since there are a wide range<br />
of potential reasons for both cost and time overruns, many of which are outside the control of<br />
contractors or contracting authorities. However, they clearly indicate the importance of building<br />
in sufficient allowance for contingencies and delays in the planning and budgeting of projects.<br />
This tended not to be done adequately for most of the projects investigated. Indeed, in most<br />
cases, there was a bias towards optimism which is typical for large-scale infrastructure projects.<br />
The second point highlighted by the evaluation was that it is difficult to compare the unit costs of<br />
infrastructure projects across regions without a detailed breakdown of various features of the<br />
project and explicit consideration of the factors which affect costs. These include the terrain and<br />
other conditions which the project has to contend with, which can vary markedly and which can<br />
have a major effect on the cost of construction of roads or railways, Equally costs can vary<br />
significantly if projects differ in their features (a three-way motorway as opposed to a two-lane<br />
one, for example). A meaningful comparison of unit costs unavoidably entails having detailed<br />
data on the cost of the various elements involved in the construction process (in the case of<br />
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motorways, not only bridges and tunnels as opposed to the carriageway itself but also different<br />
types of bridge and tunnel).<br />
Such data, however, were not generally available from the authorities responsible for carrying out<br />
the projects in question, and the aggregate data which did exist did not enable meaningful<br />
comparisons of unit costs to be made 31 .<br />
The third point to arise from the evaluation, therefore, is that there is a need for data on the unit<br />
costs of major projects to be available not only for making comparisons across the EU but also to<br />
provide a basis for judging value for money. In this regard, those responsible for the evaluation<br />
developed a prototype database with the information collected during the exercise and an<br />
indication of the other series which should be compiled once the data become available.<br />
This database could not only serve as a basis for future evaluations but could also provide a set<br />
of benchmarks against which to assess the unit costs of constructing projects that are carried out<br />
or planned. As such, it could facilitate statistical analysis and make it possible to apply ‘reference<br />
class forecasting’ methods to assess planned projects (i.e. by providing the cost information<br />
required to compare these with completed projects with similar features). It, therefore, represents<br />
a potentially valuable output of the present evaluation and one which could potentially be put in<br />
place before the present programming period comes to an end.<br />
A final point to emerge forcibly is the impossibility of comparing the unit costs of enterprise<br />
support projects in any meaningful way. This is not only because the projects concerned vary<br />
markedly in nature – a venture capital fund as against a non-repayable grant to a firm to<br />
encourage innovation or the adoption of environmentally-friendly methods of production. It is<br />
also more fundamentally because it is not possible to define a unit in many cases, still less a<br />
common unit the cost of which can be measured. While the number of jobs created or maintained<br />
has been used in the past for this purpose, estimates of this typically do not distinguish net job<br />
creation, or net jobs saved, which are the relevant concepts, from the gross figures. They,<br />
therefore, tend not to give meaningful indications of the overall effect on employment in the<br />
region concerned. More importantly, the purpose of many projects – encouraging innovation, for<br />
example – is not to create or maintain jobs, at least directly, but to strengthen competitiveness or<br />
export performance. Although employment might be increased in the long-term in the region<br />
concerned, the direct short-term effect on jobs in the firms supported is not a relevant indicator<br />
of the success or failure of such projects.<br />
3.6 SUPPORT FOR THE ENVIRONMENT<br />
3.6.1 What were the objectives of policy?<br />
The increasing concern with environmental issues at EU level led to the Cohesion Fund, set up at<br />
the end of 1993, being specifically directed to financing the construction of environmental<br />
infrastructure, one of only two areas of investment in which the Fund could be used, the other<br />
being transport. It also led to the need to take account of the environmental implications of the<br />
projects supported by the Structural Funds being included as a horizontal requirement in the<br />
2000-2006 programming period. In addition, the finance provided by the ERDF for this period<br />
31 It should be noted that the collection and provision of unit cost data was not a requirement for managing<br />
authorities for the 2000-2006 programming period.<br />
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was equally used to support projects directly aimed at protecting the environment or cleaning it<br />
up.<br />
The projects in question mainly covered two broad policy areas. The first was environmental<br />
infrastructure, where, along with the Cohesion Fund, the aim was to prevent pollution from<br />
occurring and improving living conditions in the areas concerned. The second was planning and<br />
rehabilitation, intended largely to clean up areas which had already become polluted.<br />
The first, again like the Cohesion Fund, was very much concentrated on water supply and the<br />
treatment of wastewater, to increase the number of people with access both to clean drinking<br />
water and to main drainage systems, as well as, in the latter case, to sewage plants for treating<br />
the wastewater collected though these systems. Methods for improving the disposal of other<br />
kinds of waste were also included but, in practice, were given less priority. The second policy area<br />
covered measures to renovate rundown urban areas, to clean up old polluted industrial sites and<br />
to protect and improve the natural environment.<br />
The first policy area was a particular focus in less developed regions receiving Objective 1<br />
funding in both EU15 and EU10 countries, where water supply and main drainage systems<br />
together with the treatment of wastewater did not cover the whole country, especially rural areas.<br />
The second was an area to which funding was directed right across the EU, but most especially in<br />
Objective 2 regions and Objective 1 regions in the non Cohesion countries (i.e. those in the North<br />
rather than the South of the EU15). In addition, in these two areas of intervention, two other<br />
policy areas were important in a few Member States, namely, support for environmentally-friendly<br />
technology in firms, especially in SMEs, and for the development of renewable energy supplies.<br />
While the immediate aim of policy was to further the protection of the environment and to make<br />
the areas where projects were carried out more attractive places to live and work, the rationale for<br />
directing funding to these ends was expressed very much in terms of its importance for economic<br />
development. According to the cohesion policy guidelines, therefore:<br />
‘environmental infrastructure needs to be constructed or upgraded, especially in the less<br />
developed regions, not least because high quality environmental infrastructure constitutes an<br />
important factor for regional socio-economic development’<br />
This assertion, however, was not expanded on.<br />
In practice, the funding of environmental infrastructure was motivated to a large extent by a<br />
desire to assist Member States to comply with EU Directives relating to the need to ensure<br />
universal access to clean drinking water and connection to main drainage and wastewater<br />
treatment systems as well as to the effective management of waste. The ERDF was, therefore,<br />
used to supplement the Cohesion Fund for this purpose.<br />
How far this represented an effective deployment of the Fund in the regions concerned at this<br />
particular stage of their development remains an open question. Although the sustainability of<br />
development over the long-term depends, almost by definition, on ensuring that it does not<br />
cause significant damage to the environment or the depletion of scarce resources, there is little<br />
or no empirical evidence that investment in infrastructure of the kind undertaken contributes to a<br />
major extent to economic development.<br />
Nevertheless, there are arguments for using cohesion policy funding in this way. While there may<br />
be no empirical evidence of a direct link between investment in environmental protection and<br />
economic development, the lack of clean water or effective wastewater treatment systems or the<br />
presence of polluted or rundown areas, is almost certainly a deterrent to business location in the<br />
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region or to people moving in. As such, helping to reduce disparities in infrastructure endowment<br />
of this kind across regions is a way of evening up the conditions in which businesses operate in<br />
different parts of the EU, of enabling them to compete on a more equal footing, if only in terms of<br />
being able to attract or retain workers. It also, of course, helps to even up living conditions and<br />
the quality of life at the same time.<br />
The same arguments apply to the importance of reducing disparities between areas within<br />
regions in order to ensure balanced development – or, more accurately, to establish the<br />
conditions for balanced development, whether this is aimed at encouraging the growth of<br />
economic activity outside the main agglomerations or at increasing the attractiveness of other<br />
areas as places to live. Support for investment in clean water supply and in connecting<br />
households to main drainage systems is particularly significant in this respect since problems of<br />
access to these facilities primarily existed in rural areas rather than in the larger towns or cities.<br />
The various arguments for directing the ERDF to protecting and improving the environment are<br />
reflected in the policy documents produced by Member States at the beginning of the<br />
programming period, setting out the plans for spending the funding received in the regions<br />
eligible for support. Among the regions selected as case studies in the evaluation, specific<br />
reference was made to:<br />
• the importance of environmental infrastructure as a means of improving the<br />
attractiveness of a region so helping to retain or attract well-educated and skilled<br />
workers;<br />
• the environment as a factor strengthening the competitiveness of firms;<br />
• the preservation of natural resources as being crucial for the development of tourism;<br />
• the need to respond to the growing pressure from the spread of urbanisation and<br />
economic activity on natural resources in rural areas if development was to be sustained.<br />
The aim of improving territorial balance, specifically between urban areas and rural areas lagging<br />
behind and losing population, was an explicit focus of policy in four of the case study regions<br />
(Midi-Pyrénées, South Finland, Kentriki Makedonia and Podkarpackie). This was also a stated aim<br />
in Norte in Portugal, though here much of the funding was concentrated in the more populated<br />
areas, which was also the case in Valencia in Spain, where population in such areas was growing<br />
rapidly.<br />
At the same time, there was explicit recognition of the need to comply with EU Directives on<br />
water and waste disposal in some cases (Kentriki Makedonia, Slovakia and Latvia).<br />
3.6.2 The scale and source of funding<br />
The scale of investment in environmental infrastructure relative to GDP over the period 2000-<br />
2006 varied between Member States, to some extent inversely with their GDP per head. It was<br />
larger, therefore, in the EU10 countries (where it averaged just over 0.8% of GDP) than in the EU15<br />
(0.3%), while it was also larger in the four Cohesion countries (0.6% of GDP) than in the rest of the<br />
EU15 (just under 0.3%) (Table 3.7).<br />
The relatively scale of the different sources also varied markedly, with the national government<br />
being much more important in some countries, such as France, the Netherlands or Belgium, than<br />
others, Austria and the Nordic counties in particular, where the private sector accounted for most<br />
of the funding. In the EU15 Member States, the ERDF was most important in the Cohesion<br />
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countries (accounting for 13% of funding on average as against under 3% in the remaining<br />
countries), especially in Greece, Spain and Portugal, which, of course, also received funding from<br />
the Cohesion Fund. This provided around 23% of finance for expenditure on average in the four<br />
countries concerned, so that these two EU sources together accounted for 35-36% of the total<br />
funding over the period. In addition, loans from the <strong>European</strong> Investment Bank (EIB) added<br />
another 4% on average to this, though this mostly went to Portugal. (The EBRD did not provide<br />
any loans to EU15 countries.)<br />
Table 3.7 Expenditure on environmental infrastructure, 2000-2006<br />
Total Nat govt ERDF ISPA Cohesn Fund EBRD+EIB Industry Total<br />
EUR bn<br />
% Total expenditure on environmental infrastructure % GDP<br />
BE 6.41 54.2 0.3 17.5 28.0 0.33<br />
DK 3.79 16.3 0.2 5.4 78.1 0.28<br />
DE 46.64 42.5 3.2 4.3 50.0 0.31<br />
IE 3.51 55.6 6.1 8.3 1.7 28.3 0.36<br />
EL 5.76 37.7 15.7 27.2 0.0 19.5 0.48<br />
ES 30.53 39.9 14.0 23.9 2.8 19.3 0.55<br />
FR 29.24 71.3 2.2 2.1 24.4 0.26<br />
IT 32.63 50.9 5.5 0.7 42.9 0.35<br />
LU 0.74 53.8 0.6 17.5 28.0 0.40<br />
NL 8.29 55.4 0.1 11.7 32.9 0.25<br />
AT 2.57 8.4 3.0 10.8 77.7 0.16<br />
PT 7.89 35.9 10.4 21.2 13.0 19.5 0.81<br />
FI 1.67 17.3 1.6 3.0 78.1 0.09<br />
SE 2.98 12.1 0.2 3.7 84.0 0.29<br />
UK 21.51 39.0 0.7 15.7 44.6 0.18<br />
EU15 204.16 46.4 5.1 5.3 5.4 37.8 0.30<br />
CC4* 47.69 40.1 13.0 22.7 4.1 20.0 0.55<br />
EU11* 156.47 48.3 2.7 5.8 43.2 0.26<br />
CZ 6.04 46.9 1.5 4.3 9.6 11.2 26.5 1.02<br />
EE 0.61 12.8 0.5 16.0 35.5 13.2 21.9 0.96<br />
CY 0.35 21.4 0.0 0.0 0.0 54.8 23.8 0.42<br />
LV 0.69 16.5 4.3 16.9 50.8 2.6 8.9 0.89<br />
LT 0.91 19.6 0.7 14.0 42.5 4.5 18.6 0.75<br />
HU 4.62 41.9 1.3 7.0 15.9 8.4 25.5 0.89<br />
PL 12.48 29.6 2.4 10.4 22.2 2.6 32.7 0.82<br />
SI 0.98 7.0 0.8 4.7 13.2 2.6 71.6 0.54<br />
SK 2.06 12.2 3.3 7.4 18.6 2.1 56.4 0.95<br />
EU10 28.74 32.1 2.0 8.4 19.3 6.2 31.9 0.84<br />
EU25 232.90 44.7 4.7 1.0 7.0 5.5 37.0 0.33<br />
Note: Data are taken from the Final <strong>Report</strong> of WP5b though they differ from those included<br />
there because instead of assuming that missing figures are zero (which they are known not to<br />
be), they have been estimated from the data for similar countries. These estimates are shown<br />
in italics. While the data for these countries are uncertain, they are likely to be closer to the<br />
actual ones than those ishown in the report.<br />
* CC4 = the four EU15 Cohesion countries, Greece, Spain, Ireland and Portugal<br />
EU11 = the other 11 EU15 Member States.<br />
Source: Ex post evaluation, WP5b, Environment and Climate change, Final <strong>Report</strong>, p.21<br />
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In the EU10 countries, EU sources of finance for environmental infrastructure were slightly less<br />
important than in the four EU15 Cohesion countries over the period and national government<br />
sources, on average, slightly more important. This is largely because the ERDF only began to<br />
provide support from mid-2004. Up to then, funding was provided by ISPA, though in most cases<br />
on a smaller scale. It, nevertheless, accounted for around 14-17% of the total over the period<br />
2000-2006. Over the period when the countries were eligible for ERDF support, this provided an<br />
estimated 5% or so of total finance for expenditure. The Cohesion Fund was a far larger source of<br />
finance from mid-2004 on, accounting perhaps for close to half of total support over this period<br />
and around 80-90% in the three Baltic States.<br />
3.6.3 The division of funding between areas of intervention<br />
Overall, expenditure on environmental protection and improvement accounted for around 20% of<br />
the support provided by the ERDF in Objective 1 regions in the EU15 over the programming<br />
period, the proportion varying from 37% in Flevoland in the Netherlands to only around 3% in the<br />
Finnish regions and just 1% in the Swedish ones (Table 3.8). These figures, which relate to<br />
expenditure as at the end of 2008, were slightly lower than initially planned in most countries,<br />
especially in Spain where the proportion was some 5 percentage points less than that initially<br />
allocated.<br />
As indicated above, most of the support from the ERDF on environmental protection and<br />
improvement in Objective 1 regions in the EU15 over the period went on infrastructure to ensure<br />
increased access to clean drinking water, the treatment of wastewater and the management of<br />
other kinds of waste, on the one hand, and the rehabilitation of polluted or rundown areas, on<br />
the other hand. The former accounted, on average, for 48% of total environmental expenditure<br />
financed by the ERDF, the latter for around 44% if the restoration of historical buildings,<br />
monuments and other parts of the cultural heritage is included.<br />
This division of expenditure varied markedly across countries. There was an especially high<br />
concentration of spending on infrastructure investment from the ERDF in Ireland, where all of the<br />
funding for the environment went on extending access to clean drinking water and the disposal<br />
of waste and waste water. In addition, in the Spanish and French Objective 1 regions – mostly<br />
those overseas in the French case – support for infrastructure accounted for 62-63% of ERDF<br />
financing. By contrast, there was more of a concentration of funding on cleaning up polluted<br />
areas in Portugal, where with the restoration of the cultural heritage, this also absorbed around<br />
62% of total funding, and Greece, where the figure was around 55%, most of it going on restoring<br />
and maintaining the cultural heritage. Nevertheless, it was still the case that over 30% of the ERDF<br />
went to supporting infrastructure investment in both countries. There was even more<br />
concentration of funding in these broad areas in the Objective 1 regions in the UK and the single<br />
Objective 1 regions in Belgium and the Netherlands, the proportion rising to 86% in the last.<br />
In Objective 1 regions in the EU10 countries, just over 18% of the ERDF received went on<br />
environmental projects on average, in this case the proportion varying from 45% in Malta to only<br />
8% in Estonia, with only the Czech Republic and Slovakia having a proportion above 20% (see<br />
Table 3.9). In these countries, the share of funding going to environmental expenditure was<br />
broadly in line with what was initially planned, with only Malta (where the share of spending in<br />
this area fell short of plans by around 2.5 percentage points) and Slovakia (where spending<br />
exceeded plans by a similar amount) being exceptions.<br />
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The division of funding between different types of project varied just as much if not more than in<br />
the EU15. Overall some 36% of the ERDF directed to the environment went on infrastructure<br />
projects to extend access to clean drinking water and on waste and wastewater disposal and<br />
treatment, around 31% went on cleaning up polluted areas and maintaining the cultural heritage,<br />
while the rest was spread across other areas, such as developing renewable energy sources and<br />
combating air pollution.<br />
Infrastructure investment accounted for a particularly large proportion of environmental<br />
expenditure in Slovakia (64%), Latvia (60%) and to a lesser extent in Malta (54%), while the<br />
cleaning up of polluted areas was more important in Hungary (absorbing 55% of the ERDF going<br />
to environmental projects), Slovenia (50%) and Estonia (48%). In both Latvia and Lithuania, in stark<br />
contrast to the other countries, 40% or more of the ERDF in this area went to projects for<br />
improving energy efficiency.<br />
In Objective 2 regions in the EU15, 22% of the ERDF support provided went, on average, to<br />
environmental projects (Table 3.10). The proportion varied from 52% in Luxembourg and 31-32%<br />
in Italy and the Netherlands (where Objective 1 spending in this area was equally relatively high)<br />
to only around 9% in Sweden (where Objective 1 spending in this area was also relatively low) and<br />
7% in Denmark.<br />
In contrast to Objective 1 regions, relatively little of the ERDF going to this broad area went on<br />
supporting investment in environmental infrastructure (only around 20% of the total), reflecting<br />
the generally more developed nature of the regions assisted, though in Spain, a relatively large<br />
proportion of funding went on such support (43%). Most of the funding in most countries (around<br />
two-thirds overall) went on cleaning up polluted areas and maintaining the cultural heritage,<br />
though the last was important only in Spain and Italy. In the Netherlands and the UK, over 90% of<br />
the expenditure funded by the ERDF on environmental projects, was directed to this area together<br />
with preserving the natural landscape, while in Belgium, Germany, Luxembourg and Sweden, it<br />
was over 75%.<br />
In Austria and Finland, on the other hand, a significant proportion of funding (52% and 44%,<br />
respectively) went on supporting the adoption of environmentally-friendly technology by SMEs.<br />
These were the only two countries in which this was the case and where, accordingly, where the<br />
ERDF was used for potentially commercial purposes, to the extent that such technology could<br />
offer the firms concerned a competitive edge (see below), as well as, of course, reducing the<br />
pollution or emissions they caused (and therefore, the social costs of their operations).<br />
In the three EU10 regions receiving funding under Objective 2, a relatively large proportion of this<br />
went on environmental projects in both Praha and Bratislava (43% in the former, some 3<br />
percentage points less than initially planned, and 35% in the latter, 4 percentage points more<br />
than planned). In both, all, or nearly all, of the funding went to cleaning up polluted or rundown<br />
areas, predominantly parts of the two cities. In Cyprus, on the other hand, relatively little funding<br />
was allocated to environmental projects (11%), most of it to supporting the adoption of<br />
environmentally-friendly technology in SMEs (70%).<br />
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Table 3.8 Expenditure on the environment financed by the ERDF by field of intervention in Objective 1 regions in the EU15, 2000-2006<br />
% Environmental expenditure financed by ERDF<br />
BE DE IE EL ES FR IT NL AT PT FI SE UK EU15<br />
Maintaining woodlands 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0<br />
Preserving landscape, forests 0.0 0.0 0.0 0.0 0.0 0.2 3.0 3.7 0.0 0.2 0.0 0.0 0.3 0.6<br />
Environ-friendly tech (large firms) 0.0 0.0 0.0 3.8 0.0 0.4 1.7 0.4 0.0 2.7 0.0 0.0 3.4 1.5<br />
Environ-friendly technology (SMEs) 0.0 9.0 0.0 5.2 0.3 0.5 5.2 6.6 13.1 1.9 0.0 0.0 9.3 4.0<br />
Renewable energy sources 4.2 0.6 0.0 0.3 0.8 2.7 1.8 0.4 51.2 1.2 50.0 0.0 2.0 1.1<br />
Energy efficiency 6.3 0.0 4.1 1.4 0.6 0.8 0.6 2.4 0.0 0.0 0.0 0.0 2.3 0.7<br />
Environmental infrastructure 0.0 4.4 0.0 0.1 21.7 11.6 3.0 0.0 0.0 2.7 0.0 48.9 0.0 7.8<br />
Air 0.0 0.7 0.0 0.4 0.2 0.1 2.1 0.0 0.0 0.3 0.0 0.0 0.0 0.7<br />
Noise 0.0 0.0 0.0 0.1 0.0 0.0 0.2 0.0 0.0 0.3 0.0 0.0 0.0 0.1<br />
Urban and industrial waste 6.8 7.0 32.3 11.8 3.0 10.1 7.8 0.4 0.0 1.9 0.0 0.0 1.7 6.2<br />
Drinking water (incl. distrib) 9.2 7.4 27.3 10.6 17.3 31.6 15.9 0.0 35.7 9.9 0.0 0.0 9.8 13.5<br />
Sewerage and purification 8.2 34.1 36.2 11.8 20.0 10.4 22.9 0.4 0.0 16.7 50.0 0.0 5.8 20.3<br />
Planning and rehabilitation 0.0 0.0 0.0 0.2 0.2 3.1 0.1 0.0 0.0 3.8 0.0 51.1 5.1 1.0<br />
Rehabilitation of industrial sites 65.3 12.7 0.0 2.0 0.6 2.6 1.3 11.8 0.0 5.7 0.0 0.0 40.4 5.6<br />
Rehabilitation of urban areas 0.0 22.8 0.0 16.3 6.1 23.5 14.8 74.0 0.0 34.4 0.0 0.0 19.9 17.3<br />
Protecting, improving natural environ 0.0 0.7 0.0 3.6 23.6 1.9 8.9 0.0 0.0 12.9 0.0 0.0 0.0 10.5<br />
Maintaining, restoring culturl heritage 0.0 0.6 0.0 32.4 5.6 0.7 10.5 0.0 0.0 5.4 0.0 0.0 0.0 9.2<br />
Total environment as % Total expend 11.2 23.0 11.2 17.5 19.1 24.2 21.3 36.7 6.4 20.9 3.5 1.3 19.6 19.8<br />
Note: Expenditure as at end-2008<br />
Source: Estimates based on DG Regio data<br />
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Table 3.9 Expenditure on the environment financed by the ERDF by field of intervention in Objective 1 regions in the EU10, 2000-2006<br />
% Environmental expenditure financed by ERDF<br />
CZ EE LV LT HU MT PL SI SK EU10 EU25<br />
Maintaining woodlands 0.0 0.0 0.0 0.0 3.1 0.0 0.0 0.0 0.0 0.4 0.0<br />
Preserving landscape, forests 0.0 0.0 0.0 16.2 3.1 0.0 0.0 0.0 0.0 1.2 0.6<br />
Environ-friendly tech (large firms) 3.4 0.0 0.0 0.7 0.0 0.0 7.1 0.0 1.3 4.5 1.7<br />
Environ-friendly technology (SMEs) 5.2 5.7 0.0 1.1 0.0 0.5 7.1 0.0 1.2 4.8 4.0<br />
Renewable energy sources 6.3 11.2 0.0 15.9 4.1 0.9 10.8 0.0 1.2 8.4 1.7<br />
Energy efficiency 3.6 15.0 40.0 42.1 2.8 0.0 1.3 0.0 1.2 5.1 1.0<br />
Environmental infrastructure 0.0 0.0 0.0 0.0 0.0 0.0 0.0 50.0 0.0 0.4 7.2<br />
Air 2.1 0.0 0.0 0.0 0.6 31.2 10.8 0.0 23.4 8.3 1.3<br />
Noise 2.1 0.0 0.0 0.0 0.6 0.0 0.0 0.0 0.0 0.4 0.1<br />
Urban and industrial waste 6.3 14.1 14.3 1.8 6.7 13.4 10.8 0.0 22.1 10.0 6.5<br />
Drinking water (incl. distrib) 5.1 0.0 22.8 3.6 6.1 17.8 10.8 0.0 20.7 9.9 13.2<br />
Sewerage and purification 28.7 5.7 22.8 3.6 18.2 22.3 12.1 0.0 20.7 15.6 19.9<br />
Planning and rehabilitation 0.0 0.0 0.0 0.0 0.0 0.0 0.0 50.0 0.0 0.4 1.0<br />
Rehabilitation of industrial sites 20.4 10.0 0.0 15.0 13.3 13.9 4.4 0.0 1.6 8.1 5.8<br />
Rehabilitation of urban areas 12.0 7.5 0.0 0.0 28.1 0.0 2.5 0.0 1.6 7.0 16.5<br />
Protecting, improving natural environ 4.8 30.9 0.0 0.0 13.3 0.0 12.4 0.0 5.0 9.9 10.5<br />
Maintaining, restoring culturl heritage 0.0 0.0 0.0 0.0 0.0 0.0 9.8 0.0 0.0 5.4 8.8<br />
Total environment as % Total expend 25.4 7.7 12.5 12.7 16.6 45.3 19.0 10.5 21.3 18.4 19.6<br />
Note: Expenditure as at end-2008<br />
Source: Estimates based on DG Regio data<br />
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Table 3.10 Expenditure on the environment financed by the ERDF by field of intervention in Objective 2 regions in the EU25, 2000-2006<br />
% Environmental expenditure financed by ERDF<br />
BE DK DE ES FR IT LU NL AT FI SE UK EU15 CZ CY SK<br />
Maintaining woodlands 0.0 0.0 0.0 0.0 0.1 0.2 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.0 0.0 0.0<br />
Preserving landscape, forests 1.9 0.0 4.3 0.0 3.6 0.1 0.0 10.5 0.0 0.0 0.0 0.0 2.3 0.0 0.0 0.0<br />
Environ-friendly tech (large firms) 0.0 0.0 0.9 0.0 0.8 0.1 0.8 0.0 3.2 0.0 0.0 0.7 0.5 0.0 0.0 0.0<br />
Environ-friendly technology (SMEs) 1.9 0.0 6.1 1.5 4.0 4.7 0.8 7.4 52.4 43.8 0.0 5.1 6.2 1.1 69.7 0.0<br />
Renewable energy sources 3.1 0.0 2.1 1.6 1.2 2.3 0.0 0.0 10.9 0.2 4.4 0.1 1.6 0.0 0.0 0.0<br />
Energy efficiency 4.3 0.0 1.3 1.1 1.6 1.0 0.0 0.0 3.2 0.2 0.0 0.6 1.2 0.0 0.0 0.0<br />
Environmental infrastructure 7.9 59.0 10.3 0.0 11.2 6.6 21.7 0.0 0.0 11.9 5.7 2.2 7.0 0.0 0.0 0.0<br />
Air 0.0 0.0 0.3 1.1 2.0 0.5 0.0 0.0 0.0 0.0 0.0 0.0 0.9 0.0 0.0 0.0<br />
Noise 0.0 0.0 0.4 0.0 0.0 0.5 0.0 0.0 0.3 0.0 0.0 0.0 0.2 0.0 0.0 0.0<br />
Urban and industrial waste 4.7 0.0 0.0 4.4 2.4 6.2 0.0 1.9 0.0 6.4 0.0 0.1 2.8 0.0 0.0 0.0<br />
Drinking water (incl. distrib) 0.2 0.0 0.3 17.1 2.4 4.9 0.0 0.0 0.0 0.0 0.0 0.5 4.0 0.0 0.0 0.0<br />
Sewerage and purification 2.0 0.0 1.1 21.8 3.7 8.7 0.0 0.0 5.6 0.0 0.0 0.2 5.9 0.0 0.0 0.0<br />
Planning and rehabilitation 0.0 41.0 1.1 0.0 9.5 9.7 0.0 0.0 0.0 0.0 89.8 14.1 7.1 0.0 0.0 0.0<br />
Rehabilitation of industrial sites 36.5 0.0 40.9 2.3 12.6 12.8 43.0 50.5 0.0 18.8 0.0 38.1 20.6 0.0 0.0 6.9<br />
Rehabilitation of urban areas 33.3 0.0 23.3 24.8 29.1 13.7 33.7 29.7 13.8 18.7 0.0 38.2 25.1 98.9 30.3 79.5<br />
Protecting, improving natural environ 0.5 0.0 6.9 6.8 13.1 10.9 0.0 0.0 10.1 0.0 0.0 0.0 8.1 0.0 0.0 13.6<br />
Maintaining, restoring culturl heritage 3.6 0.0 0.6 17.6 2.6 17.1 0.0 0.0 0.5 0.0 0.0 0.0 6.4 0.0 0.0 0.0<br />
Total environment as % Total expend 14.3 6.6 21.9 26.9 24.5 31.0 51.8 31.9 12.9 25.3 8.6 12.1 22.1 42.8 10.9 34.7<br />
Note: Expenditure as at end-2008<br />
Source: Estimates based on DG Regio data<br />
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3.6.4 The effects of ERDF intervention<br />
The main tangible result of the funding provided under cohesion policy over the period as<br />
regards the environment was to increase the number of households connected to main drainage<br />
and wastewater treatment systems as well as to clean drinking water. This was in Objective 1<br />
regions in particular, though also in a number of Objective 2 regions in Spain and Italy.<br />
Accordingly, the funding helped the Member States concerned move closer to compliance with<br />
the EU Directives. One effect of this was to take the pressure off underground aquifers in a<br />
number of regions, so contributing to the preservation of water reserves and, accordingly,<br />
increasing the sustainability of economic development. A further effect was to improve the quality<br />
of life in the areas concerned. Since these are predominantly rural areas, this helped to further<br />
territorial cohesion by evening up living conditions in urban and rural areas, so potentially<br />
contributing to more balanced development of the two and perhaps slowing down, or even<br />
halting, the flow of population from the former to the latter.<br />
How much of this was a result of ERDF intervention as opposed to support from the Cohesion<br />
Fund, however, is hard to tell since the two helped to finance projects in the same area, though<br />
according to the case studies, the two worked in reasonable harmony and tended to complement<br />
each other. In Portugal, for example, the Cohesion Fund was mainly used to finance ‘upstream’<br />
facilities, the ERDF, ‘downstream’ ones, the connection to final consumers in particular.<br />
Whatever the division of responsibility between the two, an additional 14 million people were<br />
connected to mains water supply over the period, almost all of them in Objective 1 regions. The<br />
largest effect was in Spain, where as noted above a significant amount of the ERDF was deployed<br />
for this purpose, with some 10.8 million people being connected. In Ireland, an additional<br />
770,000 were connected, and on a smaller, though still significant, scale, in Kentriki Makedonia,<br />
some 8% of the population were connected between 2004 and 2008, bringing those connected to<br />
95% of the total in the region. In Valencia, where a major aim was to relieve pressure on aquifers<br />
by reducing reliance on wells, water reserves were expanded though the construction of<br />
desalination plants, while some 405 kms of pipeline were completed to distribute water to final<br />
consumers. In addition, wastewater treatment plants were constructed to supply water to<br />
agriculture and irrigation channels were modernised to reduce leakages and improve the<br />
efficiency of the process.<br />
The number of additional people connected to main drainage over the period across the EU was<br />
even larger: an estimated 20.5 million, again predominantly in Objective 1 regions, most of them<br />
in Spain (7.2 million) and Italy (7.4 million), though significant numbers as well in Ireland (almost<br />
3 million, so increasing the proportion of the population covered from 25% to 90%), Germany (1.2<br />
million) and Portugal (770,000). In the Norte region alone, the proportion of the population<br />
connected increased from 58% in 2000 to 78% in 2007, while the proportion covered by<br />
wastewater treatment plants rose from 43% to 58% between these two years. In Kentriki<br />
Makedonia, the proportion connected to such plants increased from 52% to 60% (though this was<br />
still short of the government target of 75%). At the same time, the effect of this was to remove<br />
sewage from highly polluted areas around the coast, especially in or close to large towns and<br />
cities. In addition, in the Podkarpackie region of Poland, the proportion of people connected to<br />
main drainage in rural areas rose from 23% in 2003 to 31% in 2007, the ERDF being responsible<br />
for around 50% of the investment involved.<br />
In general, it is difficult to assess the effect of this investment on pollution, the quality of water in<br />
rivers and lakes or public health, since for the most part the data do not exist and if they did, it is<br />
hard to draw a direct link between the projects undertaken and improvements in these factors.<br />
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A much smaller proportion of ERDF support across the EU went to waste management in the EU15<br />
(only around 6% of the funding for environmental projects), though more in the EU10 (around<br />
22%). Most of the funding went to waste management rather than prevention or recycling, taking<br />
the form of support for selective waste collection, new waste treatment facilities and new landfill<br />
sites allied to the closure of unauthorised sites, which in Spain, amounted to some 414 over the<br />
period and in Greece to 217, while in Brandenburg in Germany, the ERDF secured the closure of<br />
60% of old sites.<br />
So far as other areas of intervention are concerned, in West Wales and the Valleys, most of the<br />
finance from the ERDF allocated to environmental measures went to support for cleaning up and<br />
renovating old industrial sites left behind by the closure of mines, metal works and so on,<br />
together with the regeneration of rundown urban areas. (This was also the case in the other UK<br />
Objective 1 regions, these two areas together accounting for around 60% of the funding over the<br />
period.) The projects co-financed led to the improvement of 940 hectares of derelict and<br />
contaminated land and the rehabilitation of further 41 hectares (including the Felinfach<br />
development site and urban areas in towns such as Merthyr Tydfil).<br />
In this region, a significant amount of funding (almost a third of the total going to environmental<br />
projects) also went to stimulating the adoption of environmentally-friendly technology in SMEs,<br />
much of it on encouraging the use of renewable energy. In South Finland, which received<br />
Objective 2 funding over the period, the finance was used for more strategic purposes, as ‘seed<br />
money’ for assisting the creation of new businesses in environmental technology and to support<br />
feasibility studies and pilot projects in the same area. The result was a significant expansion of<br />
environment-related business activity over the period, especially in clusters such as in Lahti but<br />
also in Kymenlaakso where the establishment of eco-parks have attracted SMEs specialising in<br />
these activities. This has been accompanied by increased awareness of environmental issues and<br />
research into these, coupled with greater cooperation within the sector.<br />
3.6.5 Issues to emerge<br />
A number of issues emerged from the case studies which are of wider relevance for cohesion<br />
policy. The first set of issues concerns the sustainability of the investment undertaken with ERDF<br />
support, especially in the EU10 countries. In Podkarpackie in Poland, a conclusion from the study<br />
was that many of the water treatment facilities constructed were both more sophisticated and<br />
larger in terms of capacity than were needed. This was partly a consequence of overestimating<br />
the population which would be connected to the facility in a context of considerable outward<br />
migration. It was also a consequence of over-estimating the number of people prepared to pay<br />
for the service provided. At the same time, however, it raises questions about the amount of<br />
consideration given to the cost effectiveness of the investment when deciding on the plant to be<br />
constructed and the degree of incentive which exists in the funding system to ensure value for<br />
money. The longer-term problem created is that of covering the costs of operating and<br />
maintaining the facility put in place.<br />
The second broad issue concerns the spatial concentration of intervention which was a feature of<br />
Objective 2 in the 2000-2006 period. In South Finland, for example, this concentration led to the<br />
focus of policy on support for innovation in SMEs, since the main environmental problem for the<br />
region, both during the period and since, is the pollution of the Baltic Sea, the source of which<br />
lies outside the region, in this case in the wastewater and pollutants released into the sea from<br />
Russia. Although it can be argued that the spatial concentration of funding led to tangible results<br />
in the form of the development of the environmental technology industry, the general point is<br />
that environmental problems very often emanate from outside a region, especially if narrowly<br />
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defined but also in this case even if more widely defined. Tackling the problem effectively,<br />
therefore, typically requires cooperation across regional and even national boundaries.<br />
A third and related issue is illustrated in particular by the experience in Midi-Pyrénées, where the<br />
emphasis was very much on giving local authorities the freedom to determine their own<br />
development strategies, which led to some lack of coherence between them, which in turn has led<br />
to environmental policy at least being centralised in the present programming period. Whereas,<br />
therefore, the authorities on the ground may know best which uses of funding are best suited to<br />
meeting local needs, there still needs to be some overall coordinating framework in place to<br />
ensure consistency between the measures implemented.<br />
A fourth issue concerns the planning of environmental policy and the capacity of the authorities,<br />
especially at the regional level, to do this effectively, as well as integrating it into an overall<br />
strategy for regional development. Although, therefore, the importance of protecting and<br />
improving the environment was emphasised as being important for development at the beginning<br />
of the programming period, there was little attempt to relate the projects undertaken with other<br />
aspects of development policy in the case study regions over the period. Decisions on the<br />
construction of environmental infrastructure were, therefore largely taken independently of<br />
measures implemented in other policy areas, such as for example support of tourism.<br />
Accordingly, the environmental projects undertaken had less effect on economic development<br />
than they might potentially have done.<br />
An exception to this, however, is the policy pursued in South Finland of concentrating support on<br />
the development of environmentally-related business activities. As indicated above, this was<br />
accompanied by the creation of clusters and is closely linked to a wider, long-term strategy of<br />
encouraging the growth of knowledge-based industries, which begins with ensuring a high level<br />
of education among working-age population. The use of Objective 2 support in South Finland<br />
also illustrates what can be done with a relatively small amount of funding, exemplifying the<br />
wider effects of investing in feasibility plans and innovative pilot projects.<br />
3.6.6 Main findings<br />
More generally, the main findings of the evaluation are that the funding provided by cohesion<br />
policy over the period was directed less to measures for stimulating economic development and<br />
more to improving living conditions and the standard of life in the parts of the EU assisted.<br />
Although in the short-term, the contribution to economic growth was in general limited, in the<br />
longer-term, the improvements brought about, especially in both more rural and more deprived<br />
urban areas, are likely to lead to more balanced as well as more sustainable development. As<br />
such, cohesion policy in this particular area served unquestionably to further social and territorial<br />
cohesion and may, ultimately, result in more sustained economic development.<br />
Whether the funding, by being used to a significant extent to help Member States move closer to<br />
compliance with EU Directives on water and waste, was deployed in the most effective way given<br />
the objectives of cohesion policy is an open question. It is clear that the less developed parts of<br />
the EU had to move in this direction and so needed to find the finance for such a move. It is also<br />
clear that the investment undertaken and its results have helped to even up living and working<br />
conditions both between and within regions, so alleviating a possible constraint on to the<br />
development of the less favoured areas. At the same time, it is arguable that it would have been<br />
better to have a more thorough assessment of the potential effects of using the ERDF in this way<br />
at the beginning of the programming period rather than at the end.<br />
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3.7 CLIMATE CHANGE AND SUSTAINABLE DEVELOPMENT<br />
3.7.1 Climate change: a new challenge<br />
Climate change, adapting to it and attempting to mitigate it, is high on the political agenda. Yet,<br />
this was not the case when Member States and regions prepared their programmes for the 2000-<br />
2006 period. Nevertheless, the study carried out as part of the evaluation 32 found that altogether<br />
120 operational programmes supported measures related to combating climate change,<br />
accounting for funding of EUR 2.3 billion in total, or 9% of ERDF spending on the environment. Of<br />
this, 60% went to the support of environmentally-friendly technologies in enterprises, 23% to<br />
renewable energy and 13% to energy efficiency.<br />
A further interest was to explore whether cohesion policy programmes carried out over the period<br />
provide a useful guide to the design of interventions in this area. The study found some novel<br />
approaches (see Box on the Czech Republic) but also concluded that it is a significant challenge<br />
to design effective and efficient public interventions. These need to include a detailed<br />
understanding by the authorities responsible of issues like the revenue-raising capacity of<br />
renewable energy projects and appropriate methods for monitoring and evaluating climate<br />
relevant actions. Another part of the ex-post evaluation developed first elements for such a<br />
monitoring system 33 .<br />
Box – Czech Republic<br />
In the Czech Republic a support scheme was introduced aimed at improving the energy efficiency<br />
of technologies used by SMEs. An independent energy audit was carried out before SMEs applied<br />
for support, the amount of which depended in part on the planned reduction in greenhouse gases<br />
(GHG), calculated on the basis of the energy production mix in the Czech Republic. The firms<br />
supported then had to report their energy consumption for three years after receiving the subsidy.<br />
The results of the scheme are positive and the costs involved are in line with those of other types<br />
of measure for reducing GHG emissions for a similar amount.<br />
Box – Açores, Portugal<br />
The Açores region consists of 9 islands which because of their geographical features cannot easily<br />
be linked by an electricity grid. The main aim of the regional authorities was to improve the<br />
islands’ energy supply at the same time as reducing emission. In 2003, a decision was taken to<br />
invest in renewable energy to replace traditional, fossil fuel electricity generation. Although the<br />
islands' geography was highly suitable for wind and geothermal energy production, installing<br />
generating facilities and, more importantly, connecting them proved to be more difficult than<br />
anticipated. Both wind power and hydro electricity generation produce fluctuating amounts of<br />
energy which is hard to control and which cannot be distributed between islands to reduce<br />
mismatches between supply and demand. This illustrates the problem of using these means to<br />
produce electricity in a situation where this is a small market and a lack of an effective distribution<br />
system given the high cost of construction involved.<br />
32 Ex post evaluation 2000-06, Work Package 5b: Environment and climate change, ADE. The evaluation carried out<br />
three case studies in Germany (Sachsen-Anhalt), the Czech Republic and Spain.<br />
33 Ex post evaluation 2000-06, Work Package 2: Data feasibility study, ADE. The evaluation carried out three case<br />
studies in France (Corse), Germany (Rheinland-Pfalz) and the Czech Republic.<br />
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A third aim of the evaluation 34 was to examine whether the management and implementation<br />
system for cohesion policy had the capacity to enable a strategy to be designed and pursued<br />
which was consistent with sustainable development, defined very broadly to encompass the many<br />
and various aspects which this involves. Based on ten case studies and a review of the literature,<br />
the evaluation demonstrated that the system, with programmes based on an analysis of the<br />
economic, social and environmental situation of a region, the setting of appropriate objectives<br />
and the involvement of relevant partners, is suitable for delivering sustainable regional<br />
development.<br />
What emerged from the evaluation was evidence of the building of awareness and the testing of<br />
appropriate measures. The case studies undertaken provided a clear demonstration that the<br />
pursuit of a sustainable development strategy requires political commitment and consensus as<br />
well as the setting of clear and relevant targets. The establishment of suitable administrative<br />
procedures in itself is not enough.<br />
An Integrated Sustainability Triangle for project assessment in Brandenburg, Germany<br />
In Brandenburg, discussion about assessing the sustainability of the ERDF funded projects was<br />
initiated by the <strong>European</strong> <strong>Commission</strong> which requested an assessment of the environmental effects<br />
of funding in the context of a planned programme modification after the mid-term evaluation.<br />
Since there were no adequate sustainable development (SD) indicators in the monitoring system,<br />
the Managing Authority used the opportunity to initiate a broader debate on the sustainability of<br />
the projects funded. Together with the investment bank of the Brandenburg Land (ILB), it developed<br />
a tool for project assessment which not only estimated the environmental effects but also the<br />
economic and social impacts – namely, the 'Integrated Sustainability Triangle' (IST). Based on the<br />
IST, every project is assessed for all three SD dimensions from two perspectives: first, design and<br />
implementation (‘how?’) and, secondly, the results and effects (with what outcome?).<br />
3.7.2 Main issues arising<br />
• In the 2000-2006 programming period, the ERDF supported interventions relevant for<br />
adaptation to climate change, even if on a relatively small scale.<br />
• More guidance and development work are needed to design interventions that are<br />
effective and efficient and monitored and evaluated to a high standard. Support from the<br />
ERDF should only be provided where there is a clear case for public intervention.<br />
• The programme based management system of cohesion policy has the capability of<br />
delivering integrated strategies for sustainable development, but political leadership and<br />
clear and agreed objectives are required for such strategies to be designed and<br />
implemented effectively.<br />
3.8 RURAL DEVELOPMENT<br />
3.8.1 What was the purpose of the evaluation?<br />
It was not a specific objective of the ERDF over the 2000-2006 period to assist the development<br />
of rural areas as distinct from that of non-rural areas. This was left to the EAGGF. Instead, the<br />
ERDF was aimed at assisting the development of all problem regions, whether lagging behind<br />
(supported under Objective 1) or experiencing specific difficulties (supported under Objective 2)<br />
whatever their characteristics. Nevertheless, the growing policy concern with sustainability and<br />
34 Ex post evaluation 2000-06, Work package 11: Management and implementation systems, EPRC.<br />
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territorial balance and the depopulation of many of the more sparsely populated parts of the EU<br />
mean that there has been increasing interest in the fortunes of rural areas and the problems they<br />
face.<br />
These areas, and the role of the ERDF in assisting their development, were included in the<br />
evaluation as a specific issue for investigation.<br />
3.8.2 What are rural areas?<br />
The first problem encountered when examining these issues is to identify rural areas. As<br />
indicated in Chapter 1, there is a widely accepted OECD definition of rural areas for research<br />
purposes, which relates to small areas, or local units, with a low population density (specifically<br />
below 150 per square km). Since, however, there are little if any data for areas this small, rural<br />
areas tend to be defined, as here, at the NUTS 3 regional level, the smallest areas for which there<br />
are at least some data for all EU Member States.<br />
Accordingly, there may be rural local units even in NUTS 3 regions defined as being<br />
predominantly urban and even more so in intermediate regions. Indeed, as the evaluation<br />
revealed, the OECD definition does not necessarily correspond with what administrative<br />
authorities across the EU regard as being rural areas, which are often defined, if not very<br />
precisely, on a smaller scale than NUTS 3 35 . Policy towards rural areas at national or regional<br />
level, therefore, may target slightly different regions than those defined as rural in the evaluation<br />
– or, indeed, by researchers generally. Nevertheless, these areas are usually small and most rural<br />
areas as commonly understood would tend to be in, or coincide with, NUTS 3 regions defined as<br />
being rural. Focusing on these regions, therefore, ought to give a reasonable indication of both<br />
the funding going to rural areas over the programming period and the types of project it helped<br />
to finance.<br />
3.8.3 What were the policy objectives in rural area?<br />
As the evaluation also revealed, there is no neat and simple economic theory which prescribes<br />
what development strategy should be adopted in rural areas as opposed to other types. Indeed,<br />
economic theories for the most part do not distinguish between types of region in this sense. At<br />
the same time, there is increasing emphasis on the need for policy to be tailored to the specific<br />
features of a region, to make the most of its endowment of resources or assets, widely defined,<br />
and to develop its areas of potential comparative advantage accordingly. Equally, the growing<br />
concern with on sustainability implies that the development path pursued should not give rise to<br />
significant damage to the environment or the region’s natural assets.<br />
In practice, policy towards rural areas differed across the EU, though there was a common aim of<br />
trying to maintain population in the areas concerned and, therefore, economic activity. In some<br />
countries, however, such as Germany or Spain, this was regarded to a large extent as being<br />
coincident with supporting agriculture. In others, such as Sweden or France, a broader<br />
perspective was taken, though in neither country was there a specific focus on rural areas as<br />
such. Instead the concern was with the development of regions which happened to be rural. The<br />
difference mirrors that between the EAGGF, which was predominantly directed towards assisting<br />
the agricultural sector and closely related activities, and the ERDF, which was more focused on<br />
the development of the region as such, as indicated below.<br />
35 These can be relatively large and populous regions – the whole ‘Communidad’ of Madrid, for example, is a single<br />
NUTS 3 region with a population of around 5.8 million.<br />
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Whatever the policy followed, there was at least an implicit recognition in most cases that<br />
development in rural areas was not the same as development in more urban area and that it was<br />
important to preserve the rural nature of the area concerned when formulating policy. A further<br />
point to note is that the maintenance of population in rural areas need not imply a need to<br />
stimulate economic development there, though it does imply that the people in the areas need to<br />
have access to sufficient income to be able to live there.<br />
In view of this, a further distinction can usefully be made between rural areas which are<br />
reasonably close to a sizeable town or city and those which are further away (see Chapter 1<br />
above). This can be expected to affect both their development prospects and their ability to retain<br />
population, on the one hand, and the extent to which they need to develop a more independent<br />
economic strategy, on the other. Cities which are within commuting distance, accordingly,<br />
provide a potential source of employment and income to help sustain population in the area<br />
concerned.<br />
3.8.4 What was the scale of support for rural areas from the ERDF?<br />
As indicated in Chapter 1 above, around 27% of total ERDF support under Objective 1 in the EU15<br />
(around EUR 25 billion) went to rural areas over the 2000-2006 period. Moreover, there was a<br />
relative concentration of financing in rural areas within Objective 1 regions in the EU15, especially<br />
in those remote from a city, which tended to be peripheral, The amount of funding per head of<br />
population in these areas was around 40% larger than in other areas in Objective 1 regions. This<br />
relative concentration was evident in nearly all EU15 countries, especially in Finland and Sweden,<br />
though it was not the case in Italy or the UK,<br />
In the EU10, only in Hungary was funding per head significantly larger in remote rural areas than<br />
in other types. In Poland, Latvia and Lithuania, funding per head was smaller than elsewhere.<br />
Taking account of areas close to a city as well, funding per head was also relatively large in rural<br />
areas in Slovakia, Slovenia, the Czech Republic as well as Hungary, In Poland, Latvia and<br />
Lithuania, it remained smaller than in other regions.<br />
Around 21% of Objective 2 funding (around EUR 4.6) went to rural areas in the EU15 countries. As<br />
in Objective 1 regions, this was significantly more than their share of population – well over twice<br />
as large in the case of remote rural areas and around 1.6 times as large in those close to a city –<br />
indicating a relative concentration of funding in rural areas. This was the case in all Member<br />
States.<br />
3.8.5 What was the funding spent on?<br />
As also indicated in Chapter 1, the division of funding between policy areas in rural parts of<br />
Objective 1 regions differed markedly across countries in the EU15. Moreover, there was no<br />
systematic difference in the division of funding between rural areas and others, except that a<br />
smaller share went to RTDI than in urban areas. Accordingly, in most countries, the division of<br />
funding in rural areas broadly reflected that in other areas while not being precisely the same. In<br />
Greece, Spain and Ireland, a relatively large share went on improving transport networks, in<br />
Finland and Sweden, on enterprise support. In other countries, there was a more even distribution<br />
across policy areas. Very little of the ERDF was spent on the development of rural areas as such<br />
(under 2% of total funding) in any regions.<br />
Much the same was the case in the EU10 Member States, with the division of funding in rural<br />
areas broadly reflecting that in other parts of the country.<br />
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In sum, in both the EU15 and EU10, Objective 1 funding was deployed in different ways in rural<br />
areas across Member States, suggesting that if there was a rural development strategy, it was not<br />
a common one.<br />
The extent of differences across countries in the division of Objective 2 funding in rural areas was<br />
equally wide. Nevertheless, there were more common features than in Objective 1 regions, with<br />
more spending on environmental infrastructure and tourism in particular in rural areas than<br />
elsewhere. The share of funding going to enterprise support, however, varied across countries,<br />
being relatively large in France, the Netherlands, Finland, Sweden and the UK, but not in Germany,<br />
Italy, Austria or Spain.<br />
In both Objective 1 and Objective 2 regions, enterprise support accounted for a larger share of<br />
funding in remote rural areas than in those close to a city, so that there was more emphasis put<br />
on the development of economic activity in the former than the latter, where the nearby city<br />
might be a source of income and jobs.<br />
The relatively dispersed nature of the financial support provided by the ERDF in rural areas<br />
contrasted with the concentration of the EAGGF on agriculture in such areas, though as indicated<br />
above, the areas concerned do not necessarily coincide.<br />
3.8.6 What were the effects of ERDF support in rural areas?<br />
The case studies carried out as part of the evaluation, together with more detailed examination of<br />
the expenditure financed by the ERDF, suggests that the relatively large amount of support for<br />
investment in transport – especially in Greece, Spain and Ireland – mainly went on improving the<br />
rural road network and linkages between towns in the areas as well as with towns and cities in<br />
neighbouring regions. Accordingly, it led to an increase in accessibility and helped to make it<br />
easier for people to live in rural areas and work elsewhere or take advantage of the amenities in<br />
larger cities outside the area. Equally, the investment in improvements in water supply and<br />
wastewater treatment helped to improve living conditions in the areas concerned.<br />
Both sets of action are likely to have contributed to achieving more balanced territorial<br />
development as well as strengthening social cohesion, whatever the effects on economic growth.<br />
This applies as well to the support going to local communities over the period, such as on:<br />
• the rehabilitation of rural villages in a number of areas across the EU;<br />
• the restoration of historical buildings and monuments in rural towns in Italy co-financed<br />
under both Objective 1 and Objective 2;<br />
• support for social infrastructure in rural areas in Portugal, in particular, and to a lesser<br />
extent in Greece;<br />
• support for social infrastructure in the form, for example, of childcare centres and<br />
catering facilities in the Centre region of France;<br />
• the support to social infrastructure in the EU10 countries in rural areas, especially in<br />
Estonia, where over 40% of the ERDF in remote rural areas was allocated to this, though<br />
also in Lithuania, where the proportion was over 20%, and Poland, where the figure was<br />
smaller (just over 9%) but still significantly larger than in more urban areas.<br />
3.8.7 Issues to arise from the evaluation<br />
As indicated above, in many rural areas, a significant part of ERDF co-financing went to local<br />
development projects, the main outcome of which – if not necessarily the expressed purpose –<br />
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was to improve living standards and the quality of life in the local areas concerned. While this<br />
may well have contributed to strengthening social cohesion as well as territorial balance by<br />
encouraging people to live in such areas, it raises a question over the extent to which such<br />
‘bottom-up’ actions need to be coordinated within an overall development strategy. In the Centre<br />
region of France, for example, as the case study revealed, funding was distributed to local<br />
communities to do more or less as they wished, leading to some duplication of projects. It also<br />
raises a broader question over the role of regional authorities across the EU in the design and<br />
implementation of cohesion policy, given that in many countries, such authorities are essentially<br />
administrative arms of central government and the next political level down from central<br />
government are local authorities.<br />
A related point is that while the emphasis of cohesion policy has tended historically to be on<br />
economic development – to enable all regions to develop their economic potential – economic<br />
development is not necessarily a suitable or appropriate aim for all regions and still less for all<br />
areas within regions, Accordingly, not only is it the case that development should be consistent<br />
with preserving the natural assets of a region but that in some areas this may mean little or no<br />
economic development at all, or at least one which is confined to particular activities. This need<br />
not mean depopulation so long as there is a sustainable source of income for the people<br />
concerned. In both the Sachsen region of Germany and the Świętokrzyskie region of Poland,<br />
therefore, the support given to enterprises in neighbouring urban areas benefited those living in<br />
rural areas by providing employment for them, even if not locally.<br />
As the evaluation – and the above review of the division of funding – also emphasises, there is far<br />
from being a single development strategy which fits all rural areas. Such areas are no different<br />
from other types of area in terms of their wide range of different circumstances, resource<br />
endowments of various kinds, levels of economic development and political priorities, all of which<br />
affect the most appropriate strategy to pursue.<br />
A further point to emerge is that although there were two other EU sources of funding for rural<br />
areas in addition to the ERDF, there was a reasonable degree of coordination between its activities<br />
and those of the EAGGF and ESF. The relatively narrow focus of the EAGGF on supporting the<br />
agricultural sector and closely related activities and that of the ESF on supporting education and<br />
training made it clear for the most part which fund was the relevant one for financing any<br />
particular project or measure. Nevertheless, there is scope for potential conflict, or lack of<br />
coordination, between the ERDF and the EAGGF, in particular. This is because the ERDF is<br />
primarily focused on restructuring so far as the economic development of rural areas is<br />
concerned, which implies diversification of activities away from agriculture, whereas the EAGGF is<br />
focused on attempting to increase the competitiveness of the sector and the scope of its<br />
activities. It is not clear, therefore, that the two Funds share the same strategic vision of<br />
development, which is essential not only to avoid potential conflict between the measures<br />
implemented but also to ensure that the policy itself is as effective as possible in pursuing the<br />
vision concerned.<br />
3.9 GENDER EQUALITY AND DEMOGRAPHIC CHANGE<br />
Two related horizontal issues were also covered by the evaluation. The first, equal opportunities,<br />
was included in the cohesion policy guidelines as a priority which was to be explicitly taken into<br />
account in the design and implementation of projects co-financed by the Structural Funds over the<br />
period. The second, demographic change, was not an explicit cross-cutting issue as such but it<br />
became a more pressing challenge over the period. The growing number of people beyond<br />
retirement age focused attention on the importance of future growth to provide income support<br />
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and on the implications for social services and communal amenities as well as on the potential<br />
consequences for patterns of consumption. At the same time, the significant migration flows both<br />
from developing countries outside the Union and from East to West inside the Union gave rise to<br />
concerns about integration and pressure on infrastructure (on housing, schools and so on), on the<br />
one hand, and about the loss of skilled and educated labour in the regions left behind, on the other.<br />
The main interest as regards the first issue was to examine the extent to which the pursuit of<br />
gender equality was incorporated in development plans, and the form which projects took over<br />
the period, as well as the effect it had on outcomes. The concern was to see whether regulations<br />
were respected and the way in which gender equality was actually taken into account.<br />
The interest as regards the second was to consider how far an issue which emerged over the<br />
period as having important effects on regions, both actual and prospective, was reflected in the<br />
way that the ERDF was deployed. The concern was, therefore, to see whether the allocation of<br />
funding was modified as the period went on and the implications of demographic trends became<br />
more apparent. The more general interest was in see how flexible systems for managing funding<br />
were in responding to a new challenge.<br />
3.9.1 How could the use of the ERDF have responded to gender and demographic<br />
issues?<br />
While gender equality and demographic change are separate issues, they are, in practice, closely<br />
related. Ensuring that women and men have equal opportunity to access a good education, get a<br />
decent job or pursue a fulfilling career is a goal in its own right and essential to securing a just<br />
and equitable society, but it is also important for economic reasons. Not only does it add to the<br />
work force but it also tends to increase the skills available and, accordingly, helps to raise the<br />
rate of growth and improve competitiveness. As such, it is potentially important to counter the<br />
effect of demographic trends. Moreover, as the evaluation revealed, the measures which improve<br />
the situation of women are also a means of responding to demographic change, in the form of an<br />
ageing society or increased numbers of migrants.<br />
Although the issue of gender equality is more relevant for the ESF, which is concerned, in<br />
particular, with supporting education and training as well as employment and, therefore, with the<br />
areas in which equal opportunities are particularly important, the uses to which the ERDF is put<br />
can also have a gender dimension. They can equally affect the situation of older people or<br />
migrants. This can happen either directly, i.e. with projects being designed or adapted specifically<br />
with particular social groups in mind, or indirectly, as the side-effect of projects with a different<br />
main purpose.<br />
The policy areas in which the projects undertaken could have the most direct effect are:<br />
• the enterprise environment, where the support given to firms included in some regions<br />
measures to assist women entrepreneurs, but could also include support for older people<br />
or migrants to set up businesses;<br />
• social infrastructure, such as, in particular, childcare facilities, community centres,<br />
healthcare and social services (see the Box on Castilla y Leon for an example);<br />
• planning and rehabilitation, such as the renovation of rural villages or the regeneration of<br />
rundown urban centres, which can improve living conditions in the areas concerned, with<br />
particular benefit to migrant groups or the elderly who represent a large part of the<br />
population living in such areas.<br />
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The projects undertaken in other policy areas, however, can also have differential effects on the<br />
social groups concerned. Improving local roads, for example, or connections between rural areas<br />
and urban centres can make it easier for women to combine family responsibilities with working,<br />
as can improvements in public transport, which also tend to benefit the elderly in particular.<br />
3.9.2 The main findings from the evaluation<br />
Gender equality<br />
Nearly all programming documents and development strategy statements made at the beginning<br />
of the programming period mentioned gender equality and its importance, as did many projects<br />
that were initiated.<br />
In four of the case study regions (Southern and Eastern Ireland, East Scotland, Salzburg and<br />
Basilicata), special units were set up during the period to give guidance on the implementation of<br />
the gender equality guideline in project design. In Southern and Eastern Ireland, for example, a<br />
Gender Equality Unit was established with the aim of ensuring that:<br />
• the issue was incorporated in the National Development Plan;<br />
• monitoring committees took account of gender balance when assessing the operation of<br />
programmes;<br />
• gender effects were considered in project selections<br />
• equal opportunities were part of all evaluations.<br />
Similar action was taken in the other three regions, so that gender equality, as was intended,<br />
became an integral part of the deployment of the Structural Funds.<br />
It should be noted, in addition, as indicated in the national report, that all Spanish regions also<br />
created special bodies with responsibility for ensuring equal treatment of men and women. In<br />
2007, the Red de Coordinación de Políticas de Igualdad was created to coordinate regional efforts<br />
in this regard 36 .<br />
There is evidence from the case studies of concrete results from projects undertaken in<br />
improving the situation of women by helping them better to balance their family and working<br />
lives and avoid conflicts between the two. For example:<br />
• in Southern and Eastern Ireland, support under Objective 1 contributed to increasing<br />
childcare places by over 25,000 over the programming period (in this case up to the end<br />
of 2007)<br />
• in Salzburg, childcare facilities were also established, if on a far smaller scale because of<br />
the much smaller scale of funding under Objective 2.<br />
Equally, there is more qualitative evidence of transport projects helping to reduce the isolation of<br />
rural communities and of rehabilitation projects improving living conditions in many urban and<br />
rural areas.<br />
Only in a few cases, however, was there evidence of gender equality considerations affecting the<br />
policies carried out or being specifically taken into account in the design of projects or in their<br />
36 The case study of Castilla y Leaon, however, did not find that such a unit played a prominent role over the 2000-<br />
2006 period in relation to the ERDF.<br />
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implementation. Nor were there many attempts to monitor the effect of programmes in this<br />
regard or to set up an indicator system for doing so.<br />
Moreover, the regions in which special units were set up specifically to deal with gender equality<br />
issues were a minority of the regions examined as part of the evaluation. The other regions had<br />
not put in place any machinery or procedures for integrating the issue into the planning or<br />
management process. Perhaps because of this, there was little evidence of awareness among<br />
regional and local authorities of the potentially important effect on women of the kinds of project<br />
listed above, except those which have a clear impact on them, the provision of childcare centres,<br />
in particular, despite them being the prime beneficiaries.<br />
In consequence, little or no account was taken of the specific needs of women, so that the effect<br />
on them was less than it might have been.<br />
More generally, the lack of indicators means that it is not possible to assess the extent to which<br />
the inclusion of gender equality as a horizontal issue in the cohesion policy guidelines had a<br />
tangible effect on the situation of women relative to men.<br />
Box – Support for social infrastructure in Castilla y Leon<br />
In Castilla y Leon the ERDF supported the construction of 47 health centres and the enlargement<br />
and refurbishment of 91 health centres, 24-hour medical attention centres and hospitals providing<br />
services locally to the elderly, those with disabilities and other vulnerable groups. The projects<br />
were carried out in rural and urban locations, with small towns (with a population of less than<br />
20,000) benefiting the most. The result was an improvement in the living conditions of rural<br />
populations by reducing the need to travel to larger towns to access health care services and<br />
receive medical treatment. The work-life balance of carers in rural areas, generally women, equally<br />
improved due to a reduction in their work-load. In addition, there was an increase in employment<br />
opportunities at local level, especially for women. The total budget was just under 9% of the total<br />
support from the ERDF.<br />
Demographic trends<br />
There is little or no evidence that demographic trends had any influence on the allocation of ERDF<br />
support over the period or that they were taken into account by the authorities across the EU in<br />
the selection of projects or their design.<br />
As in the case of gender equality, while a number of transport projects, projects undertaken in<br />
planning and rehabilitation programmes and the construction of various kinds of social<br />
infrastructure particularly affected older age groups and/or migrants, there was little awareness<br />
of this. Accordingly, their specific needs were not explicitly considered.<br />
Although an ageing population and the inflow, or outflow, of migrants have particularly important<br />
implications for some regions, no evidence of this affecting the pursuit of cohesion policy in the<br />
12 case study regions came to light. The evaluation did, however, find evidence of growing<br />
awareness of the potential significance of demographic trends as well as evidence that the ERDF<br />
could contribute to the implementation of measures for responding to the effects of these trends.<br />
3.9.3 The issues to arise<br />
The evidence from the evaluation is that the inclusion of gender equality as a horizontal<br />
requirement when designing and implementing programmes had only limited effect on the<br />
projects undertaken over the period. This prompts the question of whether it is worthwhile<br />
including such cross-cutting priorities in the cohesion policy guidelines in future.<br />
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One point in favour is the fact that gender equality bodies were set up in a number of regions as<br />
a specific response to its inclusion and there is piecemeal evidence that it led to authorities<br />
across the EU paying more attention to the issue, if perhaps in limited ways. At the same time, it<br />
is arguable that the authorities which took the issue seriously and introduced specific<br />
arrangements to integrate it into the policy-making machinery did so because they regarded it as<br />
an important objective in their region or country. Those that did not do so attached relatively low<br />
priority to it, despite the guideline, and in many cases did the minimum amount to comply with<br />
the regulation. Simply including an issue a horizontal priority, therefore, does not ensure that it<br />
actually has a significant effect on policy unless it is perceived as being important,, in which case<br />
action would probably be taken irrespective of whether it is a horizontal priority or not.<br />
As regards demographic change, there is little evidence at all that the issues concerned entered<br />
the policy agenda at regional or local level over the period. Although there are signs of increasing<br />
awareness of the potential importance of the issues, no specific examples were found of<br />
development policy been modified in response to them.<br />
3.10 CONTRIBUTION OF THE MANAGEMENT AND IMPLEMENTATION SYSTEM TO DELIVERING<br />
EFFECTIVE POLICIES<br />
A major element of the evaluation was the examination of management and implementation<br />
systems for the delivery of cohesion policy. A particular focus was on the EU10 countries, given<br />
that this was their first experience of carrying out cohesion policy programmes. Establishing<br />
appropriate systems for doing this, which would provide the basis for designing and<br />
implementing regional development strategies in future programming periods as well as in 2000-<br />
2006, was as much an objective as the achievement of significant results from the programmes<br />
undertaken themselves. Specific findings in relation to individual EU10 Member States are<br />
presented in Chapter 4 below. Here the concern is to review the evidence from the evaluation of<br />
management and implementation systems on the performance of the policy in different<br />
intervention areas. The evaluation did not examine audit processes which should be borne in<br />
mind when reading what follows.<br />
A major conclusion of the evaluation was that, in many cases, insufficient attention was paid in<br />
delivering programmes to strategic management issues - i.e. the entire process of strategic<br />
programme design, project selection, monitoring, evaluation, reporting, financial management<br />
and partnership. This was case in both the EU10 (where this was understandable given the<br />
newness of the processes involved) and the EU15.<br />
For the EU15 countries, implementing their second, third or fourth programmes, there was<br />
evidence of positive changes:<br />
• in the quality of strategic planning, by improving the focus, coherence and credibility of<br />
strategies, involving more detailed analysis of development needs, greater consultation<br />
with partners and stronger ex ante evaluation;<br />
• in the extent of partnership, including at local level;<br />
• in the extent and quality of evaluation, which in several cases went beyond the regulatory<br />
requirements.<br />
So far as monitoring is concerned, the conclusions of the evaluation were not so positive for both<br />
the EU10 and the EU15, with over-complex and inflexible indicator systems and associated data<br />
inconsistencies. This made it difficult in this evaluation to aggregate data across countries and to<br />
assess performance on the basis of the achievement of targets.<br />
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For both the EU15 and the EU10 countries, the requirements of financial management,<br />
particularly the de-commitment rule, led to a strong focus on financial absorption, with less<br />
attention given in monitoring committees and other policy discussions to results and<br />
achievements and how they could be further improved.<br />
These findings are confirmed by the points summarised earlier in this chapter as regards policy<br />
effectiveness in the different areas of intervention examined. In particular, evaluations<br />
highlighted the need to improve the monitoring of policy effects in enterprise support, transport<br />
and the construction of environmental infrastructure.<br />
A further finding which emerged from the evaluation of management and implementation<br />
systems is that there is evidence of positive spill-overs from the systems established into the<br />
management of domestic policy, both in the EU10 and the EU15. In the EU10 countries, these<br />
related, in particular, to managerial practices for policy design and implementation, the training<br />
of staff and the development of institutions and procedures, including pressure for evidencebased<br />
policy making.<br />
The Performance Reserve<br />
The performance reserve was an important innovation in the 2000-2006 programming period. It<br />
was not covered by this evaluation because it was examined by the <strong>Commission</strong> and the Member<br />
States in 2004 and a report on its impact was produced in the same year 37 . Under the performance<br />
reserve, 4% of resources were held back at the initial programming stage for allocation at the midterm<br />
to programmes considered to be performing well. The main conclusion of the report was that<br />
its strength was in acting as an incentive for developing good management practices in relation to<br />
the absorption of funding, the production of evaluation reports on time, the development of<br />
monitoring and financial control systems and the introduction of more transparent project<br />
selection procedures.<br />
Nevertheless, significant weaknesses were also noted, particularly in the use of performance<br />
indicators, with evidence of poor target setting (either too ambitious or too cautious), which made<br />
it difficult to use these to assess performance. In addition, a variety of methods were employed<br />
across Member States to determine how the reserve should be allocated. While there were<br />
examples of good practice, such as in Italy, where a group of experts were appointed as advisors to<br />
help assess performance, in others, more perfunctory methods were employed. Essentially, the<br />
reserve enhanced compliance with the regulations rather than increasing the focus on results. The<br />
obligatory performance reserve was replaced with an optional reserve for the 2007-2013 period.<br />
In EU15 Member States, the evaluation found evidence of institutional innovations, the adoption<br />
of new procedures, improved skills in carrying out tasks and the spread of more positive attitudes<br />
towards evaluation. The spill-overs contributed to increased knowledge about policy outcomes<br />
and the progress achieved by the programmes implemented as a result of better monitoring,<br />
reporting and evaluation arrangements.<br />
An interesting conclusion to emerge from the evaluation is that the learning effects from the<br />
establishment and use of cohesion policy management and implementation systems tend to be<br />
greatest in the second programming period, that it takes time for the full benefits to materialise.<br />
In countries where the key principles embedded in the system are far removed from prevailing<br />
practices, it can take longer still.<br />
37 <strong>European</strong> <strong>Commission</strong>, Directorate General for Regional Policy (2004): A <strong>Report</strong> on the Performance Reserve and<br />
Mid Term Evaluation in Objective 1 and 2 Regions<br />
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4 Chapter 4 – The effect of cohesion policy on economic<br />
growth and regional development<br />
This chapter is divided into two parts. The first part examines the effect of cohesion policy on the<br />
growth of the economies receiving assistance on the basis of two macroeconomic models which<br />
attempt to isolate these effects from other influences; the second part considers developments in<br />
the regions concerned in different Member States in more detail and relates these to the nature of<br />
support provided by the Structural Funds.<br />
4.1 USING MACROECONOMIC MODELS TO ESTIMATE THE EFFECTS OF COHESION POLICY<br />
4.1.1 Main points<br />
• The use of macroeconomic models is the only feasible way to estimate the quantitative<br />
effect of cohesion policy on the economic development of the regions receiving Structural<br />
Fund support.<br />
• At present, the models available can estimate the effect of the receipt of Structural Funds<br />
only at national level rather than in individual regions.<br />
• These models attempt to represent the behaviour of economies as best they can, but<br />
there, of course, remains uncertainty, and debate, about how economies work in practice.<br />
• Two different models constructed on somewhat different views about how economies<br />
work were used in the evaluation to estimate the effect of cohesion policy over the 2000-<br />
2006 programming period.<br />
• According to both models, cohesion policy had significant effects in increasing economic<br />
growth in the countries receiving support.<br />
• Although the timing of these effects differs between the two models, in both cases, there<br />
is a long-term increase in the productive potential of economies as a result of the support<br />
received.<br />
• The QUEST model, which estimates the adverse effect of the higher taxes needed to fund<br />
cohesion policy as well as the beneficial effect of the additional expenditure financed,<br />
indicates that the net effect of policy is to increase the overall growth rate of the EU and<br />
not simply to transfer growth from one country to another.<br />
4.1.2 Introduction<br />
As emphasised above, it is not possible to observe a direct link between cohesion policy, and the<br />
funds made available to support this, and the development of the regions assisted, even if the<br />
latter happen to grow faster than those not assisted. The use of simulation models is, in practice,<br />
the only means of taking account of the very many factors which affect regional development and<br />
of explicitly allowing for these in order to isolate the effect of policy. Macroeconomic models<br />
have, therefore, been developed in an attempt to capture the way that economies work and to<br />
trace the effect on GDP, employment and so on of the increased public expenditure which the<br />
Structural Funds make possible. Such models have been used in the past to estimate the<br />
contribution of cohesion policy to economic growth in EU Member States in previous<br />
programming periods.<br />
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These models have become more sophisticated over time. This applies to the way they represent<br />
both the support provided by the Structural Funds – by incorporating more accurately the time<br />
profile of payments as well as the types of expenditure being funded (infrastructure, business<br />
support and so on) – and the behaviour of the economy. Nevertheless, although they attempt to<br />
reflect the results of research into the way that economies behave and, in particular, into the<br />
effects of public expenditure of the kinds supported by cohesion policy on economic variables<br />
(GDP, employment, productivity, inflation, etc,), these effects remain open to debate. As the<br />
authors of one of the models emphasise: ‘the model, while drawing on and synthesising available<br />
theory and evidence, is still somewhat experimental’ 38 .<br />
The models which have been developed are limited to examining the effect of policy on national<br />
economies or, at best, macro regions of economies (southern Italy and eastern Germany, in<br />
particular), rather than on individual regions. As such they can provide only a partial indication of<br />
the effects of policy, which is concerned with regional disparities across countries as much as<br />
with disparities between countries.<br />
Despite the limitations of models and the ongoing debate about the behavioural relationships<br />
which they incorporate, it is still useful to examine what the effects of the Structural Funds are<br />
estimated to be on the basis of the understanding of the way that economies work which they<br />
encapsulate.<br />
4.1.3 The macroeconomic models used in the evaluation<br />
Two different macroeconomic models were used in the evaluation to assess the effects of policy<br />
over the period 2000-2006. One is the QUEST model used in the <strong>European</strong> <strong>Commission</strong> for<br />
macro-economic policy analysis but especially adapted to examine the effects of structural<br />
reforms. The other is the HERMIN model (or more precisely the Cohesion System of HERMIN<br />
Models – CSHM), which has been specifically developed for examining the effects of cohesion<br />
policy. The two models incorporate different, though related, assumptions about the workings of<br />
the EU economies, though both reflecting prevailing strands of thought about how economies<br />
work 39 .<br />
The main differences relate, first, to the effect which an increase in public expenditure financed<br />
by EU funding has in boosting demand, which in the QUEST model is smaller than in the HERMIN<br />
model, due to the nature of the interactions with private demand which are assumed. Secondly,<br />
they relate to the scale of the effect of investment in infrastructure, human resources and RDTI on<br />
productive potential (on the supply side of the economy), which is larger over the medium-term<br />
in QUEST than in HERMIN, due to the explicit incorporation in the model of endogenous growth<br />
effects (i.e. the effect of the investment concerned on growth of GDP). Accordingly, the funding<br />
provided has a quicker effect in stimulating economic growth in the latter than the former, while<br />
the longer-term consequences for productivity and, therefore, growth are larger in QUEST than in<br />
HERMIN.<br />
38 John Bradley and Gerhard Untiedt, Analysis of Cohesion Policy 2000-2006 using the CSHM.<br />
39 The very summary outline of the two models which follows is in no way intended to give a full description of the<br />
two models or of the differences between them but merely to indicate one or two features which affect the<br />
estimates they produce. For more details, see: John Bradley and Gerhand Untiedt, op cit. and Janos Varga and Jan in<br />
't Veld, A model-based analysis of the impact o cohesion policy expenditure 2000-06: Simulations with the QUEST<br />
III endogenous R&D model<br />
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A third important difference between the two models is that QUEST attempts to estimate the<br />
effect of the Structural Funds plus the Cohesion Fund on all EU Member States, while HERMIN is<br />
confined to estimating the effect on those economies which are net recipients of funding. This, in<br />
practice, means the four EU15 Cohesion countries, together with the southern Objective 1 regions<br />
of Italy (the Mezzogiorno) and the Eastern Länder of Germany, plus the 10 countries which<br />
entered the EU in 2004.<br />
QUEST also explicitly models the funding of cohesion policy as well as the expenditure it gives<br />
rise to, so that the effect of policy from countries receiving financial support tends to be offset<br />
either fully or in part if they also contribute to the funding of this support. It is assumed that, in<br />
the absence of cohesion policy, taxes to fund the Community Budget would be lower in the<br />
countries contributing to the Budget and, therefore, the effect of policy is to depress expenditure<br />
and GDP at the same time as policy adds to these as funding is received 40 . QUEST can,<br />
accordingly, be used to estimate the net effect of cohesion policy across the EU and not just its<br />
(gross) contribution to growth in the countries assisted.<br />
Another major difference is that HERMIN is a collection of single country stand alone models and<br />
therefore does not capture the feedback of Structural Funds expenditure from recipient countries<br />
to others and the effects of this on the growth of the latter. QUEST on the other hand is a global<br />
model and does attempt to capture inter-country spillovers. This is potentially important since<br />
many of the countries receiving the largest amounts of funding are reliant on imports for<br />
development. A proportion of the expenditure financed by the Structural Funds, therefore,<br />
returns to the countries which are net contributors to the funding of cohesion policy in the form<br />
of imports from recipient countries. This to some extent offsets the effect of any additional taxes<br />
that they need to raise in order to fund cohesion policy.<br />
4.1.4 The scale and timing of expenditure financed by the Structural Funds<br />
To begin by examining the estimated effects of cohesion policy on the countries receiving the<br />
largest amounts of EU funding, the starting-point is the scale of support received and the timing<br />
of this. Note that it is not possible to distinguish the effect of the ERDF from the other EU sources<br />
of funding in the period, including the Cohesion Fund which went to just four countries in the<br />
EU15 – Greece, Spain, Portugal and Ireland (up to the end of 2003). .Note also that the term<br />
‘Structural Funds’ is used here to include the Cohesion Fund.<br />
The four EU15 Cohesion countries together with the Italian Mezzogiorno and the Eastern German<br />
Länder received a total of EUR 147.2 billion from the Structural Funds (the ESF, EAGGF, FIFG and<br />
ISPA as well as the ERDF) together with the Cohesion Fund for the 2000-2006 programming<br />
period, though this was paid over a slightly longer period up to the end of 2009 (Table 4.1 – data<br />
for 2008 and 2009 are preliminary, based on the figures as at Spring, 2009). This amounted to<br />
around 0.8% of the GDP of the economies in question. Portugal received the largest sum relative<br />
to its GDP (1.5%), followed by Greece (1.3%) and the Mezzogiorno (1.1%), while Ireland received<br />
the smallest sum (0.3%).<br />
40 The alternative assumption that the part of the Community Budget which goes to finance cohesion policy is used<br />
for another purpose is not considered. The taxes in question are assumed to be taxes on wages, which means that<br />
the effect is to raise costs as well as prices and so reduce the demand for exports as well as internal demand.<br />
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Table 4.1 The scale of payments from the Structural Funds and Cohesion Fund to the main<br />
recipient countries, 2000-2009<br />
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2000-09<br />
EU15<br />
PT 1.34 1.66 2.80 3.11 3.20<br />
EUR billion<br />
2.68 2.37 2.12 2.93 0.29 22.50<br />
GR 0.00 2.24 1.45 1.41 2.55 2.43 3.43 4.68 5.45 0.16 23.80<br />
MZ* 1.30 0.24 1.20 2.68 2.63 2.94 3.37 3.31 3.24 0.48 21.40<br />
GE* 0.68 2.24 2.50 2.43 2.92 3.03 2.85 2.61 2.10 0.02 21.39<br />
ES 0.30 5.33 7.93 8.22 8.10 7.63 5.51 5.46 5.44 0.40 54.30<br />
IE 0.21 0.46 0.61 0.55 0.54 0.43 0.41 0.24 0.30 0.01 3.76<br />
Total 3.83 12.17 16.49 18.39 19.93 19.14 17.95 18.42 19.47 1.36 147.16<br />
LV 0.01 0.02 0.02 0.09 0.17 0.17 0.39 0.26 0.01 1.14<br />
LT 0.01 0.03 0.03 0.11 0.19 0.23 0.39 0.48 0.03 1.49<br />
EE 0.01 0.01 0.02 0.06 0.10 0.16 0.16 0.15 0.00 0.66<br />
PL 0.05 0.16 0.17 1.06 1.00 2.13 3.37 3.15 0.29 11.37<br />
SK 0.00 0.02 0.03 0.15 0.20 0.30 0.43 0.51 0.00 1.65<br />
HU 0.03 0.04 0.05 0.24 0.40 0.75 0.85 0.42 0.04 2.82<br />
CZ 0.01 0.03 0.05 0.23 0.20 0.51 0.61 0.69 0.03 2.37<br />
MT 0.01 0.01 0.02 0.03 0.02 0.00 0.08<br />
SI 0.00 0.01 0.01 0.03 0.06 0.10 0.08 0.11 0.01 0.40<br />
CY 0.01 0.01 0.01 0.02 0.03 0.00 0.08<br />
EU10 0.12 0.32 0.38 1.99 2.33 4.37 6.33 5.82 0.41 22.06<br />
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2000-09<br />
% GDP<br />
PT 1.10 1.28 2.07 2.24 2.22 1.80 1.53 1.30 1.76 0.18 1.53<br />
GR 0.00 1.53 0.92 0.82 1.37 1.24 1.63 2.07 2.28 0.07 1.25<br />
MZ* 0.90 0.16 0.74 1.58 1.49 1.60 1.77 1.66 1.56 0.21 1.18<br />
GE* 0.22 0.73 0.79 0.77 0.90 0.93 0.85 0.75 0.58 0.01 0.65<br />
ES 0.05 0.78 1.09 1.05 0.96 0.84 0.56 0.52 0.50 0.04 0.62<br />
IE 0.20 0.39 0.47 0.40 0.36 0.27 0.23 0.13 0.16 0.01 0.25<br />
Total 0.26 0.79 1.01 1.07 1.09 0.99 0.87 0.85 0.87 0.06 0.78<br />
LV 0.11 0.18 0.23 0.79 1.28 1.09 1.83 1.14 0.06 0.81<br />
LT 0.09 0.20 0.17 0.60 0.89 0.94 1.36 1.50 0.10 0.72<br />
EE 0.11 0.13 0.18 0.63 0.90 1.20 1.04 0.91 0.00 0.61<br />
PL 0.02 0.07 0.09 0.52 0.41 0.78 1.08 0.87 0.09 0.45<br />
SK 0.02 0.09 0.11 0.45 0.52 0.67 0.78 0.78 0.00 0.41<br />
HU 0.05 0.06 0.06 0.29 0.45 0.83 0.84 0.40 0.05 0.35<br />
CZ 0.01 0.03 0.07 0.26 0.20 0.45 0.48 0.47 0.02 0.24<br />
MT 0.14 0.11 0.32 0.60 0.36 0.00 0.17<br />
SI 0.01 0.04 0.03 0.12 0.21 0.31 0.23 0.29 0.02 0.14<br />
CY 0.04 0.07 0.10 0.14 0.17 0.01 0.06<br />
EU10 0.03 0.07 0.08 0.40 0.41 0.70 0.88 0.72 0.06 0.39<br />
Note: Countries ordered by overall payments 2000-2009 relative to GDP<br />
* MZ, GE refer to the Mezzogiorno (i.e. the Objective 1 regions in Italy) and the Eastern German<br />
Länder, respectively.<br />
Source: Bradlley and Untiedt, An analysis of cohesion policy, 2000-2006, using the CSHM<br />
The payments of the amounts involved to the countries concerned did not follow an even pattern<br />
over the period - as indicated in Chapter 1 in respect of the ERDF – but instead gradually built up<br />
in the first few years before reaching a peak (shown by the figures in bold in the table) and then<br />
declining. The precise profile, however, as in the case of the ERDF, varied across countries<br />
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reflecting the timing of their expenditure on projects and how quickly they were able to initiate<br />
these. In Spain and Ireland, expenditure built up relatively quickly reaching a peak in 2002 and in<br />
Portugal, the build-up was only slightly slower, the peak being reached in 2003. In the<br />
Mezzogiorno, by contrast, the peak was not reached until 2006 and in Greece, not until 2008. In<br />
all countries, it should be noted, the payments received were above or close to the annual<br />
average for the period in both 2007 and 2008, i.e. after the period had formally come to an end.<br />
In the EU10 countries, which received a total sum of EUR 22.1 billion over the period, the amount<br />
of funding going to them was relatively small until their entry into the Union in 2004. Expenditure<br />
then took three years to reach a peak in 2007, though as in the EU15 countries, most of the<br />
funding available was then spent in 2008 and relatively little remained to be spent in 2009. Much<br />
the same pattern of spending was true of most countries, though the peak occurred one year<br />
later, in 2008, in Lithuania, Slovenia and Cyprus and one year earlier in Estonia.<br />
The implication of the timing of expenditure from the Structural Funds is that any effect on the<br />
economy tends to extend well beyond the programming period as defined and once lags in the<br />
effect of expenditure on the economy are taken into account, even further so.<br />
4.1.5 The effect of the Structural Funds on GDP growth<br />
As indicated above, the timing of the effect of cohesion policy on the economies assisted varies<br />
according to the two models. In both cases, however, the estimated effect on GDP is substantial,<br />
though the scale of the effect varies according to both the structure of the economy and the<br />
composition of the expenditure financed.<br />
According to HERMIN, therefore, GDP in the 6 largest recipients of funding taken together was<br />
over 13% higher in 2009 as a result of the expenditure financed by the Structural Funds made<br />
available for the programming period. The largest effects were in Spain and Portugal, where<br />
Structural Fund support resulted in GDP being just under 17% higher than it otherwise would have<br />
been in the absence of support (Table 4.2).<br />
In the Eastern part of Germany, by contrast, the addition to GDP in 2009 was estimated at only<br />
just over 5%, only a third of the effect in Spain despite the slightly larger amount of funding<br />
received relative to GDP. The difference is explained by the much bigger multiplier effects in<br />
Spain since much more of the additional expenditure remains within the economy than in the<br />
Eastern German Länder. In the latter, therefore, a large amount ‘leaks out’ to the Western part of<br />
the country where many of the goods and services purchased from the expenditure are produced.<br />
At the same time, the manufacturing sector is smaller than in Spain and gains less from increased<br />
productivity resulting from cohesion funding.<br />
Much the same is true of Ireland, where a relatively small amount of financial support is also<br />
estimated to have a significant effect on GDP, increasing it by 7% in 2009 over what it otherwise<br />
would have been. Here as in Spain, therefore, the Structural Funds, according to the model, can<br />
be expected to have led to an increase in productivity in manufacturing which boosted exports<br />
and fed through into economic growth.<br />
How far these estimated effects conform with reality, it should be emphasised, depends not only<br />
the structural characteristics of the model and its properties. It also depends on the critical<br />
assumption that the expenditure financed by the Structural Funds resulted in the outcome it was<br />
capable of achieving, that the support was used reasonably efficiently. This means, for example,<br />
that expenditure on transport infrastructure led to the savings in time and costs which experience<br />
and the empirical evidence available on similar expenditure indicate would be expected. Whether<br />
it did or not is to some extent indicated by the other parts of the evaluation summarised in<br />
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Chapter 3 above and in the second part of this chapter which examines developments in the<br />
regions receiving Structural Fund support.<br />
Table 4.2 Cumulative effect of Structural Funds on GDP in major recipient economies, 2000-15<br />
Note: Aggregations are weighted averages of country estimates, using the GDP of countries expressed in EUR as<br />
weights. GDP in 2009 has been used to weight the estimates for the subsequent years.<br />
Source: Bradlley and Untiedt, An analysis of cohesion policy, 2000-2006, using the CSHM, and Janos Varga and Jan<br />
in’t Veld, A model-based analysis of the impact of cohesion policy expenditure 2000-06: Simulations with the<br />
QUEST III endogenous R&D model.<br />
The estimates produced by the QUEST model are somewhat different for the four EU15 Cohesion<br />
countries (the two macro regions in Italy and Germany are not separately distinguished in the<br />
model). For the period 2000-2009, they are lower for all the countries, though only slightly so in<br />
the case of Portugal which received the largest amount of funding relative to GDP. The difference<br />
is especially large in Spain, where QUEST estimates a cumulative gain in GDP of 9.5% as a result of<br />
cohesion policy (some 7 percentage points lower than HERMIN). The increase in demand still<br />
exceeds the demand resulting from the additional public expenditure but by less than in HERMIN.<br />
The same is the case in Ireland. In all the countries, the estimated effect of cohesion policy on<br />
GDP by 2009 is still larger than the amount of funding involved.<br />
If the period is extended beyond 2009, however, to take account of the lagged effects of<br />
expenditure on the productive potential of the economies concerned, the comparison between<br />
the estimates produced by the two models is changed markedly. Since QUEST estimates that the<br />
expenditure financed under cohesion policy will give rise to larger gains in the capacity of the<br />
economies to grow and that these effects, because of the lags involved, will tend to increase over<br />
time, the more the period is extended, the greater the effect on GDP is forecast to be.<br />
By 2013, therefore, the gain in GDP produced by Structural Fund support for the 2000-2006<br />
period is estimated by QUEST to be only slightly smaller in the four EU15 Cohesion countries than<br />
estimated by HERMIN (17% as opposed to around 17.5%). By 2015, it is estimated to be larger and<br />
the gap continues to widen as the period is extended. Moreover, this is the case for all the<br />
countries concerned except Ireland. In Portugal, in particular, GDP is estimated by QUEST to be a<br />
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third higher in 2015 as a result of EU funding over the programming period and in Greece, almost<br />
29% higher. Although the estimates produced by HERMIN are smaller, it is still the case that they<br />
are substantial – a gain to GDP by 2015 of around 19-21% in Greece and Portugal as well as in<br />
Spain.<br />
A similar difference between the estimates produced by the two models is evident for the EU10<br />
countries. For the 10 taken together, GDP is estimated by HERMIN to have been around 4.5%<br />
higher in 2009 as a result of Structural Fund support and by QUEST to have been just over 3.5%<br />
higher. If the period is extended to 2011, however, the two models generate similar estimates of<br />
the effect – the gain to GDP being around 5.5% in both cases. At the same time, for 6 of the 10<br />
countries – all except Latvia, Lithuania, Poland and Slovenia (for which the estimates are much the<br />
same) – HERMIN estimates a larger gain than QUEST and this remains the case if the period is<br />
extended to 2015.<br />
Again, despite the differences in scale and timing, according to both the models, the effect of<br />
cohesion policy in raising GDP is substantial in the countries receiving a relatively large amount of<br />
financial aid.<br />
4.1.6 The net effect of cohesion policy on GDP across the EU<br />
As noted above, the QUEST model enables estimates to be made of the effect of raising taxes to<br />
pay for cohesion policy as well as of the effect of the expenditure which it finances. These<br />
estimates indicate that, overall, the funding provided by policy for the 2000-2006 period had a<br />
positive effect on GDP growth in the EU even if account is taken of the depressing effect in<br />
countries which were net contributors to the funding of cohesion policy.<br />
GDP in the EU25 as a whole, therefore, is estimated to have been 0.7% higher in 2009 as a result<br />
of cohesion policy over the 2000-2006 period, in the sense that the positive effect on countries<br />
which were net recipients of financial aid from the Structural Funds outweighed the adverse<br />
effects on the countries mainly responsible for raising the finance for the Funds (Table 4.3) 41 .<br />
Moreover, the net beneficial effect on GDP tends to increase over time as the lagged effects on<br />
raising productive potential in recipient countries come through. By 2015, GDP in the EU25 is<br />
estimated to be 2.4% higher as a consequence of the support provided for the 2000-2006 period<br />
and in 2020, 4% higher.<br />
The implication is, therefore, that, according to the QUEST model, the cohesion policy conducted<br />
over the 2000-2006 programming period is likely to add 0.2% a year to average GDP growth in<br />
the EU25 between 2000 and 2020 – i.e. effectively increasing the average growth rate of around<br />
2% a year by 10%.<br />
In overall terms, therefore, cohesion policy over the programming period is estimated not only to<br />
have boosted economic growth in the countries which received funding but to have strengthened<br />
the capacity for growth of the EU as a whole.<br />
41 Bulgaria and Romania, which are included in the model estimates, are excluded here since they accounted for an<br />
extremely small amount of EU funding over the period (from ISPA).<br />
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Table 4.3 Cumulative net effect of cohesion policy on GDP according to QUEST, 2000-2006<br />
GDP in end year as a % of GDP in absence of cohesion policy<br />
2000-09 2000-15 2000-20<br />
Germany 0.6 2.1 3.6<br />
Ireland 2.0 5.2 8.1<br />
Greece 13.0 28.6 42.9<br />
Spain 9.5 20.0 29.8<br />
Italy 1.1 2.8 3.9<br />
Portugal 15.7 33.7 49.7<br />
Czech Republic 1.4 3.9 6.0<br />
Estonia 3.5 8.3 12.0<br />
Cyprus 0.1 0.7 1.2<br />
Latvia 11.7 27.9 41.1<br />
Lithuania 7.7 18.7 28.8<br />
Hungary 3.1 8.0 12.5<br />
Malta 0.7 2.7 4.4<br />
Poland 5.0 14.7 23.1<br />
Slovenia 0.8 2.3 3.4<br />
Slovakia 2.3 6.0 9.3<br />
EU4 (Cohesion EU15 MS) 9.8 21.1 31.5<br />
EU15 Net donor countries -2.2 -4.0 -5.3<br />
EU15 0.5 1.9 3.3<br />
EU10 3.7 10.2 15.9<br />
EU25 0.7 2.4 4.0<br />
Note: Aggregations are weighted averages of country estimates, using the GDP of<br />
countries expressed in EUR as weights. GDP in 2009 has been used to weight the<br />
estimates for the subsequent years.<br />
Source:Janos Varga and an in 't Veld, A model-based analysis of the impact o<br />
cohesion policy expenditure 2000-06: Simulations with the QUEST III endogenous<br />
R&D model.<br />
4.1.7 Concluding remarks<br />
The estimates of the effect of cohesion policy produced by the two models are not necessarily an<br />
accurate reflection of reality. Indeed, both cannot be correct. It may well be, therefore, that the<br />
QUEST model underestimates the initial contribution of the funding provided by overstating the<br />
extent to which private spending is likely to be reduced as public spending is expanded,<br />
especially in the context of economies working at less than full capacity, as was case in most<br />
major recipient countries over the period. It may also overstate the longer-term effects on<br />
productive potential by attributing too large an impact of RTDI on this. Conversely the HERMIN<br />
model may understate these longer-term effects by attributing too little to this and, more<br />
generally, to the spill-over effects of growth on investment and, through this, on productive<br />
potential. Equally, it might overstate the short-term effects on growth by over-estimating the<br />
scale of the Keynesian multiplier effects.<br />
However, while both models may have features which are open to question, modifying these<br />
features would not alter the main result of the exercise which is that cohesion policy is judged to<br />
have had a significant effect on the economic growth of the regions assisted over the 2000-2006<br />
period. Moreover, while the views of how economies work encapsulated in the two models are not<br />
the only ones which exist, models incorporating other views would be unlikely to produce<br />
radically different results, especially as regards the long-term consequences of policy.<br />
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The main area of uncertainty is not so much how economic forces responded to structural<br />
intervention over the period but more whether the intervention concerned produced the expected<br />
output and led to the expected results. This is the theme of the remainder of this chapter, which,<br />
in addition, considers the differences across regions in different parts of the EU and the effect of<br />
policy on territorial balance.<br />
4.2 THE EFFECT OF COHESION POLICY ON THE REGIONS ASSISTED<br />
The concern here is to examine developments in the regions receiving assistance from the<br />
Structural Funds in more detail, focusing in particular on those which were in receipt of the most<br />
support and taking account of the national context in which the regions concerned were<br />
developing. This is intended to complement Chapter 3 above, which considered the achievements<br />
of policy across the EU in the main policy areas, and to extend the analysis in Chapter 2, which<br />
reviewed the growth performance of the regions assisted. It is also intended to add corroborating<br />
evidence to the results of the model simulations which suggest that the Structural Funds can be<br />
expected to have boosted productive potential considerably in the countries receiving a<br />
significant amount of support. The aim is not so much to review developments in the regions as<br />
such but to relate these to the results of the evaluations of particular policy programmes carried<br />
out in the Member States concerned as well as the findings of the various studies undertaken as<br />
part of the ex post evaluation.<br />
The regions are considered in the following order:<br />
• Objective 1 regions in EU15 Member States receiving most funding in relative terms – i.e.<br />
those in Portugal, Greece, Spain, Italy, Germany and Ireland, in that order;<br />
• Objective 1 regions in EU15 countries receiving a smaller amount of support – i.e. those in<br />
the UK, France, Finland and Sweden;<br />
• Single Objective 1 regions in EU15 countries – i.e. those in Belgium, the Netherlands and<br />
Austria);<br />
• Objective 1 regions in the EU10 countries which received significant assistance only from<br />
mid-2004;<br />
• Objective 2 regions across the EU15.<br />
4.2.1 Policy outcomes in Objective 1 regions in the EU15<br />
Portugal<br />
Portugal received the largest amount of assistance from the Structural Funds – and the ERDF –<br />
relative to GDP over the 2000-2006 period. It is also the country where the effect of funding on<br />
growth is estimated to have been largest by the two macroeconomic models. In practice, as<br />
indicated in Chapter 2, growth of GDP per head in Portugal lagged behind the EU25 average over<br />
the period having significantly exceeded it over the preceding 5 years. Without EU funding,<br />
therefore, the evidence is that growth in Portugal would have lagged even further behind that in<br />
other parts of the Union.<br />
A key factor underlying the slow growth was the decline of traditional export industries,<br />
especially textiles, coupled with the limited success of developing new growth sectors in the<br />
context of a work force with the lowest education levels in the EU. In addition, slow growth led to<br />
rising budget deficits which triggered fiscal restraint and substantial cutbacks in government<br />
investment (which was reduced from 4% of GDP in 2000 to only just over 2% of GDP in 2008).<br />
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Cutbacks in public investment reinforced the importance of cohesion policy funding for<br />
development expenditure, a point explicitly recognised in a number of national evaluations. (For<br />
example, according to the Updated Mid-term evaluation in the Norte region – the centre of the<br />
textile industry and particularly badly affected by its decline – the availability of EU funding was<br />
decisive in supporting both public and private investment.)<br />
In addition to supporting investment in improving education levels (which accounted for just over<br />
21% of the total Structural Funds received), cohesion policy was directed to two main areas,<br />
transport and territorial development, combined with social infrastructure. Investment in<br />
transport continued to have the major role that it had in previous programming periods, on the<br />
grounds that there was still a need for further investment, partly to strengthen the economy in<br />
the context of globalisation, partly to restructure the urban system (as stated in CSF III).<br />
According to evaluations 42 , the main achievements were:<br />
• an improvement in the quality of transport systems in general and a decline in travel time,<br />
with a consequent increase in accessibility of the main concentrations of population and<br />
centres of economic activity, contributing to better spatial balance;<br />
• the construction of by-passes around a number of cities which took traffic away from<br />
urban centres, so reducing environmental damage;<br />
• the construction of the Oporto Metropolitan Surface Train System which had similar<br />
beneficial effects on the urban environment as well as reducing congestion and travel<br />
time.<br />
In the territorial policy area, there was substantial investment in social infrastructure, mainly to<br />
further social cohesion but also territorial balance. As emphasised in policy documents (CSF III),<br />
‘it is crucial to support interventions directed towards the reinforcement of social solidarity, that<br />
take the citizens needs into account, mainly the most deprived population groups’). The outcome<br />
was:<br />
• the construction of facilities and the provision of support for children, young people, the<br />
elderly, people with disabilities and other vulnerable groups in a number of regions;<br />
• the urban renewal of 28 cities across the country along with smaller measures in 12 other<br />
towns and cities, five of which were classified by UNESCO as World Heritage sites, which<br />
had the effect not only of increasing tourism but also improving the environment for<br />
those living there.<br />
Support also went to investment in improving the natural environment, resulting in:<br />
• the increased protection and cleaning-up of the coastal strip;<br />
• an increase in water reserves;<br />
• significant expansion in the number of people connected to clean drinking water and<br />
wastewater treatment systems, as indicated in the previous chapter.<br />
Despite the positive achievements, the Updated Mid-term Evaluation pointed to a lack of<br />
coordination between different aspects of territorial policy, especially the absence of integrated<br />
strategies for cities, which could have further stimulated economic development.<br />
42T he Updated Mid-term Evaluation, in particular.<br />
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Nevertheless, if Norte which suffered from special problems, is left to one side, the<br />
implementation of cohesion policy over the programming period was accompanied by a<br />
narrowing of regional disparities in GDP per head, following a widening over the preceding<br />
period. Growth in Centro, Alentejo and Açores, regions with the lowest levels of GDP per head in<br />
2000 along with Norte, outstripped that in the rest of the country, especially in Lisboa, between<br />
2000 and 2006, though, of course, this cannot necessarily be assumed to be the direct result of<br />
policy.<br />
Beyond the economic, social and territorial effects, cohesion policy also led to more efficient<br />
policy-making, Substantial progress was made during the period in the monitoring, follow-up<br />
and evaluation of projects, which fed into the preparation of the plans for the 2007-2013 period<br />
and led to increased accountability, transparency and, consequently, more effective and efficient<br />
policy measures.<br />
Greece<br />
GDP per head in Greece converged towards the EU average over the programming period to a<br />
major extent, as indicated in Chapter 2. According to the macroeconomic models described<br />
above, the significant amount of assistance provided by the Structural Funds greatly contributed<br />
to this.<br />
At the same time, growth was largely concentrated in the Attiki region, in Athens and the<br />
surrounding area. Regional disparities, therefore, widened over the period.<br />
Growth was fuelled, in addition to EU funding, by an expansionary fiscal policy, to a large extent<br />
associated with preparing for the Olympic Games in Athens in 2004. The need to complete the<br />
stadiums and related infrastructure in time for the Games served to accelerate expenditure and to<br />
overcome the lengthy delays characteristic of the construction of large projects in the past. The<br />
expansion of spending led to a substantial budget deficit, which averaged almost 6% of GDP over<br />
the period 43 .<br />
Cohesion policy contributed considerably to improvements in the transport network (mainly<br />
roads) which occurred over the period and which absorbed some 45% of total expenditure cofinanced<br />
by the ERDF. This continued the emphasis on strengthening the transport system,<br />
evident in previous programming periods, which was regarded as a precondition for increasing<br />
access to markets in Central Europe and the Balkans as well as for improving internal connections<br />
between cities in the country.<br />
The tangible outcome of this investment was:<br />
• the construction of 2,115 kms of the trans-<strong>European</strong> road network, in particular the<br />
Patra-Athens-Evzonoi and Egnatia motorways, as well as road links on the islands of Kriti,<br />
Rodos, Lesvos and Kerkira;<br />
• the time taken to travel between major cities was reduced by 16%;<br />
• the capacity of the four main ports in the country was increased by 22% in terms of<br />
freight and by 1.5 million a year in terms of passengers;<br />
• the completion of the Athens metro.<br />
43 According to the Eurostat figures at the time the present evaluation was completed, though it may have been<br />
even larger. The large budget deficit was reflected in a balance of payments deficit which averaged 12% of GDP.<br />
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In other policy areas, ERDF support helped to equip almost all primary and secondary schools<br />
with Internet connections and to install specialised ICT equipment in over two-thirds of special<br />
schools. In addition, funding contributed to the upgrading and modernisation of health services<br />
across the country.<br />
Although much of the ERDF support went to Attiki (30% of the total), it was still less than the<br />
share of the region in total population (36%). The difference, however, was not large in relation to<br />
the substantial difference in prosperity between Attiki and the other Greek regions (GDP per head<br />
in Attiki was almost 50% higher than in the other regions taken together). Nevertheless, there was<br />
some attempt to improve regional balance by directing funding towards less-favoured rural areas<br />
(some 38% of the ERDF was spent in NUTS 3 regions classified as being remote, which accounted<br />
for 31% of population). This resulted in:<br />
• some diversification of economic activities, such as the development of agri-tourism, and<br />
less dependence on agriculture;<br />
• the increased connection of households to wastewater treatment systems;<br />
• the revitalisation of cultural activities and social services that helped to maintain<br />
population in the areas concerned.<br />
The physical features of the regions concerned, however, in particular the mountainous terrain<br />
and the fact that many of them are islands, as well as the lack of large towns or cities to act as<br />
growth centres, limited what was achieved in terms of economic development.<br />
Cohesion policy is reported to have had a much wider effect than the simple provision of funding.<br />
In particular, in the absence of EU intervention, it is considered unlikely that attention would have<br />
been paid to gender equality and to developing integrated urban strategies or that there would<br />
have been the same focus on the structural problems of the economy.<br />
In addition, cohesion policy helped to create a culture of programming and planning, mechanisms<br />
for the design and implementation of policy measures and encouragement for the involvement of<br />
local and regional authorities and other interested parties in the development process.<br />
However, despite the improvements over previous periods, there remained a lack of a coherent<br />
overall development strategy and of effective means of coordinating the activities of various<br />
departments and authorities involved in development policy. Though the Ministry of Economy and<br />
Finance played a coordinating role, the approach adopted to planning and implementation was<br />
largely sectoral with responsibility divided between many different Ministries.<br />
Monitoring and implementation systems were improved over the period, as reflected in the<br />
relatively high level of expenditure at the end of 2008 as compared with the allocation of funding.<br />
Nevertheless, despite the increased use of technical assistance, only limited evidence was<br />
compiled on the effectiveness of expenditure over the programming period which could inform<br />
the future design of policy. Few evaluations were carried out and, in many cases, those that were<br />
undertaken were limited, delayed and often not open to public scrutiny.<br />
Moreover, the focus of monitoring programmes was largely on financial and contractual aspects<br />
rather than on physical indicators of progress, which tended to be inconsistent, unreliable and<br />
incomplete.<br />
For the situation to improve, however, it is not simply a matter of devising more effective<br />
procedures and better indicators. There also needs to be a fundamental change in the official<br />
attitude towards evidence-based policy-making, which was unsympathetic throughout the<br />
programming period, and an acceptance of its critical importance.<br />
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Spain<br />
The amount of EU funding going to Objective 1 regions in Spain over the 2000-2006<br />
programming period was only slightly less than in Portugal or Greece in relation to the GDP of the<br />
regions concerned – just under 1% a year. Although their estimates of the scale differ, both<br />
macroeconomic models indicate that, together with the Objective 2 funding, this should have had<br />
a significant effect on economic growth.<br />
In practice, GDP per head in Spain converged markedly towards the EU average over the period. At<br />
the same time, disparities in GDP per head narrowed as growth was higher, on average, in the<br />
Objective 1 regions than in the rest of the country. This contrasts with the experience in the<br />
previous period when disparities widened.<br />
Much of the growth concerned stemmed from increased employment rather than increases in<br />
productivity, which remained almost unchanged over the period. This pattern of growth was<br />
much the same across regions. To some extent, it reflects the composition of growth which was<br />
heavily dependent on construction, partly due to the expansion of public investment in<br />
infrastructure, fuelled in turn by the Structural Funds.<br />
Much of the investment went into rectifying deficiencies in the transport network, which had been<br />
a priority in the preceding programming period. The result was:<br />
• an improvement in both links between regions and within them, leading to reductions in<br />
journey times and increased accessibility;<br />
• progress in completing the Trans-<strong>European</strong> Networks;<br />
• the construction of connections between these and regional networks;<br />
• modernisation of the railways and the construction of high-speed rail lines, coupled with<br />
the expansion of port facilities.<br />
The ERDF, in conjunction with the Cohesion Fund, also contributed to investment in<br />
environmental infrastructure, in extending mains water supply, in particular. This resulted in an<br />
expansion of water reserves and reduced pressure on groundwater supplies as well as an increase<br />
in the number of people connected to water mains, with benefits to agriculture and tourism in<br />
addition to people living in the regions concerned.<br />
In addition, EU funding supported investment in wastewater treatment plants and the extension<br />
of main drainage. The number of such plants is estimated to have almost doubled over the period<br />
(from 1,326 to around 2,500), while, in 2006, some 98% of the population in Objective 1 regions<br />
was connected to main drainage as opposed to 79% in 1999.<br />
The investment not only added to water reserves and reduced pollution, so improving the quality<br />
of life in these regions, especially in the more rural parts, but by so doing it strengthened their<br />
economies, dependent to a large extent on agriculture and tourism, as well as increasing the<br />
sustainability of development.<br />
In general, according to evaluations, in addition to adding significantly to the financial resources<br />
available for both regional and local development, EU intervention has been largely responsible<br />
for the ‘modernisation’ of regional policy, by highlighting the importance of the business<br />
environment, RTDI, human resource development and protecting and improving the natural<br />
environment. All regions formulated their own RTDI plans, in some cases for the first time, during<br />
the programming period and carried out evaluations of regional policy prior to establishing new<br />
plans.<br />
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Structural Fund support has also resulted in important national programmes being initiated<br />
which, it is considered, would otherwise not have been undertaken. These include:<br />
• Programa AGUA (2004-2008), for improving the management of water reserves,<br />
• Plan AVANZ@ (2005-2010), for reducing the digital divide between Spain and the rest of<br />
the EU;<br />
• Torres Quevedo, for supporting research and technology in SMEs.<br />
Moreover, there have also been wider consequences of EU support:<br />
• the funding provided under cohesion policy helped attract foreign investment which<br />
increased from 11% of total investment in 1998 to an average of almost 18% by the end of<br />
the period in Objective 1 regions;<br />
• multi-annual programming brought a more stable policy environment, encouraging<br />
longer-term planning in Spanish regions and reducing the effects of political changes on<br />
policy;<br />
• the requirement for partnership resulted in a wider range of organisations becoming<br />
involved in development projects;<br />
• the management model of Community policies, based on strategic planning and<br />
continuous monitoring and evaluation, has permeated into national policy-making<br />
resulting in a more effective use of public resources.<br />
Italy<br />
The finance from the Structural Funds in support of the Southern Italian Objective 1 regions was<br />
less than for the countries considered above primarily because they were not covered by the<br />
Cohesion Fund. Finance from the ERDF was also less in relation to GDP, though only slightly<br />
smaller than in Spain (0.8%). The macroeconomic model estimates indicate that this funding is<br />
likely to have added significantly to their growth over the programming period.<br />
In fact, GDP per head increased by more in the regions concerned than in the rest of the country<br />
between 2000 and 2006, though the difference was marginal and the rate of growth in both the<br />
North and South of Italy was much below the EU average, at only around 1% a year.<br />
This suggests, first, that economic growth in the Objective 1 regions would have been close to<br />
zero without support of EU funding; secondly, that the national context over the period was not<br />
conducive to their economic development. This is all the more the case since government<br />
investment was reduced over the period, along with the transfers to the Southern regions as part<br />
of a policy of increased regional autonomy.<br />
Consequently, a major effect of EU funding in Objective 1 regions was to compensate, at least to<br />
some extent, for the reduction in national support and so avoid a widening of disparities with the<br />
rest of Italy. However, it had only limited success in tackling the wide-ranging factors at the root<br />
of their lagging development. Nevertheless, it did help in the pursuit of the two main aims of<br />
policy –to increase regional attractiveness through investment in infrastructure and to increase<br />
the efficiency and effectiveness of public administration through institution building.<br />
EU funding, and more importantly the requirement for programming which went with it, also<br />
obliged national authorities to focus their attention on the drivers of development. Before 2000,<br />
there was no ICT or RTDI strategy in Objective 1 regions and cohesion policy forced the<br />
authorities to define these explicitly. In practice, the ERDF and the co-financing that went with it<br />
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accounted for around half of the total public resources devoted to RTDI in these regions over the<br />
period. Moreover, it had some success in the form of:<br />
• fostering an increase in expenditure and involvement of enterprises in R&D activities;<br />
• funding good quality projects, even if these were mainly aimed at encouraging the<br />
adoption of up-to-date, but already available, technology, rather than supporting new<br />
innovation;<br />
• some 90% of the research projects funded resulting in the products concerned being<br />
produced or the processes being adopted;<br />
• helping to establish new links between businesses and research centres, 50% of the<br />
projects funded leading to such links being formed.<br />
The effectiveness of the programme, however, was marred by the length of administrative<br />
procedures (selection and contracting) and by a monitoring system limited to administration<br />
rather than the identification of results which could inform future project selection.<br />
Other elements of enterprise support policy in Objective 1 regions were less successful.<br />
Evaluations point to the limited effects of investment grants, their large deadweight costs and a<br />
lack of a clear industrial policy against a background of globalisation which affected lagging<br />
regions disproportionately and gave rise to the need for shifts in the structure of economic<br />
activity.<br />
Although local infrastructure was built and public services were generally improved over the<br />
period, with positive effects on the quality of life, the gap in these respects in relation to the<br />
North of Italy remained wide. Moreover, the improvements proved insufficient to attract new<br />
investment, partly because investment was fragmented, often on a small scale and not part of a<br />
wider strategic plan.<br />
Nevertheless, in many rural areas, historical centres were saved from ruin, so increasing their<br />
tourist potential as well as improving the local quality of life. The projects concerned also<br />
encouraged local partnership and greater participation of local people in decision making.<br />
At the same time, cohesion policy contributed to the fight against organised crime, which has<br />
long been a major obstacle to economic development in the South of Italy. While it was not the<br />
principal cause, it was one factor behind the growing refusal of businesses to put up with criminal<br />
extortion as in the past, which is gradually enabling a stronger market economy to emerge.<br />
The attempt to improve the effectiveness of public administrations also had some success, if<br />
limited. Although the ‘n+2’ rule was almost fully respected and the funding available was spent,<br />
major reasons for this were:<br />
• the widespread use of ‘pre-funded’ projects, or those which were already underway and,<br />
in some cases, nearing completion and had received funding from other sources (at the<br />
beginning of 2008, such projects accounted for over a third of the total value of the main<br />
Operational Programmes 44 );<br />
• the prevalence of small projects, which were easier to manage or replace by others if<br />
problems arose, with a consequent fragmentation of intervention.<br />
44 The largest use was in the Transport OP (71%) and the Campania OP (43%). See National report on ‘Freed<br />
resources’ in Objective 1, DPS, 2008.<br />
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The preference of the administrative authorities for small projects was reinforced by the<br />
complicated nature of the bureaucracy, which discouraged large-scale projects from being<br />
initiated.<br />
Equally, monitoring and evaluation increased in importance and all programmes were subject to<br />
both according to EC guidelines. However, while evaluations provided a large amount of<br />
information:<br />
• this was often interpreted in a very formal and restricted way and was not put to<br />
constructive use;<br />
• the evaluation units in the Ministries and regions spread a culture of evaluation but failed<br />
to increase true evaluation capacity, since many relatively simple and routine tasks were<br />
contracted out to technical assistance agencies, so preventing internal staff from gaining<br />
know-how and building capacity.<br />
Germany<br />
Support from the Structural Funds going to the Objective 1 regions in the East of Germany over<br />
the period 2000-2006 was slightly smaller in relation to their GDP than in the Southern Italian<br />
regions (at around 0.65%), most of it coming from the ERDF, though if Berlin (part of which<br />
received phasing-out funding under Objective 1 and part, Objective 2 funding) is excluded, the<br />
relative amount is increased closer to that in Italy.<br />
Germany like Italy experienced relatively slow growth of GDP per head over the period, if not<br />
quite so slow (around 1.4% a year). Growth in the Objective 1 regions, excluding Berlin, however,<br />
was much faster than in the rest of the country (around 2.5% a year), so that regional disparities<br />
narrowed over the period. According to the HERMIN model, the Structural Funds are likely to have<br />
contributed significantly to this narrowing.<br />
At the same time, there are marked differences across the Objective 1 regions, which tended to<br />
widen over the period, with the less prosperous regions in the North (Mecklenburg-Vorpommern<br />
and Brandenburg) growing at a much slower rate than the more prosperous ones further South<br />
(Halle, Dresden and Magdeburg).<br />
Like in Italy too, EU funding compensated in some degree for the reduction over the period in<br />
national funds for investment, which remained small as compared with the amounts devoted to<br />
assisting the development of these regions in the first half of the 1990s. Nevertheless, national<br />
funds, made available under the ‘Joint Task’ (Gemeinschaftsaufgabe "Verbesserung der<br />
regionalen Wirtschaftsstruktur"), which is partly financed by the Structural Funds, represented the<br />
major source of support.<br />
As compared with the Joint Task, which was focussed on investment grants to companies and<br />
infrastructure, the ERDF was wider in scope and gave the Länder receiving assistance 45 the chance<br />
to formulate a reasonably comprehensive development strategy containing a wide-ranging<br />
package of measures. In most cases, there was a growing emphasis on clusters and growth poles,<br />
which was reflected in the concentration of support on specific sectors of activity or on major<br />
cities.<br />
Much of the funding went to strengthening SMEs and supporting RTDI, which led to:<br />
45 In Germany, the Länder, which correspond with NUTS 1 rather than NUTS 2 regions, represent the regional level<br />
of government responsible jointly with the Federal authorities for formulating development strategies.<br />
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• some 278,350 gross jobs being created or maintained between 2000 and 2004;<br />
• around 8,460 SMEs in Berlin, Brandenburg, Mecklenburg-Vorpommern and Sachsen<br />
receiving investment support;<br />
• some 1,022 business start-ups in Berlin, Brandenburg and Mecklenburg-Vorpommern;<br />
• some 2,065 RTDI projects being funded in Brandenburg, Mecklenburg-Vorpommern and<br />
Saxony;<br />
• the improvement of telecommunications and the provision of equipment in universities<br />
and research institutes in Thüringen;<br />
• the development of institutes of applied research (Fraunhofer-institutes) in Sachsen,<br />
amounting to around 46,000 square metres of floor space and establishing cooperation<br />
with 380 enterprises.<br />
At the same time, a significant though slightly smaller amount of funding went to improving<br />
transport networks, designed to bring the standard closer to that in the Western part of the<br />
country, and resulting in the construction or upgrading of several thousand kms of roads,<br />
motorways and railway lines, with the emphasis on the last (which accounted for over half of the<br />
ERDF going to transport).<br />
In addition, a similar amount of support went to environmental projects, in particular to<br />
investment in wastewater treatment plants and sewage pipelines and to the clean-up and<br />
regeneration of urban areas (in Sachsen, for example, funding was provided to projects in 26<br />
separate towns and cities), with the aim of increasing the attractiveness of the regions concerned<br />
and improving the quality of life.<br />
Expert opinion is that that a large part of the investment in RTDI in Objective 1 regions would not<br />
have taken place without EU funding. It is also likely that experimentation with innovative<br />
measures would have been more limited.<br />
While the Structural Funds in Germany are integrated into existing arrangements for supporting<br />
regional development, which reduces the potential for innovation, there were, nevertheless, some<br />
innovative aspects. These include:<br />
• the pursuit of a strategy integrating the activities of different Departments, which is not<br />
the norm in Germany but which was enforced by the programming approach;<br />
• the adoption of systems for monitoring and evaluating expenditure, which for the most<br />
part did not exist before in respect of regional policy.<br />
Ireland<br />
High and sustained growth in Ireland over the previous programming period meant that by 2000,<br />
GDP per head was considerably above the EU average. Much of the growth, however, had been<br />
concentrated in Dublin and the surrounding area as well as in the South-East of the country.<br />
The disparity between these parts and the rest of Ireland was explicitly recognised by the division<br />
of the county into two NUTS 2 regions for the 2000-2006 programming period. The effect was<br />
that the Border, Midland and Western (BMW) region remained eligible for EU funding under<br />
Objective 1, while the Southern and Eastern (SE) region received phasing-out funding.<br />
At the same time, the amount of funding from the ERDF and Cohesion Fund together was reduced<br />
significantly (to only around 0.2-0.3% of GDP). Accordingly, the ERDF accounted for only around<br />
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10% of overall financial support going to regional development over the programming period,<br />
considerably less than before.<br />
Growth of GDP per head in Ireland continued to be well above the EU average throughout the<br />
period. The rate was much the same in the two regions, so that the disparity between them in<br />
these terms also remained unchanged. This disparity, however, arises partly from commuting<br />
from the BMW region to the SE and partly from the relative concentration of multinational<br />
companies in the SE region. Since much of the profits of these companies go abroad, the<br />
difference in terms of income per head is much smaller. This difference seems also to have<br />
remained much the same over the period.<br />
Cohesion policy very much supported national development policy over the programming period,<br />
the aim being to channel development away from Dublin and improve infrastructure and the<br />
business environment in less favoured areas, in large part to attract inward investment.<br />
In practice, the ERDF was concentrated very much on improving transport links both within and<br />
around Dublin to ease congestion in the city and between towns and cities across the country to<br />
reduce travel time and increase the accessibility of the more remote areas. The result was:<br />
• the completion of 555 kms of motorway, including between Dublin and Galway and<br />
between Kilkullen and Waterford, with significant savings in travel time;<br />
• the upgrading and expansion of capacity on the mainline rail network, resulting in time<br />
savings of 38 minutes overall and much improved links to Dublin from Galway, Ballina<br />
and Sligo;<br />
• the Dublin Port Tunnel road, relieving congestion in the city;<br />
• the completion of the Dublin ring road, to avoid traffic having to go through the city;<br />
• the completion of the LUAS light railway in Dublin, though the effect on travel times and<br />
congestion was reduced by the separation of the two lines;<br />
• the completion of phase 1 of the DART upgrade around the coast in Dublin to take traffic<br />
off the roads;<br />
• a Rural Transport Initiative which piloted local bus services for rural communities to<br />
improve their access to services and to encourage more people to remain in the areas<br />
concerned, so reducing depopulation.<br />
The projects were carried out in the context of rapid population growth, stemming largely from<br />
inward migration, which led to a similarly rapid growth of traffic, fuelled in addition by rising real<br />
income levels. The observed easing of congestion and reduction in travel times were, therefore,<br />
relatively small, though there is no question that without the projects being undertaken, the<br />
situation would have worsened considerably in both respects.<br />
Funding, though on a much smaller scale, also went to support investment in telecommunications<br />
which led to increased access to broadband for SMEs in rural areas in both the BMW and SE<br />
regions.<br />
These areas were also the main target of support to environmental infrastructure which resulted<br />
in:<br />
• some 770 thousand additional people being connected to clean drinking water supply;<br />
• the construction and upgrading of wastewater treatment plants, adding sufficient capacity<br />
to meet the needs of over 3 million people.<br />
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In addition, a similar amount of funding from the ERDF went to RTDI intended to assist the<br />
development of specialist research centres across the country as well as the adoption of new<br />
technology by SMEs. This, however, was less effective in the BMW region than in the SE because of<br />
the more limited ability of the centres and firms concerned to absorb the funding.<br />
Although there was no apparent narrowing of the disparity between the two regions between<br />
2000 and 2006 as a result of these various measures, their effect may have been to prevent a<br />
further widening.<br />
At the same time, it is difficult to say whether regional development became more balanced over<br />
the period in terms not only of the difference between the two regions but equally importantly of<br />
those between urban and rural areas within the two regions. This was a major objective of<br />
development policy but no coherent set of indicators were devised to monitor progress in this<br />
respect.<br />
The main effects of cohesion policy, however, were arguably:<br />
• to focus attention on the widening disparity between Dublin and the rest of the country<br />
and the concentration of economic growth in the former, which was unsustainable in the<br />
long-term, and so to encourage the adoption of a regional rather than a national strategy;<br />
• to contribute to the development and expansion of multi-annual programming, the more<br />
extensive adoption of a partnership approach at national and local level and to more<br />
monitoring and evaluation of programmes..<br />
UK<br />
The UK was a net contributor to the funding of cohesion policy over the 2000-2006 period.<br />
Nevertheless, the four regions eligible for full funding under Objective 1 (Merseyside, South<br />
Yorkshire, Cornwall and Isles of Scilly and West Wales and the Valleys) and the two eligible for<br />
phasing-out funding (Highlands and Islands in Scotland and Northern Ireland) between them<br />
received an amount from the ERDF equivalent to around 0.4% of their GDP. Moreover, these<br />
regions together accounted for just under 12% of UK population, not so much less than Objective<br />
1 regions in Germany (around 18%). Nevertheless, the amount of EU funding received was small in<br />
relation to that from the national government, though the ERDF was involved in a number of high<br />
profile projects, as indicated below.<br />
The rate of growth of GDP per head of all 6 of regions assisted exceeded that of the non-assisted<br />
regions in the UK over the period (on average by 0.7% a year).<br />
In all the regions, the main focus of development policy, to which the ERDF contributed, was on<br />
strengthening business competitiveness which was achieved through:<br />
• supporting SMEs, both directly and indirectly through the provision of advice, services and<br />
access to finance, to assist them to modernise and diversify (by end- 2006, over 70,000<br />
SMEs had received assistance);<br />
• improving transport networks, such as by converting Newquay airport in Cornwall from<br />
military to civilian use and by completing the Liverpool South Parkway Interchange in<br />
Merseyside, which provides fast links to Liverpool John Lennon Airport as well as access<br />
to up to 11,000 planned jobs in the vicinity;<br />
• improving telecommunications, including the provision of broadband to the whole of<br />
Cornwall and the Isles of Scilly;<br />
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• regenerating urban areas, such as in market towns in Cornwall or the Sheffield city centre<br />
in South Yorkshire.<br />
Most of the projects concerned were conceived to bring about long-term changes in the<br />
underlying economic structure and social capital of problem regions, so that the full effect will<br />
not become evident for some years.<br />
In addition, the environmental implications of projects were explicitly taken into account in all<br />
programmes. Those for business support, for example, were encouraged to include measures to<br />
improve resource efficiency and waste management, while some programmes established<br />
Environmental Advisory Groups and others nominated “Environmental Champions” to be among<br />
those involved in project delivery.<br />
Moreover, there are a number of examples of mobilising local involvement in projects, both to<br />
make use of and develop local know-how and capacity for action. Examples include:<br />
• the formation of Local Strategic Partnerships, such as in the Sheffield City Centre<br />
regeneration programme in South Yorkshire or between the University of the Highlands<br />
and Islands and private sector organisations in the region;<br />
• the assistance provided to 11,419 community groups in West Wales and the Valleys to<br />
engage in projects aimed at the regeneration of deprived areas;<br />
• the financial support to community-based groups in the Highlands and Islands region to<br />
increase both the quality and scale of programmes, through the recruitment of skilled<br />
staff, and to enable them to attract additional matching funding.<br />
According to the UK Government, the Structural Funds have been an important source of<br />
additional funding for local authorities, universities and the third sector. They have also:<br />
• made it possible to plan economic development over a longer time-frame than most<br />
other funding sources allow;<br />
• encouraged the direct involvement of a wide range of partner organisations;<br />
• brought enhanced transparency, co-operation and co-ordination in the design and<br />
delivery of regional development policy, and better quality intervention as a result.<br />
France<br />
In France, the only regions receiving full Objective 1 funding over the 2000-2006 period were the<br />
four DOMs (the Overseas Departments) – Guadeloupe, Martinique, Guyane and Réunion – though<br />
Corse and parts of Nord Pas de Calais were in receipt of phasing-out support. While the latter two<br />
regions received only a relatively small amount of funding, support for the four DOMs amounted<br />
to around 1% of their GDP. Together, however, they account for under 3% of the population of<br />
France.<br />
Their average GDP per head was only just over 60% of the EU25 average in 2000 and over 40%<br />
below the average for France, with the least prosperous region, Guyane, having a level only 50%<br />
of the EU average and the most prosperous Martinique, one of 70% of the average. Between 2000<br />
and 2006, their GDP per head, on average, increased by more than in the rest of France, though<br />
by less in Guyane. Structural Fund support almost certainly contributed to the catching up in the<br />
three DOMs where this occurred.<br />
Guyane is also the region with the smallest population (around 166,000 at the beginning of the<br />
period), but the one which grew most rapidly over the period (by 4% a year, so that by 2006).<br />
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Population increased in the other regions as well, but by much less – by well under 1% a year in<br />
Guadeloupe and Martinique and by just under 1.5% in Réunion – reflecting outward migration.<br />
In the two Objective 1 phasing-out regions, growth of GDP per head was slightly higher than in<br />
non-assisted regions in France over the period.<br />
All four DOMs have similar features which tend to inhibit development:<br />
• geographical remoteness and so poor accessibility;<br />
• relatively small populations and so a lack of critical mass;<br />
• a sensitive ecological system and so environmental challenges;<br />
• a heavy dependence on tourism and the public sector;<br />
• a business sector mainly composed of service-related SMEs and micro enterprises, often<br />
family owned and neither export nor innovation oriented;<br />
• a proportion of recipients of minimum income support six times the average in mainland<br />
France.<br />
Corse shares all these features, except the last, if to a lesser extent.<br />
The objectives of policy were also common:<br />
• to modernise and restructure traditional sectors, especially tourism and agriculture;<br />
• to diversify activities by supporting the development of new ones;<br />
• to develop ICT for both individuals and businesses to improve the competitiveness of the<br />
latter and to open up new markets;<br />
• to improve the environment and protect natural resources, in part by supporting public<br />
transport as an alternative to cars.<br />
EU funding was, therefore, used in pursuit of these objectives. However, support was given to<br />
traditional activities and diversification was limited, as was the take-up of ICT, partly because of<br />
relatively high charges. The exception is Réunion, where growth of the ICT sector was stimulated,<br />
but only after telecommunication charges were cut significantly following the intervention of the<br />
regulatory authorities.<br />
In the Objective 1 phasing-out part of Nord Pas-de-Calais, EU funding, in addition to supporting<br />
training to help the unemployed find work, was aimed at strengthening research capacity (in<br />
poles of excellence) but with only a limited effect on innovation in SMEs.<br />
Although initiatives were taken to improve the management of programmes in Objective 1<br />
regions, the effects on administrative capacity were limited. There was, however, an increase in<br />
the extent of partnership between the authorities and those involved in the implementation of<br />
programmes on the ground, which was one of the main results of EU intervention.<br />
Finland and Sweden<br />
Regions in Finland and Sweden which received funding under Objective 1 over the 2000-2006<br />
period – Itä-Suomi and part of Pohjois-Suomi in the first and Mellersta Norrland and Övre<br />
Norrland in the second – share common features. In each case, they are in the North or Centre of<br />
the countries with a harsh climate for much of the year and very low population density. Although<br />
they make up most of the land mass in both countries, they account, in the case of the two<br />
Finnish regions, for only around 20% of the country’s population and, in the case of the Swedish<br />
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regions, for just 10%. In both cases, population had been declining for some years before the<br />
beginning of the programming period.<br />
ERDF funding amounted on average to just over 0.3% of the GDP of the regions concerned in<br />
Finland and just over 0.25% in the Swedish regions.<br />
GDP per head in the regions in both countries is below the national average, though whereas in<br />
Sweden, it was only 8% below in 2006, in Finland, it was 21% below. In both cases, growth of GDP<br />
per head over the period was above the national average, whereas it has been significantly below<br />
the national average in the preceding 5 years. In both cases, population continued to decline over<br />
the period, but in the Swedish regions at a declining rate.<br />
In both cases too, there were growing disparities within the regions, with a widening gap between<br />
the few urban centres and more rural and remote areas.<br />
The development strategy co-financed by the Structural Funds was similar in the two countries:<br />
• in Finland, to strengthen the competitiveness of local businesses through supporting<br />
innovation, investment in human capital and the local environment, as well as to provide<br />
public services on an equal basis across the country in pursuit of regional balance;<br />
• in Sweden, to develop local industry through a knowledge-based growth strategy.<br />
In Finland, support was mainly confined to well-managed and profitable SMEs. The evidence<br />
suggests that over 80% of the firms receiving investment grants grew as a result and new jobs<br />
were generated in about half. The aim, however, was not to expand output and create jobs<br />
directly but to do so indirectly and in a sustained way by increasing competitiveness and<br />
productivity. The evaluation evidence is that support for R&D achieved this in most cases and that<br />
R&D projects carried out jointly with research centres and large enterprises were a means for<br />
SMEs to have access to research without incurring excessive costs.<br />
In practice, support for R&D activities in SMEs and in research centres in both Finland and Sweden<br />
contributed to raising the expenditure on R&D in Objective 1 regions in relation to GDP to well<br />
above the level in most other regions of the EU. According to Eurostat data:<br />
• in Pohjois-Suomi, R&D expenditure amounted to 4.8% of GDP in 2006 as against a<br />
national average of 3.5% and an EU average of 1.9%;<br />
• in Övre Norrland, it amounted to 4.5% of GDP in 2006 as compared with a national<br />
average of 3.6% and a figure of just 2.5% in 2000.<br />
In Sweden as well as Finland, the evaluations carried out concluded that structural intervention in<br />
Objective 1 regions had succeeded not only in improving the competitiveness of SMEs but in<br />
increasing cooperation between them, including those in rural areas. It also strengthened local<br />
partnership and the willingness of people and organisations to work together and to adapt to<br />
structural change (see Box on forestry in Sweden).<br />
The decline in agriculture and forestry and the traditional industries based on the latter, together<br />
with an ageing and declining population, has made it difficult to narrow the gap between the<br />
more remote rural areas and the rest of the country. Nevertheless, EU funding and the projects<br />
supported helped to prevent it from widening, as well as creating the potential for altering the<br />
trends over the longer-term.<br />
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Cooperation in the forestry industry in Mellersta Norrland<br />
Forestry is of major importance in the region and much of the ERDF funding went to supporting the<br />
industry. An example is the SÅGAB trade association which acted as a coordinator for projects to<br />
improve the market potential of the small and medium sized sawmills in the region. The result was<br />
the creation of a website bringing sellers and buyers of wood together, which has led to extensive<br />
networks being established between sawmills as well as with local authorities. Although the<br />
financial support provided under Objective 1 was relatively small, the results have been substantial<br />
for small firms in the industry.<br />
In both countries, the funding received was reported to have been key to projects being carried<br />
out, with many unlikely to have been undertaken either at all or on the same scale. In the<br />
evaluation report for Södra (Mellersta Norrland), for example, it is explicitly stated that ‘the<br />
contribution from the EU and the Structural Funds is very important for actually being able to<br />
realise ideas through different initiatives.’<br />
In addition, cohesion policy led to improvements in policy-making and the increased local<br />
involvement in the development strategy. According to evaluations, in Finland:<br />
• the programme based approach has increased the openness and efficiency of regional<br />
policy and given more powers to the regional level;<br />
• EU-type systems of monitoring and evaluation have become a standard tool in national<br />
regional development programmes.<br />
In Sweden:<br />
• EU funding has resulted in improved organisational skills in administrative units in the<br />
regions, with consequent improvements in the selection and control of projects.<br />
Austria, Belgium and the Netherlands<br />
There was a single region receiving support under Objective 1 in each of Austria, Belgium and the<br />
Netherlands over the period 2000-2006. Burgenland in Austria was eligible for full funding,<br />
Hainaut in Belgium and Flevoland in the Netherlands for phasing-out support. The amount of<br />
funding going to Burgenland was, therefore, larger than in the other two, representing around<br />
0.5% of its GDP. For Hainaut, it was only around half as large and for Flevoland, less than a third<br />
as a large.<br />
Both Burgenland and Flevoland are relatively small regions in terms of population – just under<br />
300,000 at the beginning of the period in the first case and just over this in the second, only 2-<br />
3% of their respective country’s total – though Flevoland is growing rapidly (by around 2.5% a year<br />
over the programming period). Hainaut is much bigger, with a population of around 1.3 million,<br />
almost 13% of the population of Belgium.<br />
The regions are very different in terms of their characteristics – Burgenland is predominantly a<br />
rural region, Hainaut, an old industrial coal mining and steel-making region, with many people<br />
living in or around Charleroi or in other urban areas, Flevoland, a relatively new region largely<br />
reclaimed from the sea and close to Amsterdam and other centres of economic activity. All three,<br />
however, have one feature in common: all have substantial outward commuting to neighbouring<br />
regions, Flevoland most especially. This serves to reduce their GDP per head significantly since<br />
many people contribute to the GDP of other regions rather than to that of the region in which<br />
they live. GDP per head, therefore, does not reflect income levels which are much higher in all<br />
three cases.<br />
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GDP per head in both Burgenland and Flevoland increased by more than the national average over<br />
the period (by around 0.5% or so), even after adjusting for the effect of commuting, while in<br />
Hainaut, it rose by slightly less. This, however, was an improvement over the preceding period<br />
when the gap in GDP per head between the region and the rest of the country widened<br />
appreciably.<br />
In all three regions, especially in Burgenland and Hainaut, a central aim was to expand business<br />
activity, in Flevoland, to encourage people to work in the region rather than outside, in<br />
Burgenland and Hainaut, to replace the jobs being lost in declining sectors. The measures<br />
involved were similar but the focus differed slightly.<br />
In Burgenland, funding was given to a broad mix of measures aimed at supporting business<br />
start-ups, the construction of new industrial sites and the expansion of business parks, the<br />
provision of risk capital to SMEs, R&D projects and the development of technology and research<br />
centres.<br />
In Hainaut, the focus was on creating ‘hubs of competitiveness’ by supporting a limited number<br />
of sectors (aerospace, the agri-food industry, logistics and mechanical engineering) through<br />
direct support of SMEs, centres of technology and research and links between the two. The aim<br />
was to develop sufficient critical mass for the businesses concerned to be able to compete on<br />
world markets.<br />
Among the achievements were:<br />
• an increase in the number of business establishments by 4,400 by mid-2005 in<br />
Flevoland, implying that the target of 5,500 over the programming period would be met;<br />
• support for around 1,600 business start-ups in Burgenland as against a target of 700.<br />
In all three regions, EU funding also went to supporting tourism and renovating and regenerating<br />
both urban areas and rural villages. In Burgenland, this was part of an attempt to ensure a more<br />
balanced pattern of development between the North of the region, which is close to Vienna, and<br />
the South and Centre. By the end of 2006, the number of beds in the higher quality end of the<br />
tourist industry had been increased by 2,500, 500 more than the target, through support directed<br />
at spa locations in the South and Centre.<br />
However, in all three regions difficulties were encountered in pursuit of the development<br />
strategies, especially as regards stimulating the growth of SMEs in problem regions in more<br />
technologically advanced activities:<br />
• in Burgenland, evaluations reported the problems of developing of research centres in<br />
structurally weak regions, where the potential to initiate innovation-oriented projects is<br />
limited;<br />
• in Hainaut, because of the limited take-up, only 15% of risk capital was, in practice,<br />
allocated to innovation activities, while wholesaling, retailing, restaurants and hotels<br />
together accounted for 70% of the funds made available;<br />
• in Hainaut again, despite the aim of increasing the capacity of SMEs to absorb new<br />
technology, according to the updated mid-term evaluation, the main recipients of R&D<br />
support were not small but large enterprises, which to a large extent would probably have<br />
undertaken the expenditure concerned anyway.<br />
In Flevoland, where there was less emphasis on RTDI, funding stimulated the creation of new<br />
businesses and led to growth in local employment, so contributing to more balanced<br />
development.<br />
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In all three cases, the evaluations carried out emphasised the beneficial effect of EU funding, and<br />
the delivery system associated with it, on the policies implemented as regards not only the<br />
development of the regions concerned but also more widely.<br />
In Burgenland, it was reported that despite the high administrative costs and deterrent effect on<br />
SMEs, cohesion policy:<br />
• enabled forward planning to be undertaken with clear aims and certainty of finance and,<br />
accordingly, facilitated integrated development programmes with long-term objectives to<br />
be formulated;<br />
• encouraged closer coordination between national and regional authorities as well as local<br />
involvement;<br />
• increased the importance attached to evaluation;<br />
• facilitated the establishment of inter-regional networks to exchange information and<br />
experience<br />
In Hainaut, according to evaluation reports, EU support:<br />
• enabled projects to be implemented which would not otherwise have been possible;<br />
• enabled those which would have been undertaken to be carried out on a larger scale, so<br />
helping to achieve critical mass and, accordingly, increased effectiveness. An illustrative<br />
example is the Centre for promotion of R&D (CeRDT), set up to encourage SMEs to take<br />
innovative initiatives, which helped to create a critical mass of expertise by bringing<br />
experts together and integrating the services they provide;<br />
• encouraged regional authorities to develop a capacity for strategic thinking, as illustrated<br />
by the creation of a task force in Région Wallonne for evaluating projects, which has<br />
helped focus attention on the overall development strategy of the region and on the<br />
measures which have the most effect on restructuring the economy in the long-run.<br />
In Flevoland, reports point to the widespread evaluation of co-financed projects, which has<br />
encouraged the development of an evaluation culture and has led, in turn, to similar<br />
arrangements being applied to other programmes in the Netherlands.<br />
4.2.2 Policy outcomes in Objective 1 regions in EU10 countries<br />
Growth along with widening regional disparities<br />
Growth of GDP per head in nearly all of the EU10 countries was relatively high from the late 1990s<br />
onwards before entry into the Union in mid-2004. After entry up until the onset of the global<br />
recession, the rate of growth increased further, fuelled in part by financial support from the<br />
Structural Funds, which was expanded considerably once they became eligible for the ERDF and<br />
the Cohesion Fund.<br />
This was particularly the case in the Baltic States, where growth was especially rapid. Indeed, the<br />
question has been raised as to whether the financial injection involved, amounting to 1-2% of<br />
GDP a year in the three years 2006-2008 led to overheating of these economies and, accordingly,<br />
to the financial crisis which struck them in 2008 and which led, in turn, to a sharp decline in their<br />
GDP. As indicated below, however, while the funding they received added to demand, it also<br />
financed investment in infrastructure and business support which increased their capacity to<br />
sustain economic growth over the longer-term<br />
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At the same time, high growth was associated in all countries with widening disparities in GDP<br />
per head between the urban centres, especially the capital cities, and rural areas, particularly the<br />
more peripheral ones, as economic activity, and the inward flow of foreign direct investment<br />
(FDI), was concentrated in the former.<br />
This was as much the case in the smaller countries which were single NUTS 2 regions as the in<br />
the larger ones. In Lithuania, therefore, the difference in GDP per head between the richest county<br />
(Vilnius district) and the poorest (Taurage district) had increased to 2.6 times by the time of entry<br />
into the EU. In Latvia, the continuing widening of regional disparities between the capital, Riga,<br />
and the other regions was explained as follows:<br />
‘due to the backwardness of the regions, educated and qualified people leave to go to Riga’ and<br />
‘the drawbacks of the infrastructure significantly diminish the interest of entrepreneurs in<br />
developing production in the regions’ 46 )<br />
The effect of the Structural Funds on regional disparities<br />
Such disparities were, therefore, of increasing concern as the plans for the 2004-2006<br />
programming period were being prepared. These plans in nearly all countries were focused in<br />
particular on strengthening the competitiveness of businesses both directly through support for<br />
investment – and more especially, for innovation – and indirectly through improving infrastructure<br />
and the underlying conditions for enterprise development. Funding, however, was directed not<br />
only at sustaining growth of the economy as a whole but also at trying to achieve a more<br />
balanced spatial pattern of development.<br />
The aim was, therefore, to spend relatively more in the less developed parts than in more<br />
developed ones in an attempt to reduce disparities in infrastructure, and resource endowment<br />
generally, so as to even out the capacity for growth. At the same time, it was also to provide more<br />
support to local businesses to help them to become more competitive.<br />
This aim, however, was not always realised because of the differential capacity of regions, and the<br />
firms located there, to absorb the funding made available. In Latvia, therefore despite the aim of<br />
allocating more funding per head of population to the weaker regions, a larger share of finance<br />
went to Vidzeme, a relatively prosperous region surrounding Riga, than to Latgale, a region with<br />
one of the lowest levels of GDP per head.<br />
In Estonia, where the aim was similar, the national report concluded that implementation was<br />
most effective in the most developed regions and attributed this to their greater preparedness to<br />
take up the measures introduced.<br />
This was also the case in Hungary, where it is reported that the emphasis on innovation and R&D<br />
policies in the development strategy led to Közép-Magyarország, the most developed region<br />
where Budapest is situated and where research capacity is predominantly concentrated, gaining<br />
much more than others.<br />
The higher take-up of funding by the more developed regions was reinforced by the shortness of<br />
the programming period, together with the limited experience of the authorities concerned either<br />
of managing a large volume of EU funding, and the administrative requirements which go with it,<br />
or of implementing a regional development strategy. In Poland, therefore, it was reported that,<br />
because of time pressure, most of the attention of policy-makers during the process of<br />
preparation for accession was taken up by the capacity to absorb EU support. In Hungary, the<br />
46 Single Programming Document for the period 2004-2006.<br />
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programmes implemented tended to favour the more developed regions where there was less risk<br />
of budgets not being spent.<br />
Nevertheless, despite the difficulties of absorption, which applied most to business support, it<br />
was still the case in Hungary that EU funding helped to reduce differences in the endowment of<br />
physical infrastructure, through construction of motorways in the lagging regions.<br />
In the Czech Republic, the ERDF financed improvements in infrastructure in regions outside<br />
Praha, the expansion of industrial zones, science and technology parks and innovation centres<br />
and the cultivation of the business environment. This served to increase the attractiveness of the<br />
regions concerned to foreign investors, so contributing to the marked increase in FDI going to<br />
regions other than Praha over the period.<br />
In the Czech Republic, therefore, the Structural Funds over the period 2004-2006 contributed to<br />
stabilising the disparity between the capital city region and others, which had widened<br />
appreciably in earlier years.<br />
The development policies supported<br />
The main programmes financed by the ERDF, as noted above, were support both to businesses,<br />
especially SMEs, aimed at strengthening their competitiveness, and to investment in<br />
infrastructure, especially in transport networks, aimed at alleviating the constraints on growth as<br />
well as at improving the environment.<br />
SME support<br />
Support for SMEs was a common feature in all the countries, for example:<br />
• in Poland, the main achievement in respect of business support was the establishment of<br />
services for SMEs, to provide technical information and advice as well as loans and credit<br />
guarantees;<br />
• in the Czech Republic, support of SMEs to encourage them to innovate resulted in the<br />
value-added of the firms assisted increasing by over 30% as against a target of 10%; in<br />
addition some 38% of business start-ups supported were run by women as against a<br />
target of 25%;<br />
• in Slovenia, support was mainly focussed on the creation of networks of technology and<br />
centres of excellence and on promoting links between these and businesses; up to the<br />
end of 2007, 28 centres were established to act as intermediaries between business and<br />
research and of these, 10 were centres of excellence.<br />
At the same time, the aims set of assisting SMEs, especially in the weakest regions, and<br />
increasing the extent of innovation in businesses were not always achieved:<br />
• in Hungary, most of the additional value-added generated by enterprise support -some<br />
three-quarters of the total increase – was in the strongest region, Közép-Magyarország;<br />
moreover, according to independent evaluation, in the case of support for the larger<br />
companies, typically competing in international markets, the deadweight loss was close to<br />
90%, while on specific programmes supporting SMEs, the crowding-out effect was<br />
estimated to be close to 50% and the deadweight loss, around 80%;<br />
• in Lithuania, the aim of strengthening links between business and the research<br />
community had limited success, partly because of the large-scale emigration of scientists<br />
and other highly qualified people over the transition period and especially after accession<br />
to the EU.<br />
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Investment in transport<br />
The transport system in all the mainland EU10 countries was in a poor state of repair and in need<br />
of modernisation when the transition began and was, accordingly, a focus for EU funding in many<br />
of the countries:<br />
• in Poland, particular importance was attached to tackling the outdated and worn out<br />
transport network, inherited from the communist years. However, funding was excessively<br />
dispersed and there was an evident propensity to support small projects of local<br />
importance, which were considered unlikely to improve the transport system as a whole<br />
significantly;<br />
• in the Czech Republic, ERDF support was concentrated on improving regional road<br />
networks and the development of public transport; given the substantial need to upgrade<br />
existing transport links and establish new ones, there was no problem absorbing the<br />
funds allocated;<br />
• in Slovakia, most of the funding for transport infrastructure went on financing the<br />
reconstruction and electrification of selected railway lines and the repair of existing roads<br />
as well as the construction of a few new ones. As a result, a start was made on improving<br />
the rail network, modernising stations, upgrading inter-regional lines and increasing the<br />
speed of service as well safety and reliability. At the same time, the focus on railways<br />
served to reduce the environmental impact of transport;<br />
• in Lithuania, a large number of projects were initiated, aimed as improving traffic<br />
conditions, linking up local road networks with the main transport routes and renewing<br />
railway lines. While most of investment went into improving existing roads rather than<br />
constructing new ones, it also went into building a by-pass in Vilnius around the old city,<br />
which has reduced traffic jams, road accidents and pollution.<br />
Environmental investment<br />
Protection of the environment had also been largely neglected during the communist era and<br />
projects were undertaken in a number of the countries with a view to both cleaning up the<br />
environment and safeguarding it against further damage:<br />
• in Slovakia, the Structural Funds were used to co-finance investment in environmental<br />
infrastructure to tackle the legacy of decades of damage caused by heavy industry and<br />
other factors, which could not have taken place on the same scale without EU support;<br />
• in Lithuania, support was aimed at improving the quality of drinking water, cleaning up<br />
contaminated sites, protecting vulnerable areas, strengthening the monitoring of<br />
environmental indicators and cleaning up the Baltic Sea coastline as well as modernising<br />
electricity and natural gas distribution networks. As a result, both energy losses and<br />
pollution were reduced, CO2 emissions, for example, being cut by 2.5%.<br />
• in Malta, where, though the history was different, the environment had also tended to be<br />
neglected, cohesion policy and EU influence encouraged a shift of public investment<br />
towards environmental measures and increased awareness of the issues involved; funding<br />
was, therefore, used to support the adoption of a less ‘invasive’, more sustainable model<br />
of tourism.<br />
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The institutional effects of support<br />
In view of the relatively short time period over which support from the Structural Funds on any<br />
significant scale was provided to the EU10 countries, it is unrealistic to expect a great deal to<br />
have been achieved in increasing their capacity for sustained development. Nevertheless,<br />
important improvements are evident even in this short time in the institutional arrangements for<br />
pursuing a regional development strategy and for managing the EU funding received. These<br />
improvements occurred not only at the national level but also in the regions, which, in many<br />
cases, were newly created for the express purpose of making use of EU support.<br />
The regionalisation of policy<br />
• in Poland, an indirect effect of EU cohesion policy was to strengthen the economic powers<br />
of the regions and, although the funding received was managed by the national<br />
government, the regional authorities had some discretion over how they used the<br />
amounts allocated to them;<br />
• in the Czech Republic, the formulation of a regional development strategy was<br />
accompanied by the establishment of a new institutional framework, with increased<br />
decentralisation and the regionalisation of responsibilities. Because of the need to<br />
distribute funds to the regions and to coordinate regional development, a new Territorial<br />
Development Policy was formulated, involving the formulation of a more coherent and<br />
coordinated policy approach, increased decentralisation and the regionalisation of<br />
administrative structures and responsibilities;<br />
• in Hungary, the ‘achievement of a better environmental and more balanced regional<br />
development’ became a stated objective of policy. EU funding led to a strengthening of<br />
institutional capacity in all of the regions, so that in the future they will be better-placed<br />
to develop an autonomous and coherent development strategy in line with their needs<br />
and resource endowment;<br />
• in Slovakia, accession to the EU was associated with a new regional division of the<br />
country, together with fiscal decentralisation. This division brought about a complete<br />
change in the structure of public administration, though it also led to a number of<br />
problems. The newly-formed regions were under pressure to formulate their own<br />
development strategies but lacked the necessary administrative capacity as well as<br />
management experience to do so. This complicated the development of coherent regional<br />
planning and was a source of delay in respect of the deployment of EU funding.<br />
The management and implementation system<br />
In all the EU10 countries, systems were set up to manage the implementation of cohesion policy,<br />
with support from the ERDF, which resulted not only in the finance made available being<br />
absorbed but also in the seeming extension of the methods involved into domestic policy areas.<br />
• In Cyprus, the management and implementation system was integrated into the existing<br />
public administration system. The most important indirect effects were the transfer of<br />
cohesion policy management practices (strategic planning, partnership, monitoring and<br />
evaluation) to national development policy and the establishment of a medium-term<br />
budgetary framework.<br />
• In the Czech Republic, substantial progress was made over the programming period in<br />
establishing many features of the cohesion policy management and implementation<br />
system (financial control, project generation, appraisal and selection as well as<br />
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evaluation). Nevertheless, there was still need for improvement as regards coordination<br />
between Ministries and the quality of indicators used. Access to EU funding is reported to<br />
have had significant indirect effects by establishing a new programming and planning<br />
approach for the whole cycle of spending public money, involving more targeted - and so<br />
more effective – support of activities for fostering economic development, and by<br />
stimulating the formulation of national and regional development strategies.<br />
• In Estonia, the main emphasis was on putting suitable institutions in place, which left<br />
limited time and resources for reviewing the projects undertaken and assessing their<br />
effects. A strong financial control system was put in place and a sufficient number of staff<br />
were recruited and trained. Cohesion policy is reported to have contributed to better<br />
coordination of policies between different Ministries and more of a focus on longer-term<br />
planning, partnership and evaluation.<br />
• In Hungary, substantial improvements were made in the procedures for project selection,<br />
monitoring, reporting and evaluation over the period. However, the existence of dual<br />
procedural requirements for cohesion policy and domestic policy created an extra<br />
administrative burden for financial planning and staff management. Nevertheless,<br />
progress was made in building the necessary institutions and in spreading a new culture<br />
of cooperation among the various parties involved in domestic policy-making.<br />
• In Latvia, priority was accorded to financial management and the establishment of welldefined<br />
procedures, though focused more on ensuring financial correctness and on<br />
monitoring and reporting spending than on physical outcomes. There were shortcomings<br />
in other aspects too, in the form of lengthy procedures and insufficient flexibility, which<br />
were partly overcome during the programming period. The requirements of cohesion<br />
policy led to more transparency and accountability, increased involvement of stakeholders<br />
in the decision-making process, more strategic planning at the national level and<br />
enhanced cross-ministerial cooperation. There were also signs of an evidence-based<br />
approach to policy-making beginning to emerge in other policy areas.<br />
• In Lithuania, a centralised administrative system was established for the management of<br />
cohesion policy. This proved capable of reacting quickly to problems and deficiencies in<br />
procedures (e.g. in project selection). Cohesion policy had a tangible effect in initiating a<br />
culture of transparency and accountability in public administration and led to increased<br />
interest in strategic planning.<br />
• In Malta, a number of important reforms to establish accountability, openness and<br />
transparency had already been introduced prior to EU accession. A significant challenge<br />
was the small pool of civil servants and the lack of project management skills. Cohesion<br />
policy helped to put in place more efficient arrangements for contracting and making<br />
payments and to establish a monitoring and evaluation system, both of which could be<br />
introduced into other policy areas.<br />
• In Poland, considerable progress was made in establishing an effective management and<br />
implementation system for cohesion policy. However, the system was created and<br />
operated in isolation from the national administration system, which was still not fully<br />
compliant with EU standards of public management and governance. The effectiveness of<br />
cohesion policy was accordingly undermined. The major challenges remaining at the end<br />
of the programming period were to improve coordination, financial management and<br />
monitoring. Nevertheless, cohesion policy enforced the modernisation of public<br />
administration, in the form of multi-annual strategic planning, task-oriented budgets and<br />
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evaluation. The changes were more visible at the regional level – where the administration<br />
of cohesion policy and domestic policy was merged - than at the national level.<br />
• In Slovenia, suitable institutional arrangements and procedures were set up for the<br />
management and implementation of cohesion policy. However, due to lack of staff and<br />
experience, the system encountered some difficulties, especially at the beginning of the<br />
period. Nevertheless, cohesion policy is reported to have been important in introducing<br />
new forms of management and in strengthening institutional capacity, as well as<br />
stimulating collective action for development and introducing new forms of intervention<br />
(industrial zones and in tourism). This was achieved through:<br />
o<br />
o<br />
o<br />
intensive education of personnel in Ministries and associated bodies aimed at<br />
better planning of projects and at establishing clear and transparent means of<br />
implementation;<br />
closer cooperation between the Managing Authority and Ministries;<br />
better prepared policies, clearer instructions and guidelines and increased<br />
publication of information about the funding available.<br />
• In Slovakia, a solid basis for the management and implementation of cohesion policy was<br />
established over the period. However, due to limited experience, the focus was primarily<br />
on contracting and reimbursement and less attention was paid to the qualitative aspects<br />
of implementation. High staff turnover and deficiencies in staff development undermined<br />
the overall effectiveness of policy. Although the establishment of the management and<br />
implementation system had some effects, major differences in the management of<br />
cohesion policy and in that of domestic policies remained at the end of the period.<br />
4.2.3 Policy outcomes in Objective 2 regions<br />
The expenditure financed by the ERDF under Objective 2 for the period 2000-2006 was, as<br />
indicated above, very much less than under Objective 1 – only around one-fifth of the amount (at<br />
just under EUR 19 billion up to the end of 2008). Partly because of this, funding was concentrated<br />
on small problem areas within countries, smaller – in many cases, much smaller – than NUTS 2<br />
regions and mostly smaller even than NUTS 3 regions. Despite this spatial concentration, the<br />
amount of support provided in the areas assisted was considerably less than in Objective 1<br />
regions, averaging only around 0.13% of GDP in the areas concerned.<br />
What can reasonably be expected to have been achieved in these areas as a result of cohesion<br />
policy is, therefore, correspondingly less than in Objective 1 regions. Nevertheless, despite the<br />
policy aims set often being far in excess of what was feasible given the amount of financial<br />
support provided, the evidence from the evaluation is that in many of the regions assisted, the<br />
amount involved had a significant effect in furthering economic and social objectives. It,<br />
therefore, acted in a number of cases both as a catalyst for the formulation of development<br />
policies for tackling the problems confronting the regions concerned and as a means of levering<br />
more funding to carry out a more extensive, and effective, policy.<br />
This is reflected in the performance of regions receiving Objective 2 funding over the<br />
programming period. As indicated in Chapter 2 above, growth of GDP per head in the regions<br />
concerned tended to be either higher or not significantly worse in the regions concerned than in<br />
non-assisted regions. This was especially the case in those receiving the most funding, despite<br />
these being the ones with the biggest structural problems whether arising from being overly<br />
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dependent on traditional industries in decline, including fishing in some cases as well as<br />
manufacturing, or because of their rural nature.<br />
At the same time, partly by being so spatially concentrated, it stimulated local involvement in<br />
projects for improving the situation in the areas targeted in social as well as economic terms. As<br />
such, it brought cohesion policy closer to local communities and raised awareness of the<br />
possibilities for locally-based action to improve both the underlying conditions for economic<br />
development and the quality of life.<br />
In some countries, therefore, Objective 2 funding was associated with a visible improvement in<br />
growth performance over the period, though, of course, there may not be a direct, causal,<br />
connection between the two. In other countries, from the evidence collected during the<br />
evaluation, it helped to improve the conditions for growth and a more balanced pattern of<br />
development, which is expected to show up in the quantitative indicators in the coming years.<br />
The remainder of this chapter summarises this evidence. It outlines some of the main examples<br />
of policies supported by the ERDF under Objective 2 in the regions receiving assistance over the<br />
period and indicates the outcomes according to both the present evaluation and those carried out<br />
in the countries concerned. It should be emphasised that no attempt is made to present a<br />
comprehensive coverage of the projects supported, still less of all the regions receiving funding.<br />
The features of Objective 2 regions and the policies implemented<br />
In practice, in most of the countries with regions receiving assistance under Objective 2, the<br />
development strategy pursued and the uses to which the funding was put were not very different<br />
from those in Objective 1 regions. This reflects the fact in many cases the features of regions<br />
concerned, especially in the Northern parts of the EU, were similar to those assisted under<br />
Objective 1.<br />
In the UK, for example, the regions eligible for Objective 2 support were either urban areas or<br />
rural areas reasonably close to an urban centre but nearly all of them had been dependent on<br />
traditional industries in decline, with consequent low rates of economic growth and relatively high<br />
rates of unemployment. The primary aim of Objective 2 programmes was to increase GDP per<br />
head and employment levels closer to those in the rest of the UK. This was to be achieved<br />
through improving the performance of businesses located in the region. and most especially the<br />
SMEs, by direct aid and the development of business support services, coupled with the cleaning<br />
up of old industrial sites and the regeneration of urban areas to make the areas concerned more<br />
attractive as locations for investment.<br />
In Italy, on the other hand, where there were more pronounced differences in the characteristics<br />
of Objective 2 and Objective 1 regions. The development strategy for the former was defined<br />
separately and greater autonomy was given to them. The main aims, however, were similar to<br />
those in the UK, to increase the competitiveness of businesses, including those in tourism, and to<br />
develop the growth potential of regions. This was to be done, again as in the UK, through<br />
improving the environment, both natural and physical, and making most use of its potential to<br />
attract tourists as well as business investment.<br />
In both cases, while the focus was on increasing growth and business competitiveness,<br />
underlying this was an implicit recognition of the need for restructuring to achieve this aim,<br />
which became more explicit as the period progressed. This is reflected in the emphasis on<br />
innovation and the significant share of funding going to support this, not only in these two<br />
countries, but also in most others.<br />
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In Germany, structural change was an explicit central aim of Objective 2 programmes in a number<br />
of regions, such as in Berlin, or Saarland, where the concern was to reduce reliance on coal and<br />
steel industries, while in Niedersachsen, the focus was on developing indigenous potential and in<br />
Rheinland-Pfalz, on sustainable development.<br />
In Belgium, while the ultimate goal in Objective 2 regions was to increase growth and<br />
employment, the immediate aim was explicitly to diversify the production system. The<br />
programmes implemented were all directed to varying degrees towards developing a broader and<br />
more diversified economy, especially one based on more knowledge-intensive activities and one<br />
which was attractive to outside investors<br />
In Sweden, the aim in Objective 2 regions was equally to improve the business environment<br />
together with stimulating knowledge-driven development, much as in the case of Objective 1<br />
regions.<br />
In the Netherlands, the areas eligible for Objective 2 support were primarily those in the North of<br />
the country which were the only ones for which a specific regional development programme was<br />
implemented by the national authorities over the period 2000-2006. Here the aim, as elsewhere<br />
was to increase growth and employment but to do so in a way which was in line with spatial<br />
balance, with growth being concentrated in centres of economic activity and rural areas being<br />
preserved.<br />
The three main policy areas in which support was concentrated in most countries were enterprise<br />
support, RTDI – which was closely related and in many cases an integral part of the support<br />
provided to businesses – and territorial development. Some of the actions taken in these areas,<br />
especially the first two, and their results have been described in earlier sections of this report.<br />
The focus here is on the overall outcomes in the regions concerned.<br />
France<br />
In France, expenditure financed under Objective 2 for the 2000-2006 period amounted to some<br />
EUR 5.1 billion up to the end of 2008. This was spread across the country in the sense that all<br />
NUTS 2 regions had at least one area which received assistance, just over 35% of the population<br />
outside of Objective 1 regions living in assisted areas (see Table 4.4).<br />
Funding to assist businesses went to a significant extent to the provision of support services for<br />
SMEs, in the form of investment in new industrial zones tailored to the needs of local firms,<br />
business parks, incubators and premises in urban areas, which had visible results in terms of the<br />
infrastructure created.<br />
Funding also went to increasing access to RTDI and, depending on the region, the focus of<br />
support was either on research centres and universities, or on centres of technology transfer to<br />
increase the diffusion of know-how or on improving the links between research centres and<br />
industry. According to evaluations, the funding provided contributed to bringing about a better<br />
culture of innovation across the country, leading to:<br />
• increased expenditure on R&D by firms and the development of new markets (such as in<br />
Provence-Alpes-Cotes d’Azur and Languedoc-Roussillon, where a third of companies<br />
receiving support applied for a patent);<br />
• the development of research centres, public-private partnerships, networks for the<br />
development of technology (Réseaux de développement technologique) and ‘technology<br />
platforms (as in Midi-Pyrénées);<br />
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• the diversification of regional economies based on industry towards ICT-related services<br />
(as in Franche-Comté).<br />
An even large part of the funding went to territorial policy to improve the attractiveness of<br />
regions both for people to live and businesses to locate. The projects undertaken included:<br />
• the regeneration of derelict urban areas in traditional manufacturing regions (e.g.: in<br />
Lorraine, Picardie, and Haute-Normandie);<br />
• the rehabilitation of industrial zones in rural areas and the creation of new ones together<br />
with support for the diversification of economic activity (such as into the agri-food<br />
industry in Picardie)<br />
• the renovation of small rural towns (such as in Franche-Comté, Basse-Normandie and<br />
Rhône-Alpes);<br />
• support for the tourist industry through the renovation and modernisation of<br />
accommodation, the better organisation of activities, the restoration of heritage sites and<br />
the creation of cultural events;<br />
• improving accommodation and protection of the natural heritage in mountainous areas in<br />
order to encourage more tourism (such as in Auvergne and Midi-Pyrénées);<br />
• the provision of main drainage and waste-water treatment plants in rural areas in a<br />
number of regions.<br />
Although it is difficult to measure the effects of such measures, it is, nevertheless, the case that<br />
the population stabilised or even increased over the period in many of the areas concerned.<br />
UK<br />
In the UK, as in France, Objective 2 funding, which amounted to EUR 3.8 billion in total up to the<br />
end of 2008, was allocated to a large number of areas across the country. These together covered<br />
just over 31% of the population outside of Objective 1 regions. Although the amount involved was<br />
small in relation to national funding, it increased the resources available for the pursuit of<br />
development policy in problem regions.<br />
EU funding, like that from national sources went predominantly to support of businesses,<br />
especially SMEs, the aim being to diversify the regional economy into new and expanding sectors<br />
and to encourage increased RTDI. It also, however, went into measures to improve the<br />
environment for both businesses and people. Examples include:<br />
• the installation of broadband in a number of areas, including the ‘Switch on Shropshire’<br />
project in the West Midlands which provided access to high-speed telecommunications to<br />
over 400 businesses and 35 local communities in the county;<br />
• the Eliot Park Innovation Centre also in the West Midlands, where ERDF support enabled<br />
the installation of an electricity generation system based on solar power (which is<br />
expected to yield energy savings of over 50% as compared with typical offices of the same<br />
kind) and provided important lessons for the future construction of office buildings;<br />
• the construction of the Ricoh Arena in Coventry in the West Midlands on an old industrial<br />
site with conference, exhibition, hotel, restaurant, entertainment and sports facilities;<br />
• the renovation and expansion of community facilities in deprived parts of East<br />
Manchester.<br />
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In a number of the regions receiving assistance, according to evaluations, there was evidence of<br />
the restructuring of economies, in the form of a larger decline than elsewhere in the share of<br />
industry and a bigger rise in the share of business services and high tech activities. In the East of<br />
Scotland, for example, a bio-technology cluster was developed with the aid of EU funding around<br />
life science research institutes in Dundee, while funding supported the concentration of the<br />
electronics industry in West Lothian.<br />
Table 4.4 ERDF-financed expenditure under Objective 2 in relation to population and GDP, 2000-<br />
2006<br />
ERDF<br />
expenditure<br />
(EUR million)<br />
Obj2 popn as %<br />
non-Obj1 popn<br />
ERDF allocation<br />
as % non-Obj1<br />
GDP<br />
ERDF allocation as<br />
% of GDP in Obj 2<br />
areas<br />
AT 623.8 29.8 0.04 0.15<br />
BE 342.1 16.3 0.02 0.13<br />
DE 2,908.9 18.9 0.02 0.12<br />
DK 125.1 12.5 0.01 0.07<br />
ES 2,070.1 52.1 0.07 0.13<br />
FI 392.6 40.7 0.04 0.11<br />
FR 5,129.8 35.6 0.05 0.15<br />
IT 2,464.5 22.3 0.03 0.17<br />
LU 40.4 25.6 0.02 0.08<br />
NL 685.2 18.5 0.02 0.11<br />
SE 368.4 17.6 0.02 0.14<br />
UK 3,785.7 31.0 0.03 0.12<br />
EU 15 18,936.8 27.4 0.03 0.13<br />
CY 22.5 28.7 0.06 0.20<br />
CZ 54.0 31.2 0.08 0.27<br />
SK 31.6 29.6 0.11 0.39<br />
EU 10 108.0 30.1 0.08 0.27<br />
EU 25 19,044.8 27.5 0.03 0.13<br />
Note: The figures include Objective 2 phasing-out support. These figures,<br />
however, have been weighted by the average amount of funding received per head<br />
of population in relation to the amount received in areas fully eligible for Objective<br />
2 so as to be more comparable. On average, funding per head in phasing out areas<br />
was only around 20% of that in fully eligible areas.<br />
The figures relate to expenditure up to end-2008<br />
Source: Calculations based on DG Regio data.<br />
Germany<br />
In Germany, Objective 2 funding amounted to some EUR 3.2 billion up to end-2008 and went to<br />
areas located in all of the 11 Länder (NUTS 1 regions) in the Western part of Germany. Around<br />
19% of the population in the Western part of the country (i.e. outside of Objective 1 regions) lived<br />
in such areas, though the size of the areas concerned varied markedly in terms of population,<br />
and, therefore, of the scale of the support provided. All of the areas were experiencing problems<br />
either of industrial decline or of lagging development because of their rural nature. As in the UK,<br />
a large part of funding went to support SMEs and the rehabilitation of polluted or rundown areas.<br />
EU funding supplemented the support available under the Joint Task and enabled additional<br />
measures to be undertaken, such as in respect of RTDI, the environment and tourism, for<br />
example:<br />
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• the construction of Logport, a logistics centre in Duisburg-Rheinhausen on the site of a<br />
former steel mill, with railway connections and a harbour with a container terminal, which<br />
makes use of the good transport network and logistics know-how of the old heavy<br />
industries. This has become one of Germany’s and Europe’s leading logistics locations<br />
and probably the world’s biggest inland container terminal;<br />
• the establishment of the <strong>European</strong> Centre for Micro and Nanoreliability (EUCEMAN) in<br />
Berlin, coordinating a network of research institutes across Europe working at the<br />
forefront of nano-technology;<br />
• the implementation of 390 projects in Niedersachsen to expand hotel and other<br />
accommodation and support for the creation of 112 new tourist facilities, and of 110<br />
projects in Nordrhein-Westfalen to provide leisure and cultural activities<br />
Although the evidence is relatively limited, it is reported that a large part of the programmes on<br />
RTDI would not have taken place without EU funding. In addition, the inclusion of the pursuit of<br />
equal opportunities and the sustainability of development as horizontal principles in EU cohesion<br />
policy put these issues on to the policy agenda, even if they were not necessarily incorporated as<br />
prominent features in national policies. Equally, the Structural Funds opened up the possibility of<br />
supporting the development of clusters and the adoption of other innovative measures for<br />
stimulating regional development.<br />
Moreover, the regulations surrounding the receipt of EU funding also produced benefits in the<br />
form, for example of:<br />
• the strengthening of existing mechanisms of financial control in a number of Länder,<br />
such as in Nordrhein-Westfalen where the adoption of competitive tendering was<br />
prompted by the deficiencies revealed by control mechanisms;<br />
• the adoption of systems for monitoring and evaluating expenditure, which for the most<br />
part did not previously exist in respect of regional policy.<br />
Italy<br />
In Italy, expenditure under Objective 2 amounted to around EUR 2.5 billion up the end of 2008<br />
and went to problem areas in all 14 NUTS 2 regions in the North and Centre of the country, the<br />
areas assisted accounting for around 22% of the population.<br />
The programmes implemented were similar in nature, combining direct support to enterprises<br />
and for the provision of business services and infrastructure with improvements to the physical<br />
and natural environment. The form which business support took varied across regions:<br />
• in some regions, the focus was on supporting the growth of existing industries (in Valle<br />
d’Aosta, Liguria and Lazio);<br />
• in others, support was concentrated on creating the conditions for innovation and<br />
exporting (Piemonte and Umbria);<br />
• in most, general investment grants were combined with specific measures to stimulate<br />
innovation and environmentally-friendly methods of production (Abruzzo, Marche,<br />
Toscana and Friuli Venezia Giulia).<br />
Support for improving the environment was equally varied in focus:<br />
• in some regions, funding helped to regenerate deprived areas and prevent natural<br />
disasters (in Liguria and Friuli Venezia Giulia);<br />
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• in others, to improve water supply, the disposal of urban waste and energy efficiency and<br />
to develop renewable sources (in Marche and Toscana)<br />
• in yet others, to protect the environment and to take advantage of the tourist potential of<br />
natural assets (in Abruzzo and Lazio);<br />
• in most regions, to reclaim and regenerate polluted and old industrial areas.<br />
In addition, funding contributed to the diversification of tourism in regions specialising in<br />
particular activities (Valle d’Aosta, Bolzano, Umbria and Toscana) through co-financing new<br />
amenities and new services. The visible effects, however, were dampened by slow growth of the<br />
economy.<br />
The effect of the environmental measures on regional development, however, was dissipated by<br />
the fact that they were generally small and fragmented and a response to specific needs, rather<br />
than being part of a coherent regional development strategy. Where environmental plans were<br />
more detailed and governance more structured (such as in Toscana), the small-scale projects<br />
were linked to a more explicit strategy and were more effective because of this.<br />
Spain<br />
In Spain, the finance provided under Objective 2 up to the end of 2008 amounted to some EUR<br />
2.1 billion and covered just over half (52%) of the population outside of Objective 1 regions. As in<br />
the other major countries, all NUTS 2 regions had areas receiving Objective 2 support within their<br />
boundaries, the population covered ranging from 91% in País Vasco and 83% in Aragon to 25% in<br />
Madrid.<br />
The funding provided generally helped the regions concerned pursue their development<br />
strategies and, in particular, to increase the resources devoted to RTDI, which accounted for<br />
almost a third of the ERDF support received. Indeed, with the exception of La Rioja (24%), all<br />
regions devoted more than 25% of funding to RTDI intervention, with Navarra investing around<br />
43%. This heavy investment in RTDI was associated with expenditure on R&D in Objective 2<br />
regions increasing from just over 1% of GDP in 2000 to almost 1.5% in 2006 and was reflected in<br />
a 60% increase in patent applications between 2004 and 2006.<br />
RTD developments in two Objective 2 regions, Navarra and Illes Balears, are especially<br />
noteworthy. In Navarra, RTD expenditure increased from 0.9% of GDP in 2000 to 1.9% in 2006<br />
while the number of patent applications tripled between 2001 and 2007. In Illes Balears, where<br />
expenditure on RTDI was historically very low, EU funding helped the region to establish a<br />
coherent policy in this regard, based on strengthening the links between businesses and research<br />
centres and on increasing public outlays (public expenditure on RTDI increased by three times<br />
between 2002 and 2006). Many firms engaged in RTDI activities for the first time in collaboration<br />
with public research centres. As in the country generally, this was reflected in a substantial<br />
increase in patent applications.<br />
Although the funding provided under Objective 2 was, therefore, relatively small, it still played a<br />
major role in stimulating action and levering finance from other sources. In general, EU funding is<br />
considered to have been responsible for the ‘modernisation’ of regional policy, traditionally based<br />
only on infrastructure and training programmes. In a number of regions, the authorities reported<br />
that Objective 2 programmes had an important effect in facilitating the implementation of<br />
‘advanced’ measures such as those promoting the knowledge society, protecting and improving<br />
the environment and increasing the employment of women, which would not necessarily have<br />
been given priority over the period.<br />
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Moreover, the management model of cohesion policy has permeated into national and regional<br />
practices resulting in a more effective use of public resources.<br />
In the remaining countries receiving Objective 2 funding, the sums involved were smaller in<br />
absolute terms than in the larger countries examined above but, in most cases, they were similar<br />
in amount in relation to GDP in the areas assisted.<br />
Netherlands<br />
In the Netherlands, expenditure under Objective 2 amounted to just under EUR 700 million up to<br />
the end of 2008. Most of this went to areas in the North and East of the country where income<br />
levels were lower than elsewhere and rates on unemployment higher. Just under 19% of the<br />
population outside of the Objective 1 region (Flevoland) lived in the areas concerned.<br />
The primary goal in the northern regions in which funding was concentrated – Groningen,<br />
Friesland and Drenthe – was to generate 13,000-23,000 net additional jobs, which were<br />
considered to be needed to increase the employment rate in the regions and close the gap with<br />
that in the country as a whole. The measures funded in pursuit of this were the development of<br />
new business parks and office space as well as direct support to SMEs, including in the tourist<br />
industry.<br />
Between 2000 and 2006, the gap between the regions and the national average closed by around<br />
8,000 jobs. However, it is estimated that without support, employment in the regions assisted<br />
would have fallen by 8,000, so that from this perspective, the programme achieved its goal.<br />
Business support measures were combined with funding for the regeneration of towns and<br />
villages in the areas assisted and for new amenities, which, accordingly, brought about an<br />
improvement in the quality of life in rural areas to go with the increased employment in the more<br />
urban parts.<br />
The conscious policy was to concentrate job creation in centres of economic activity and to<br />
preserve rural areas as largely residential and places for leisure and recreation. The rationale was<br />
to realise the benefits from agglomeration and the externalities generated by such a<br />
concentration of businesses, which would then provide employment, and income, to those living<br />
in other parts of the region, while safeguarding the rural nature of the latter. The strategy was<br />
successful in the sense that job growth was concentrated over the period in the economic centres<br />
where business support was focused, while the Northern regions as a whole experienced<br />
employment growth in contrast to earlier years.<br />
In general terms, therefore, the programme contributed to achieving a more balanced pattern of<br />
development as well as stimulating entrepreneurship on a local scale.<br />
Austria<br />
In Austria, expenditure financed under Objective 2 amounted to around EUR 620 million up to<br />
end-2008 and some 30% of people outside of the Objective 1 region (Burgenland) lived in areas<br />
receiving support.<br />
As elsewhere, funding went primarily to business support programmes, which had the direct<br />
effect of creating around 18,000 new jobs, as well as another 2,000 in tourism. These jobs were<br />
to a large extent in growing, technology-oriented industries (such as in automobile manufacture)<br />
and only a small number were in traditional sectors (such as food and drink).<br />
In the four NUTS 2 regions receiving most support over the period (Niederösterreich,<br />
Oberrösterreich, Kärnten and Steiermark), growth of GDP per head over the period was almost<br />
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twice the average in non-assisted regions. While it is hard to disentangle the influence of<br />
Objective 2 funding from other factors, especially given its relatively small scale, there are<br />
indications that programmes contributed to the modernisation of industry, including of tourism,<br />
by helping to fund business premises, advisory services, research and technology centres, the<br />
expansion of broadband networks and improvements in the environment as well as by<br />
encouraging the development of clusters. Accordingly, support was associated with a<br />
restructuring of regional economies away from low value-added sectors to more advanced<br />
activities.<br />
In addition, the measures supported led to more integrated and innovative regional policies and<br />
increased participation in programmes at local and regional level.<br />
Nevertheless, the evidence also is that, as regards innovation, the ambitious objectives were not<br />
fully achieved. In particular:<br />
• cooperation between businesses and research centres lagged behind expectations<br />
because of a lack of suitable projects;<br />
• the venture capital funds set up financed only a small number of projects;<br />
• fewer innovation networks were created than planned.<br />
It was reported, in addition, that experience over the period suggested that the potential for the<br />
development of research and technology infrastructure in structurally weak regions is limited by<br />
the low potential to absorb innovation-oriented projects.<br />
Belgium<br />
In Belgium, the ERDF under Objective 2 financed expenditure amounting to around EUR 340<br />
million up to the end of 2008, with only 16% of the population outside of Objective 1 regions<br />
living in the areas assisted. Only in three NUTS 2 regions – Limburg in Flemish speaking part of<br />
the country and Liege and Namur in the French-speaking part – did funding cover more than 20%<br />
of the population. The areas in which funding was concentrated were either centres of heavy<br />
industry in the past or rural areas.<br />
In all three regions, funding was divided mainly between business support, cleaning up old<br />
industrial sites in order to make them more attractive to investors and support for tourism and<br />
cultural activities.<br />
In Limburg, the policy had some success in helping to develop sectors of activity in which the<br />
region had an actual or potential comparative advantage in terms of local expertise, such as, in<br />
particular, the automotive and transport equipment industry, logistics, ICT and new media<br />
activities.<br />
In the other two regions, the policy was less successful in bringing about restructuring. In the<br />
Liege region, especially, investment grants did not produce the expected effects in terms of the<br />
diversification of the economy or stimulating the development of high tech activities. In rural<br />
areas, this was reported to be because of the low density of business services. Equally, in some<br />
areas, a large proportion of grants went to large rather small enterprises and were associated<br />
with significant deadweight effects, while relatively few projects involved collaboration between<br />
firms, so that the potential gains from clustering, which were a key part of policy, were not<br />
realised.<br />
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Finland<br />
In Finland, expenditure under Objective 2 amounted to just under over EUR 400 million up to the<br />
end of 2008 and went to areas in which some 40% of the population outside of Objective 1<br />
regions lived.<br />
The focus of support was similar to that in Objective 1 regions, much of it going to stimulate<br />
diversification and innovation in the business sector. As in Objective 1 regions, the policy was<br />
more successful in achieving its aims in larger urban areas with centres of higher education and<br />
research, which were best equipped to benefit from the significant support to R&D and other<br />
innovation activities. While in these areas, there tended to be several R&D and business<br />
development organisations capable of taking initiatives, obtaining funding and organising<br />
projects, this was not the case in rural areas.<br />
According to evaluations, in the case of RDTI in particular, the funding received from the ERDF<br />
was vital for projects to have been undertaken.<br />
Funding also went to improving the local environment in many of the areas assisted. Support for<br />
various measures of urban regeneration, involving partnership between local authorities and local<br />
organisations on the ground, for local public services and for social infrastructure helped to make<br />
the areas concerned more attractive places for people to live and for firms to locate. Such<br />
measures contributed to the growth of tourism as well as to the development of businesses in<br />
other sectors.<br />
Sweden<br />
In Sweden, Objective 2-financed expenditure over the period amounted to around EUR 370<br />
million up to the end of 2008 and went to areas where only around 18% of the population outside<br />
of Objective 1 regions lived. The division of funding between broad policy areas was similar to<br />
that in Finland – or indeed in Objective 1 regions – with much of it going to support of SMEs,<br />
improvement of the environment and the development of tourism.<br />
Although population continued to decline in the rural areas assisted, the growth of GDP per head<br />
over the period was slightly higher than in non-assisted regions and, according to evaluations,<br />
the policies followed have helped to adapt the development path to the requirements of global<br />
competition. In particular, they contributed to a substantial increase in expenditure on R&D (to an<br />
average of 4.6% of GDP in the regions receiving most support), to the development of advanced<br />
services and to the establishment of scientific and cultural exchanges.<br />
Denmark<br />
In Denmark, Objective 2 funding amounted to only some EUR 125 million up to end-2008 and<br />
only just over 12% of the population lived in areas receiving support. Funding was split mainly<br />
between three policy areas – support of SMEs, of RTDI and of tourism.<br />
According to evaluations, funding acted as a catalyst to generate more financial assistance and<br />
improved the conditions for business in the areas concerned. The availability of business services<br />
was increased, networking and cooperation between companies was strengthened (in the form,<br />
for example, of joint marketing initiatives, especially in tourism) and better possibilities for the<br />
transfer of knowledge were established.<br />
The more favourable business environment created in the areas assisted, together with the<br />
establishment of advisory services, led to a higher survival rate of small businesses. Evaluations<br />
indicate that in the case of funding to support businesses:<br />
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• over half of all projects contributed to restructuring and stronger competitiveness;<br />
• some 64% of projects contributed to the development of new products;<br />
• around 40% of projects helped to develop new markets both at home and abroad.<br />
In addition, a large number of projects helped to improve the attractiveness of regions, widened<br />
the choice open to tourists and led to better marketing. As a result, funding contributed to the<br />
tourist season being extended in the regions concerned. (From the mid-term evaluation in 2003<br />
to the end of the programming period, the total number of tourist weeks increased in Denmark<br />
by 300% and the number of overnight stays by 70%.)<br />
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5 Chapter 5 – Conclusions and implications for future policy<br />
This final chapter is divided into two parts. The first part draws out the main points to emerge<br />
from the results of the evaluation as set out in the previous chapters of this report. This covers a<br />
number of issues, in particular:<br />
• an assessment of the effects of ERDF support under Objective 1 and Objective 2 over the<br />
2000-2006 period on the economic performance of the regions assisted;<br />
• consideration of the wider effects of the ERDF on the social and territorial objectives of<br />
cohesion policy and of the dispersion of funding linked to this;<br />
• examination of the particular case of Objective 2 and its achievements given the small<br />
scale of funding allocated to it and the spatial concentration of this funding;<br />
• a review of the contribution of the management and implementation system for the<br />
deployment of the Structural Funds to the policy-making process in the Member States<br />
and of the deficiencies which came to light during the evaluation.<br />
The second part sets out the implications of the evaluation findings for the future design and<br />
implementation of cohesion policy, focusing specifically on the ERDF.<br />
5.1 MAIN CONCLUSIONS<br />
The primary conclusion to emerge from the evaluation is that cohesion policy made a major<br />
contribution to the economic development of the regions assisted by the Structural Funds over<br />
the 2000-2006 programming period. This is especially so in Objective 1 regions but significant<br />
effects are also evident in regions receiving Objective 2 funding despite the relatively small<br />
amount of financing involved. At the same time, cohesion policy helped to further social cohesion<br />
and improve territorial balance across the EU.<br />
5.1.1 The challenges facing the evaluation<br />
The present report draws together the main points to emerge from the various Work Packages<br />
which made up the ex post evaluation of cohesion policy programmes financed by the ERDF<br />
across the EU in the 2000-2006 period and synthesises the findings.<br />
As also indicated at the outset and as highlighted at various points in the analysis, the evaluation<br />
had to overcome the challenges posed by:<br />
• the difficulties of distinguishing the effects of the measures financed by the ERDF from<br />
the many other influences, especially given the often lengthy time lags between policy<br />
measures being taken and their effects becoming apparent;<br />
• the multiple nature of cohesion policy objectives, which are not confined to economic<br />
development as such but encompass the maintenance and strengthening of social and<br />
territorial cohesion as well;<br />
• the lack of clarity in policy documents and official statements on the precise objectives<br />
which particular programmes and measures were intended to achieve and how their<br />
achievement was to be verified;<br />
• the fact that, while accepted indicators exist to assess economic development, there are<br />
few indicators available which can be used to assess social and territorial cohesion, not<br />
least because of their intangible nature;<br />
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• the difficulties of both defining and measuring the ultimate goal of sustainable<br />
development, as opposed to economic development per se, and the long-term nature of<br />
the concept, which makes it hard to judge the appropriate balance between economic and<br />
other objectives in the short-term.<br />
• The fact that in many Member States, the financial support provided by the Structural<br />
Funds is only a small part of the aid which went to Objective 1 and 2 regions. This means<br />
that, in the non-Cohesion countries in particular, national policy towards the<br />
development of the regions concerned can have a much greater effect on outcomes than<br />
EU cohesion policy. Although the above analysis has pointed to cutbacks in overall<br />
government investment in some Member States over the programming period, data are<br />
not readily available on nationally-financed development expenditure in the different<br />
regions and how it changed over the period.<br />
• The fact that most regions receiving funding over the 2000-2006 period also received<br />
financial support in the preceding programming period and, in many cases, the one<br />
before that as well. This means that any effects which show up on regional economic<br />
performance over the period could well be a result of earlier funding as much as that<br />
received during the period itself, especially given sometimes lengthy lags in the effect of<br />
policy materialising. Accordingly, it is not possible to attribute developments observed<br />
over the period to the 2000-2006 funding alone.<br />
The effect of the ERDF on the economic development of the regions assisted is considered first<br />
before going on to consider the other objectives of cohesion policy.<br />
5.1.2 The effect of the ERDF on the economic development of regions<br />
It is important to recognise that it is not inherently possible to draw a direct link between the<br />
financial support given to regions and changes in indicators of regional economic performance,<br />
such as growth of GDP per head in particular. What is possible is to draw together the various<br />
pieces of evidence which are relevant for judging the effect of the former on the latter, in this<br />
case, on:<br />
• Whether the scale of funding was significant.<br />
• Whether funding targeted the drivers of economic growth which economic theories – and<br />
the main international organisations – say should be targeted.<br />
• Whether simulations of the funding provided and its division between policy areas, using<br />
macroeconomic models representing the workings of the economy as best they can,<br />
indicate that it should have had a positive effect on economic growth.<br />
• Whether the growth performance over the period in regions receiving funding was better<br />
or worse than in other regions.<br />
• Whether there is concrete evidence from national evaluations and the case studies that<br />
the funding had positive results in the areas of intervention.<br />
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This is the approach which has been adopted in the evaluation. If the answers to these 5<br />
questions are positive, this does not necessarily prove that funding had a positive effect on<br />
economic development but it is reasonable to suppose that it did 47 .<br />
The evidence is as follows:<br />
The scale of funding 48<br />
• The Structural Funds provided EUR 174 billion of financial support to regions across the<br />
EU for the 2000-2006 period. The ERDF was responsible for almost two-thirds of this,<br />
just under EUR 116 billion. In Objective 1 regions, in particular, to which well over 80% of<br />
the funding went, this was a significant amount in relation to GDP and even more in<br />
relation to investment.<br />
• On average, ERDF support amounted to 2-3% of total fixed investment in Objective 1<br />
regions in the EU15 and some 15% of government investment<br />
• In Portugal and Greece, the ERDF amounted to well over 1% of GDP a year and was<br />
equivalent to around 40% of government investment over the period.<br />
• In the EU10 countries, which became eligible for the ERDF only from May 2004, the scale<br />
of support was also significant from then on.<br />
• In Objective 2 regions, funding was much smaller, though not negligible, equivalent to<br />
around 3% or so of government investment in the regions receiving support.<br />
The policy areas targeted by EU intervention<br />
• The largest part of the ERDF in Objective 1 regions in both the EU15 and the EU10 was<br />
allocated to two broad policy areas – transport, on the one hand, and enterprise support,<br />
on the other. These two areas accounted for around two-thirds of the total funding made<br />
available, if support for tourism is included in the latter.<br />
• Such a focus of support is very much in line with economic theories of development which<br />
emphasise the importance for growth of both efficient communications in order to widen<br />
the market and save travel time and investment in productive capacity.<br />
• The relative weight given to these policy areas in the funding allocated varied across<br />
regions, reflecting their needs and priorities. Greece, Spain and Ireland invested the funds<br />
more in transport than enterprise support, reflecting deficiencies in their communications<br />
networks; other EU15 countries with Objective 1 regions, more in enterprise support to<br />
strengthen businesses. Investment in the two together were complementary – the one<br />
aimed directly at increasing business competitiveness, the other indirectly by improving<br />
the conditions in which businesses operate.<br />
• In regions receiving Objective 2 support, the ERDF was concentrated much more on<br />
enterprise support than in most Objective 1 regions. Together with tourism and including<br />
support for research and innovation, this accounted on average for around 60% of the<br />
total funds allocated. Much of the focus, therefore, was on one of the main drivers of<br />
economic growth.<br />
47 It should be noted that the evaluation did not attempt to answer the question of whether the funds were used in<br />
the most effective way, or whether some other pattern of expenditure would have boosted GDP by more, which is<br />
virtually impossible to know given the differing circumstances and needs in the regions assisted.<br />
48 Payments by the <strong>European</strong> <strong>Commission</strong> to Member States<br />
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• Much of the remaining part of funding was allocated to protecting and improving the<br />
natural and physical environment, which contributed to the sustainability of economic<br />
development as well as to social cohesion and territorial balance, as indicated below.<br />
The simulation results of macroeconomic models<br />
• The two macroeconomic models used both estimate that the expenditure financed from<br />
the Structural Funds is likely to have had a substantial effect on economic growth in the<br />
countries receiving more from the Funds than they contributed to their financing. This is<br />
the case, in the EU15, in Greece, Portugal, Spain and, to a lesser extent, Ireland, as well as<br />
in Southern Italy and Eastern Germany and all of the EU10 countries.<br />
• In Portugal, GDP is estimated to have been around 16% higher in 2009 as a result of<br />
support from the Funds, turning a possible decline in GDP into growth, even if at a low<br />
rate. For Greece, GDP is estimated to have been 13-16% higher in 2009 as a result of<br />
funding and in Spain, 10-17% higher 49 .<br />
• In the EU10 countries taken together, GDP in 2009 is estimated to have been almost 5%<br />
higher than it would have been without Structural Fund support, despite the short time<br />
this was available.<br />
• According to the model designed to estimate the combined effect of levying the taxes to<br />
raise the necessary revenue as well as of the expenditure, the Structural Funds are<br />
estimated to have increased economic growth across the EU25 as a whole over the period.<br />
The boost to growth in lagging economies, therefore, outweighed any adverse effects in<br />
the countries which were net contributors to funding.<br />
The growth performance in regions assisted by the ERDF<br />
• Growth of GDP per head in Objective 1 regions in the EU15 was higher on average over<br />
the 2000-2006 period than in other regions (around 2% a year as opposed to 1.4%).<br />
• Growth in Objective 1 regions in all EU15 countries apart from Belgium was higher than in<br />
non-assisted regions, and in all countries apart from Belgium, Italy and Portugal, higher<br />
than the EU25 average.<br />
• Growth in GDP per head in all regions in EU10 countries, except Malta, was above the<br />
EU25 average over the period 2000-2006, in the run-up to their entry into the Union and,<br />
even more so, after it.<br />
• Growth in regions receiving a significant amount of Objective 2 funding was either higher<br />
than that in non-assisted regions or much the same.<br />
• Regional disparities in GDP per head, one of the main targets of cohesion policy,<br />
narrowed slightly in the EU15 as a whole over the 2000-2006 period having widened in<br />
the preceding 5 years. They also narrowed in most EU15 Member States. This is all the<br />
more the case if the effect of commuting on GDP per head is taken into account.<br />
Evidence of the results of ERDF support<br />
Tangible evidence of the positive effects of ERDF support in policy areas which represent key<br />
drivers of economic growth was compiled for all countries from the administrative data available<br />
49 The ranges refer to the estimates of the two models.<br />
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and from the many case studies carried out in the various Work Packages as well as from the<br />
national reports. To select just a few examples from Chapter 3:<br />
Transport<br />
• the ERDF co-financed around 26% of the 7.734 kms of motorway constructed in the EU15<br />
over the 2000-2006 period, around the same proportion of new high-speed railway lines<br />
in Spain and Italy and the modernisation or upgrading of over 3,000 kms of standard<br />
railway lines across the EU;<br />
• In Spain, Greece and Ireland, in particular, the support provided by the ERDF to<br />
investment in transport led to significant improvements in the links between major<br />
centres both between and within regions and to substantial savings in travel time.<br />
• In Spain, the new motorways constructed, especially in the lagging regions of Andalucía<br />
and Galicia, resulted in overall time savings of 3.5 millions hours a year. In. Greece, the<br />
construction of the Egnatia Odos motorway which extends 680 kms from the West coast<br />
to the Turkish border reduced travel time by almost a half. In Ireland, the completion of 5<br />
major roads between Dublin and other main towns and cities in the country led to journey<br />
time savings of over 40%.<br />
• In a number of cities, Athens, Oporto, Lisbon and Dublin, especially, the expansion of<br />
public transport systems reduced congestion significantly below what it otherwise would<br />
have been, so cutting travel time as well emissions.<br />
Enterprise support<br />
• Almost 640,000 new jobs were reported to have been created as a result of enterprise<br />
support in programmes accounting for some 60% of total funding on such support,<br />
implying the creation of over 1 million new jobs overall across the EU..<br />
• In Eastern Germany, detailed statistical analysis demonstrated that investment per worker<br />
in firms receiving aid was substantially larger than in firms not receiving aid, the extent of<br />
the difference being significantly greater than the amount of aid given.<br />
• In Thüringen, similar analysis demonstrated that R&D expenditure per worker was also<br />
significantly larger in firms receiving aid for this than in those not doing so, with again<br />
the difference exceeding the amount of support given.<br />
In brief, therefore, there is sufficient evidence available from the evaluation to conclude that,<br />
overall, the ERDF had a significant effect on the economic growth of the regions assisted,<br />
especially regions assisted under Objective 1.<br />
5.1.3 Effects of the ERDF on social, territorial and environmental cohesion<br />
As emphasised throughout this report, the ERDF was not only deployed to stimulate economic<br />
growth. It had wider objectives.<br />
• The evaluation revealed that the objectives of social and territorial cohesion were not only<br />
important throughout the EU, but that, in many regions, they had a similar level of priority<br />
as growth and in some cases a higher level, reflecting the characteristics and needs of the<br />
regions in question as well as the political choices made.<br />
• A large part of the financing provided by the ERDF, therefore, went to projects directly<br />
aimed at social objectives combined with territorial balance rather than economic growth<br />
as such. These projects include various kinds of social infrastructure and those covered<br />
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by the term ‘planning and rehabilitation’ – the clean-up of and renovation of rural<br />
villages, inner city areas, old industrial sites, historical monuments and so on.<br />
• Projects of this kind, including those aimed at improving tourist facilities, absorbed<br />
almost a third of the total allocation of the ERDF to Objective 1 regions in both the EU15<br />
and EU10 over the period. In Portugal and the French DOMs, they accounted for over 40%<br />
of the funding provided. In regions which received Objective 2 funding, they accounted<br />
for 36% of the total funding in the EU15, 47% in France and well over half in the<br />
Netherlands and Luxembourg.<br />
• The projects concerned also included wastewater treatment and other kinds of<br />
environmental infrastructure. These had tangible results in terms of the substantial<br />
number of households in deprived regions across the EU which were connected to a<br />
supply of clean drinking water or main drainage.<br />
• The projects equally led to many villages, towns and cities being made more attractive<br />
places to live in and the construction of social, cultural and sporting facilities. While the<br />
projects undoubtedly improved living standards and the quality of life, as well as<br />
territorial balance by encouraging more people to live in the places concerned and more<br />
businesses to locate there, unlike in the case of economic growth, there is no accepted<br />
set of indicators to quantify these effects.<br />
• Moreover, while their immediate impact on economic growth was limited, they almost<br />
certainly strengthened the conditions for long-term sustainable development by reducing<br />
social disparities between regions and territorial imbalances as well as by protecting the<br />
environment.<br />
5.1.4 Cross-cutting issues<br />
A number of cross-cutting issues were examined in the course of the evaluation.<br />
Gender equality<br />
The evidence on gender equality, which was a horizontal priority in the guidelines, is that:<br />
• most programmes made explicit mention of the need to take it into account, but that it<br />
had limited tangible effect on the projects actually carried out;<br />
• only in four of the 12 case study regions was specific action taken to ensure that gender<br />
equality was specifically incorporated in programme design and project selection and<br />
implementation;<br />
• making the issue a horizontal priority did not in itself, therefore, lead authorities across<br />
the EU to take it seriously when deciding policy but that it might have inspired those that<br />
regarded it as being of major importance to take concrete action.<br />
Demographic change<br />
Demographic change was not included as a specific horizontal priority in the Structural Fund<br />
guidelines at the beginning of the programming period. The evidence from the evaluation is that:<br />
• it was increasingly recognised as an important issue in a number of regions as the period<br />
went on, though more in relation to projects financed by the ESF than the ERDF;<br />
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• the ERDF can contribute to regional responses to demographic trends through cofinancing<br />
appropriate projects, especially in relation to social infrastructure and enterprise<br />
support as well as education and training.<br />
5.1.5 Multiple objectives and dispersed funding<br />
As implied by the above, EU funding was spread across many different policy areas in most<br />
regions. Although there was usually emphasis on one or two areas, the average regional<br />
operational programme in Objective 1 regions in the EU15 contained 41 measures. This<br />
dispersion arises for a number of reasons:<br />
• It reflects the fact that there are complementarities between policy areas, that, for<br />
example, support for enterprises should be accompanied by investment in infrastructure<br />
if there are deficiencies in this which harm business competitiveness. Indeed, it is the<br />
essence of an integrated approach to development that these complementarities are<br />
explicitly taken into account.<br />
• It also reflects a tendency to spread funding widely, to try to tackle a range of problems at<br />
the same time and to pursue multiple objectives. The aim typically was not only to<br />
strengthen the capacity of regions for economic growth but also to try to ensure that<br />
growth was balanced across regions and that disparities in living conditions were<br />
reduced.<br />
• The motivation for this may often have been political, to distribute funding across regions<br />
in relatively even way and to give local communities some discretion over how to use the<br />
funding. The effect in many cases was to improve territorial balance by reducing<br />
disparities in access to public goods and services and basic facilities, such as mains water<br />
supply and main drainage. It also made it more likely that the projects funded were in line<br />
with the features and natural assets of the local area concerned and, therefore, consistent<br />
with sustainable development.<br />
• The dispersion of funding across policy areas equally reflects the fact that the most<br />
appropriate regional development strategy is not necessarily to stimulate economic<br />
activity everywhere, in rural as well as urban areas and that protection of the natural<br />
environment or improvements in living conditions sometimes have higher priority..<br />
• Nevertheless, the dispersion of funding also meant that support was in some cases<br />
spread too widely to have a significant impact in any particular policy – or indeed<br />
geographical – area. At the same time, the pursuit of the different objectives was in a<br />
number of cases not sufficiently integrated into an overall development strategy, so that<br />
the potential complementarities – or synergies – were not adequately exploited.<br />
5.1.6 The particular case of Objective 2<br />
Most of the points made above apply to both Objective 1 and Objective 2 regions. Objective 2,<br />
however, needs to be considered separately both because of the much smaller amount of funding<br />
involved and because of the smaller geographical areas in which financing was concentrated. Both<br />
condition what the funding can be expected to have achieved over the period.<br />
The expenditure co-financed by the ERDF under Objective 2 over the period amounted to just<br />
under EUR 265 per head in the EU15 over the 7 year period in the areas receiving aid at the full<br />
rate, or under EUR 40 per head a year. This was only just over a quarter of the funding per head<br />
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in Objective 1 regions. In regions receiving phasing-out support under Objective 2, the amount<br />
involved was considerably less – only around EUR 8 a year 50 .<br />
This scale of support has to be assessed in relation to the problems confronting the areas<br />
concerned and the aims which were set for the funding to achieve.<br />
• In many cases, the areas were reliant in the past on traditional industry and had been<br />
seeking to diversify into other activities for many years before 2000. As is evident from<br />
the case study evidence collected, it typically takes decades of concerted policy effort<br />
rather than years to bring about a fundamental change in areas of specialisation.<br />
• Nevertheless, significant achievements were recorded in many Objective 2 areas. In these<br />
cases, ERDF support acted both as a catalyst to stimulate the formulation of a long-term<br />
strategy for restructuring and for developing new growth activities and as a means of<br />
levering larger amounts of funding<br />
• The 7-year programming period, therefore, gave both an opportunity to plan ahead and<br />
an incentive to do so, while the relatively small amount of funding helped to focus<br />
attention on the most effective ways of deploying this. Moreover, the provision of EU<br />
funding lent credence to the strategy being followed and encouraged others to invest in<br />
it.<br />
• The effectiveness of funding is reflected in the fact that, despite their economic problems,<br />
growth of GDP per head in the regions concerned was either higher or not significantly<br />
lower than in non-assisted regions. According to evaluations, funding both boosted<br />
growth and helped to improve the potential for future growth.<br />
• Objective 2 funding also helped to further social cohesion and territorial balance<br />
especially at the local level. Partly as a result of the small areas on which funding was<br />
concentrated and the limited amount involved, much of it went to environmental and<br />
community projects which increased the attractiveness of areas as places in which to live.<br />
• Funding also led to greater local involvement in the development of the local area as well<br />
as raising awareness of the potential for locally-based action.<br />
In sum, Objective 2 produced positive results in a number of different policy areas across the EU<br />
which in many cases far outweighed the relatively small scale of funding made available.<br />
A number of evaluations, however, pointed to the pitfalls of the spatial concentration of Objective<br />
2 funding on small areas. In many cases, the most effective way of helping the areas to develop<br />
was to stimulate the growth of economic activity in neighbouring areas where businesses were<br />
already concentrated. These, however, were not designated as problem areas and so were not<br />
eligible for support.<br />
5.1.7 The management and implementation system<br />
The system which Member States and regions are required to put in place for managing and<br />
implementing cohesion policy and for receiving financial aid from the Structural Funds is intended<br />
to ensure that the policy implemented is effective. Although the system was already in place in<br />
EU15 Member States before the beginning of the 2000-2006 programming period, according to<br />
the evaluation, it, nevertheless, had important positive effects over the programming period.<br />
50 See Table 2.3 in Chapter 2 above which shows the support provided by the ERDF in relation to GDP. Overall the<br />
level of support in areas assisted under Objective 2 was less than 20% of that in Objective 1 regions in the EU15.<br />
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These include, in particular, spill-overs into other policy areas of the key principles involved –<br />
programming over a medium-to-long time horizon, partnership (involving stakeholders in the<br />
design and implementation of policy), transparency, monitoring and evaluation.<br />
The spill-overs tended to be greatest where commitment to increasing the effectiveness of<br />
policies was strongest among decision makers and where the scale of funding was large in<br />
relation to national budgets.<br />
Nevertheless, while the programming principle was firmly established, infrastructure projects,<br />
particularly for the environment though also for transport, were in many cases, not adequately<br />
integrated into an overall regional development strategy. The result was that they were less<br />
effective than they might have been in furthering the strategy concerned and in pursuing more<br />
than one objective at the same time.<br />
A particular challenge is posed by the typically long duration of infrastructure projects, especially<br />
those for transport, which often extend beyond the time span of a single programming period.<br />
This, in many cases, is combined with long lead times because of the need for careful design of<br />
the project, obtaining planning approval, purchasing the land required and so on, as well as with<br />
a high level of uncertainty about the costs involved at various stages of the project. In addition,<br />
the bureaucratic procedures surrounding such projects, which vary markedly between countries<br />
in their complexity and the time needed to complete them, add a further element of uncertainty<br />
and potential delay.<br />
The resulting difficulty in determining the expenditure profile of large-scale infrastructure<br />
projects led in a number of countries to funding being concentrated on smaller projects where<br />
commitments could more easily be translated into spending within a reasonable period of time,<br />
with less risk of infringing the n+2 rule (see below). These projects, however, tended to be less<br />
important for development.<br />
In certain cases, funding was shifted to projects which had already been completed, or were in<br />
the process of so being, and had been financed from other sources. Accordingly, while the<br />
funding provided was spent in the same broad policy area as initially planned, it was not spent on<br />
new investment as such. The key issue this raises is whether the strategy initially agreed, and on<br />
which the funding provided was predicated, was implemented in practice. This question could not<br />
be answered during the evaluation.<br />
A related feature to emerge from the evaluation was the tendency in a number of countries for<br />
expenditure to have built up only slowly over the programming period and to have been<br />
concentrated at the very end of the time allowed for spending to take place – in the years 2006-<br />
2008. This might reflect a particularly careful selection of projects to fund or, alternatively,<br />
excessively long administrative procedures, implying significant costs to those undertaking the<br />
projects. It also raises a question about the criteria applied to selecting projects towards the end<br />
of the period when a large proportion of the funds have to be spent relatively quickly. It equally<br />
implies an adverse effect on the implementation of programmes in the following programming<br />
period, given the likely preoccupation of the authorities with spending the remaining funding<br />
from the previous period. Indeed, the evidence is that a number of Member States have effectively<br />
shifted the programming period by two years, so that spending the funds available does not<br />
really begin seriously until two years have already elapsed.<br />
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Unit costs of major projects<br />
A further issue which emerged from the evaluation was the lack of information available on major<br />
infrastructure projects which would enable their cost effectiveness, to be assessed. The study<br />
carried out as part of the evaluation on this issue concluded that:<br />
• insufficient data exist at present to compare the unit costs of major projects and to<br />
assess differences in the costs of similar projects carried out in different parts of the EU in<br />
a meaningful way or to broach the question of how far the projects undertaken<br />
represented value for money;<br />
• the lack of detailed data on unit costs is a major gap in the information available on the<br />
conduct of cohesion policy and the deployment of the Structural Funds;<br />
• DG Regio is uniquely placed to maintain a database containing relevant detailed data on<br />
the unit costs of major projects of various kinds completed in different parts of the EU,<br />
which would enable both the cost of similar projects regions to be compared across<br />
regions and the costs of those planned to be assessed in advance.<br />
Monitoring and evaluation<br />
Considerable progress was made in establishing monitoring and evaluation systems which<br />
delivered much more information than ever before about the programmes funded and the<br />
expenditure carried out. Progress was particularly evident in countries like the UK, Germany and<br />
some regions of Italy where serious attempts were made to assess the effects of policy, such as in<br />
relation to enterprise support.<br />
Nevertheless, weaknesses persisted in many Member States. In particular, the main focus tended<br />
to be on processes and financial implementation rather than on the actual results of the<br />
programmes and the effectiveness of the projects supported. In addition:<br />
• monitoring and evaluation systems were often not integrated into the decision-making<br />
process;<br />
• evaluations were not adequately supported by output and result indicators which were<br />
often missing, not well measured and sometimes not relevant;<br />
• enterprise support programmes in particular, especially those involving non-repayable<br />
grants, were subject to evaluation only in a few Member States, despite the widely<br />
recognised problems of deadweight effects.<br />
Criticisms were also made in a number of countries of the heavy administrative burden imposed<br />
by the Structural Fund financial regulations on managing authorities and funding recipients alike,<br />
which tended to deter SMEs in particular from applying for support.<br />
The n+2 rule<br />
While the changes introduced in the 2000-2006 period to ensure that funding was spent within a<br />
reasonable period of time – through the de-commitment regulation (the ‘n+2’ rule) – had the<br />
intended effect, mostly without the need for clawing back funding, there were some unintended,<br />
and unwanted, side-effects. In a number of countries, where managing authorities were less<br />
efficient or primarily concerned with not losing funding, priority was given to projects which were<br />
easier and quicker to carry out as opposed to larger and more ambitious projects which might<br />
have contributed more to regional development. This was not only the case for major<br />
infrastructure projects, as indicated above – though, as also indicated, these involve difficulties<br />
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which are not directly linked to n+2 – but also for innovative projects where there was inevitably<br />
more uncertainty about the time they would take to complete.<br />
Experience in the EU10 countries<br />
The EU10 countries had only a short period of time in which to implement programmes and lack<br />
of experience of pursuing a regional development strategy and of managing large-scale financial<br />
aid from the Structural Funds. Nevertheless, the extension of cohesion policy to EU10 countries<br />
did not give rise to major problems during the period. Concerns, which were widely aired<br />
beforehand about their capacity to absorb the funding provided, proved mostly groundless. They<br />
largely succeeded in spending the financing they received in the policy areas intended.<br />
At the same time, although the funding made available was absorbed, it was also reported that:<br />
• In some cases, the short programming period left little time for any detailed assessment<br />
of the effects of programmes;<br />
• the administration of policy was adversely affected in many countries by institutional<br />
deficiencies, in particular, the lack of an appropriate organisational structure, an overlybureaucratic<br />
system and shortages of experienced staff, partly due to high staff turnover<br />
as a result of the higher pay available in the private sector.<br />
Where needed, the EU10 Member States also succeeded in establishing a regional structure of<br />
administration. This was the case in all four of the countries (Poland, the Czech Republic,<br />
Hungary and Slovakia) with NUTS 2 regions, which formulated regional development strategies<br />
where in most cases none existed before. There is equally evidence of the principles embedded in<br />
the Structural Fund regulations being extended to other policy areas in a number of the countries.<br />
5.2 IMPLICATIONS FOR COHESION POLICY IN THE FUTURE<br />
The findings which have emerged from the evaluation have a number of clear implications for the<br />
future design and conduct of cohesion policy, especially in relation to the ERDF, though many of<br />
the implications extend more widely to other parts of the Structural Funds.<br />
5.2.1 The multiplicity of cohesion policy objectives<br />
The evaluation has drawn attention forcibly to the multi-dimensional nature of cohesion policy<br />
objectives – the twin aims of social and territorial cohesion are as important as economic<br />
development and the reduction of economic disparities between regions.<br />
The multiplicity of goals needs to be recognised explicitly in the design, implementation and<br />
evaluation of policy, which is not always the case at present and was even less for the 2000-2006<br />
programming period.<br />
A number of implications stem from this, in particular:<br />
• the relative priority attached to the different objectives should be made clear when<br />
regional development programmes are determined in Member States or regions; they<br />
should be justified and opened up to debate;<br />
• indicators need to be developed in order to cover, so far as possible, the different<br />
objectives to enable progress towards achieving them to be monitored;<br />
• these indicators need to be developed at the same time as the objectives are determined<br />
and to be regarded as an integral part of the policy-making process.<br />
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5.2.2 The need for concentration of expenditure<br />
As the report makes clear, funding over the 2000-2006 period under both Objective 1 and<br />
Objective 2 was in virtually all cases dispersed over a wide range of policy areas and measures.<br />
• There is a strong case for concentrating funding in particular regions on a limited number<br />
of objectives in order to try to ensure that they have a tangible impact and achieve critical<br />
mass. This does not necessarily mean concentrating, in each case, solely on one of the<br />
multiple objectives of cohesion policy or neglecting complementarities between policy<br />
areas. But it does mean reducing the number of measures funded substantially.<br />
• The objectives and the corresponding measured concerned cannot be specified a priori,<br />
since they should be in line with the needs of the regions in question and their priorities;<br />
these differ between regions because of their different characteristics, patterns of<br />
development and areas of potential comparative advantage.<br />
• It should be up to regions to decide, within the constraints indicated below, on the<br />
objectives and measures on which to concentrate funding, since they are in the best<br />
position to determine the areas in which it would have the greatest effect.<br />
• This choice should not be imposed externally but at the same time, it has to take account<br />
of, and be coherent with, the national strategy being pursued as well as with any<br />
commonly agreed EU-level strategy. Equally, where relevant (such as in relation to<br />
transport networks), it needs to be in line with the policy being followed in neighbouring<br />
regions, which implies a degree of central coordination.<br />
• Whichever objectives and measures are chosen on which to concentrate funding, the<br />
choice needs to be justified and subject to open debate. It also needs to be subject to<br />
detailed and informed negotiations with the <strong>European</strong> <strong>Commission</strong>, which has not only to<br />
consider the rationale for the action being proposed but also to ensure a suitable<br />
concentration of funding, to act as a buffer against the strong tendency for ‘policy creep’<br />
to occur as programmes are determined.<br />
5.2.3 The spatial dimension of policy focus<br />
This report has highlighted the lack of correspondence in many cases between NUTS 2 regions,<br />
which tend to be the focus of cohesion policy so far as the ERDF is concerned, and both<br />
administrative and functional, or economic, regions. It has also highlighted the interdependencies<br />
between regions. Both have implications for the formulation of policy and the assessment of the<br />
results.<br />
• Policy needs to be determined, or at least coordinated, at an appropriate spatial level,<br />
which varies between policy areas, spanning regions and sometimes countries in some<br />
cases (transport networks, for example) and being confined to small areas in others (such<br />
as urban regeneration).<br />
• Although there is a strong case for focusing cohesion policy on administrative regions,<br />
which is not the case in many Member States at present, the fact that the statistical<br />
system is built largely around NUTS 2 regions means that these have to remain at the<br />
centre of cohesion policy at EU level.<br />
• Explicit account needs to be taken of the impact of commuting on GDP per head in NUTS<br />
2 regions, in cases where the flows are significant, when designing policies and assessing<br />
them.<br />
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• The fact that NUTS 2 regions do not always correspond with functional regions means<br />
that in some cases a wider perspective needs to be taken when assessing regional<br />
development policies which need to span more than one NUTS 2 region.<br />
• The importance of territorial cohesion, as well as sustainable development, means that<br />
policy interest cannot stop at the NUTS 2 regional level but needs equally to be concerned<br />
with territorial balance within regions.<br />
5.2.4 Indicators for determining and assessing policy<br />
• There is a need to develop indicators of social cohesion which recognise the multidimensional<br />
nature of the concept both for assessing policy achievements and as an aid<br />
to programming. These could include household income per head as an indicator of living<br />
standards, though the data at present available on this need to be improved, as well as<br />
access to healthcare and education of reasonable standards, and to other essential<br />
services and facilities.<br />
• Such indicators need to extend below the NUTS 2 level given the interest in territorial<br />
cohesion and achieving a suitable territorial balance of development, though account<br />
equally needs to be taken of the importance of ensuring that such development is in<br />
keeping with the features and natural assets of the areas concerned.<br />
• Indicators of social and territorial cohesion are relevant for assessing the sustainability of<br />
regional development, since the two dimensions are integral aspects of this. There is<br />
equally a need to develop indicators which specifically allow for the effects of economic<br />
activity on the environment and on the depletion of exhaustible resources.<br />
• Cohesion policy cannot, however, be satisfactorily assessed without reference to regional<br />
development policy at national level. Data on the expenditure funded from national<br />
sources should be readily available so that this can be examined in relation to spending<br />
financed by the Structural Funds. This is far from the case at present, despite the need for<br />
Member States to demonstrate that they are complying with the additionality requirement.<br />
5.2.5 The spatial concentration of funding – the case of Objective 2<br />
The issue of the territorial level at which cohesion policy should be implemented is especially<br />
relevant with regard to Objective 2, or what is now termed the Competitiveness and Employment<br />
Objective. In the 2000-2006 period, funding was targeted at relatively small areas in which there<br />
were perceived problems of economic development. In the present programming period, such<br />
narrow targeting – or zoning - was abandoned and Member States were left freer to determine<br />
where to locate financial support. The evaluation brought to light the problems inherent in the<br />
concentration of intervention in small geographical areas.<br />
• Although there are merits in the concentration of funding, spatial concentration ignores<br />
interdependencies between areas and the fact that areas often benefit more from<br />
developments outside their borders than from those inside. Funding, therefore, should<br />
not be narrowly confined to small areas, since this may not only fail to achieve the<br />
objective of a more even distribution of economic activity and population but might even<br />
distort the spatial pattern of development.<br />
• Concentration of funding does not necessarily imply spatial concentration. Impact can be<br />
achieved just as readily by focusing funding on a limited number of policy areas.<br />
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• The substantial proportion of Objective 2 funding which went to territorial development,<br />
to projects mainly of a local interest, but which were important for the communities<br />
concerned and attracted much local involvement, was highlighted in a number of the<br />
evaluations. The importance of such projects both in terms of the funding allocated to<br />
them and their effects on local development was not perceived at the beginning of the ex<br />
post evaluation but emerged strongly during the course of it. Accordingly, more research<br />
is needed on this policy area in order to learn more about the projects involved and their<br />
effects on social and territorial cohesion in particular.<br />
• The spatial zoning of Objective 2 in the 2000-2006 period did achieve one important aim<br />
which was effectively to ration the relatively small amount of funding which was available.<br />
This evaluation has highlighted the significant positive effects which Objective 2 funding<br />
had in many areas over the period despite its small scale. Since the provision of funding<br />
can be justified in most areas in terms of the common interest in strengthening<br />
economic, social or territorial cohesion across the EU, some means needs to be found for<br />
allocating the resources available if it is not through zoning (see Box for an alternative<br />
way of concentrating funding).<br />
• In order to determine the shape of Objective 2, or the Competitiveness and Employment<br />
Objective in future, there is need to evaluate how the funding is being used across<br />
Member States in the present programming period and what the effects are. This is<br />
particularly important given the different form of this part of cohesion policy as compared<br />
with the previous period.<br />
Box – Policy objectives of common EU interest<br />
One way of concentrating funding is to target it specifically on policy objectives which are of<br />
common EU interest. This is the approach adopted in the 2007-2013 programming period and a<br />
similar approach could be adopted as part of the Europe 2020 strategy, which identifies a limited<br />
number of objectives to be achieved over the next 10 years. The problem with this approach is,<br />
first, that the objectives may have no precise meaning for any individual region (i.e. a target of<br />
raising R&D expenditure to 3% of GDP or the employment rate of those 20-64 does not mean that<br />
every region should seek to achieve these rates) and, secondly, if they are couched in general<br />
terms, they are objectives which regions will tend to pursue anyway (i.e. to increase R&D and<br />
employment).<br />
For such an approach to be both meaningful and effective, it needs, first, to be translated into<br />
tangible policies on the ground. Secondly, such policies should not be imposed from above but<br />
have to start from the specific circumstances and needs of individual regions. In other words, they<br />
have to be ‘place-based’ to use the Barca report terminology and to be ‘bottom-up’ as much as<br />
‘top-down’.<br />
5.2.6 Policy implications in specific areas of intervention<br />
A large number of points emerged from the evaluations of specific policy areas which have<br />
implications for future policy and deserve careful consideration. Some of the main ones are:<br />
• In the case of enterprise support, there is need to consider whether the ERDF should be<br />
used any longer to finance aid to large enterprises given the real possibility of significant<br />
‘deadweight’ effects.<br />
• In the case of aid to SMEs, there is a need for careful targeting of support on strategic<br />
objectives.<br />
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• There is a need for more evidence on the effectiveness of support to enterprises; such<br />
evidence can only satisfactorily be compiled from studies of the behaviour and<br />
performance of firms.<br />
• As regards transport, the case for expanding support for investment in urban transport<br />
needs to be recognised given its major potential for reducing congestion and emissions.<br />
• It is equally important to recognise the environmental importance of supporting<br />
investment in intermodal transport links, especially if they take traffic off roads.<br />
• It should also be recognised that a great deal of investment is still needed to bring<br />
transport networks in the EU12 regions up to a satisfactory standard; it is important,<br />
however, that this is done in the most environmentally-friendly way possible.<br />
• Consideration should be given to whether the ERDF should continue to finance:<br />
o<br />
o<br />
o<br />
o<br />
the construction of high-speed rail lines, given the cost involved, the alternative<br />
sources of finance and the often uncertain benefits to regional development; this<br />
is an issue where more research is required, focused on the regional effects of<br />
projects;<br />
the modernisation and extension of regional airports and ports, given both their<br />
commercial nature and the questionable effect in many cases on regional<br />
economic activity in view of the many which exist;<br />
the construction of new roads in the EU15, whenever it is not possible to<br />
demonstrate a clear reduction in traffic emissions (such as, for example, in the<br />
case of urban by-passes) or a clear increase in road safety.<br />
road maintenance, though this, in practice, can be difficult to distinguish from<br />
the upgrading of roads, which remains important in the EU12 regions.<br />
• In the case of environmental projects, in particular – though also in some other policy<br />
areas – there is a need to spell out more clearly the case for intervention in terms of the<br />
objectives of cohesion policy and to justify funding in these terms; in addition, it is<br />
important to link investment in environmental infrastructure with regional development<br />
and to monitor this more closely.<br />
• Consideration should be given as to whether it is useful to include horizontal priorities in<br />
the Structural Fund guidelines.<br />
5.2.7 Policy implications for management and implementation<br />
It be should be noted that, while concerns were raised in the course of the evaluation about the<br />
heavy administrative burden imposed by the Structural Fund regulations, especially in relation to<br />
the often very small amounts of funding involved, this was not a specific focus of the evaluation.<br />
The policy implications considered here relate to the key conclusion that the attention on<br />
financial implementation seems to have been at the expense of a focus on strategic objectives<br />
and the results achieved.<br />
Much more monitoring of expenditure and many more evaluations were carried out over the<br />
2000-2006 period than ever before. These, however, were not in many cases at the centre of<br />
policy-making and tended to be focused on processes and financial absorption rather than on<br />
strategic issues. Moreover, the indicators adopted, together with the targets set, were not<br />
sufficiently robust or linked to the objectives of programmes.<br />
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• There is a need in future for evaluations to be more focused on the effectiveness of<br />
programmes and different areas of intervention and on the physical outcomes and results<br />
rather than on process issues and absorption; in doing so, rigorous methods of<br />
evaluation should be used – making use of both qualitative and quantitative data –<br />
adapted to the policy area concerned.<br />
• Indicators need to be directly, and transparently, related to the objectives of programmes.<br />
This needs to happen from the beginning of the process, when programmes are<br />
formulated, so that it is clear what they are attempting to achieve.<br />
• Data on the indicators should be collected and published regularly to enable programme<br />
performance to be monitored.<br />
• It is unrealistic to expect – or aim for – these indicators to be common across the EU;<br />
instead they should be specific to the objectives set in the particular regions concerned<br />
and enable progress in pursuing these objectives to be tracked<br />
• Equally importantly, such a monitoring and evaluation system needs to be an integral part<br />
of the decision-making process. It should be recognised that the obstacles to the<br />
adoption of such a system are as much political as technical. There, therefore, has to be<br />
an acceptance on the part of Member States that a system of this kind is essential for<br />
improving the effectiveness of development policies.<br />
• There also needs to be a willingness to make policy, and evaluations of it, more open to<br />
public scrutiny and to encourage debate on both the objectives of policy and the<br />
performance in meeting them. Such a debate is perhaps the only way of ensuring that the<br />
targets set are meaningful and that the authorities concerned are accountable for their<br />
achievement.<br />
• The development of such a system would be facilitated by the concentration of funding<br />
on a limited number of priorities, as advocated above, which would make it easier both to<br />
set the objectives and to monitor performance towards achieving them.<br />
• To put a system of this kind in place implies more detailed negotiation between the<br />
<strong>European</strong> <strong>Commission</strong> and the Member States about the content of policy.<br />
• The ‘n+2’ rule should be reconsidered to determine whether there is a better way of<br />
ensuring that the funds made available are spent within a reasonable period of time. Such<br />
consideration should take specific account of the tendency in a number of countries for<br />
expenditure to be concentrated at the end of the programming period and beyond, to<br />
investigate whether there is a means of ensuring a more even profile of spending over the<br />
period.<br />
• Special attention should be given to the practice of allocating funding to pre-financed<br />
projects both to examine whether there are ways of avoiding this – in particular, through<br />
investigating how Member States which do not use the method manage to avoid doing so<br />
– and to ensure that the funds effectively freed up by the practice are used in an<br />
appropriate and effective way.<br />
• Member States should be obliged to produce data on the unit costs of large projects in<br />
sufficient detail to enable these to be compared across regions and the cost effectiveness<br />
of the projects concerned to be assessed.<br />
• DG Regional Policy should construct and maintain a database containing information on<br />
the various elements of the costs of large projects as they are completed across the EU in<br />
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the detail required so that the unit costs, which can be calculated from this, can serve as a<br />
benchmark for assessing the costs of similar planned projects.<br />
6<br />
• Arrangements should be established for exchanging information and experience between<br />
the authorities responsible for managing the ERDF and implementing cohesion policy in<br />
different parts of the EU. This would enable authorities to learn from each other. In<br />
particular, those with less experience could learn from those with more and the less<br />
successful from the more so, so serving to raise the level of performance across the EU. In<br />
addition, it would exploit the considerable amount of information and evidence (on, in<br />
particular, what works and what does not and the reasons why, as well as on practical<br />
evaluation methods) which has been built up and which is continuously being added to<br />
across the EU.<br />
7<br />
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8 Annex – Case study regions<br />
WP 2<br />
Data feasibility<br />
WP4<br />
Structural change<br />
WP 5a<br />
Transport<br />
WP 5b<br />
Environment<br />
AT<br />
Steiermark<br />
BE<br />
CZ National National<br />
DE Rheinland-Pfalz Nordrhein-Westfalen Mecklenburg-<br />
Brandenburg<br />
Vorpommern<br />
Bayern Bayern Sachsen-Anhalt<br />
EL<br />
Attiki<br />
Kentriki Makedonia Kentriki Makedonia<br />
ES País Vasco Andalucía Comunidad<br />
Valenciana<br />
Galicia<br />
Cataluña<br />
FI Etelä-Suomi Etelä-Suomi<br />
FR Bretagne Haute Normandie Midi-Pyrenées<br />
Corse<br />
Rhône-Alpes<br />
HU<br />
National<br />
IE<br />
Southern & Eastern<br />
IT Toscana Puglia + Bari airport Lazio<br />
Lazio<br />
LT<br />
Lithuania<br />
LV<br />
Latvia<br />
NL<br />
Noord Nederland<br />
MT<br />
PL National Podkarpackie<br />
Mazowiekie<br />
PT Lisboa e Vale do Tejo Norte<br />
National<br />
Açores<br />
SE<br />
Västra<br />
SI<br />
National<br />
SK Stredné Slovensko Východné Slovakia<br />
UK NW England Merseyside W Wales & Valleys<br />
NE England<br />
J.Lennon airport in<br />
Merseyside<br />
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9<br />
WP 7<br />
Demography<br />
WP 9<br />
Rural development<br />
WP 11<br />
Management<br />
Salzburg Burgenland AT<br />
Limburg<br />
BE<br />
CZ<br />
Sachsen Sachsen Brandenburg DE<br />
National<br />
EL<br />
Castilla y León Andalucía Cantabria ES<br />
Länsi-Suomi<br />
Nord-Pas-de-Calais Centre National FR<br />
FI<br />
National<br />
HU<br />
National National IE<br />
Liguria Toscana IT<br />
Basilicata<br />
LT<br />
Latvia<br />
LV<br />
Gelderland Noord NL<br />
National<br />
MT<br />
Swietokrzyskie<br />
PL<br />
Norte<br />
PT<br />
Norra Norrland Sydsverige Södra Skogslän SE<br />
SI<br />
SK<br />
East of Scotland South West UK<br />
East Scotland<br />
East Midlands<br />
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172
Cover page: Vermeer, Johannes: Woman Holding a Balance, Widener Collection.<br />
Image courtesy of the Board of Trustees, National Gallery of Art, Washington
Consult this website for further information:<br />
http://ec.europa.eu/regional_policy/sources/docgener/evaluation/evaluation_en.htm<br />
Responsible editor: Veronica GAFFEY - <strong>European</strong> <strong>Commission</strong>, Regional Policy, Evaluation Unit<br />
The texts of this publication do not bind the <strong>Commission</strong>