EIB Papers Volume 13. n°1/2008 - European Investment Bank

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In some new member states there is a serious lack of administrative absorption capacity, which could jeopardize planned increases in infrastructure investment. 136 Volume13 N°1 2008 EIB PAPERS programmes for the production environment. 11 For 2007-13, however, there has been a reorientation of expenditure, particularly in favour of policies aimed at growth and employment, with resources for transport and energy increasing by nearly 139 percent (Box 2). These changes would be consistent with previously identified investment needs. 12 The impact, however, will not be very evident until the NMS step up absorption of EU funds. As noted by Rosenberg and Sierhej (2007), absorption of Structural and Cohesion Funds has picked up only slowly in some countries. Demand is high and the contracting of funds already committed under the 2004-2006 financial perspective is proceeding swiftly. Key bottlenecks come from limited administrative capacities for handling (i) project supervision, (ii) efficient implementation, and (iii) co-financing requirements after the submission of proper documentation. Increased allocations under the new financial perspective for 2007-13 are likely to pose additional challenges. In particular, they require an acceleration of past absorption rates if funds are not to be de-committed under the n+ rules, which stipulate that if a country fails to use the allocated EU fund within a certain period after the year in which it was committed, it will lose such unused allocation. Box 2. Changes in expenditure orientation in the new EU financial perspective Under the new EU financial perspective for 2007-2013, there is a reorientation of expenditure in favour, in particular, of policies aimed at growth and employment. Main changes for 2007-2013 compared to 2000-2006 are as follows: • 69 percent increase for Competitiveness for growth and employment (sub-heading 1a), including: • 139 percent increase for transport and energy • 81 percent increase for environment-friendly transport (Marco Polo II) • 75 percent increase for research (7th Research Framework Programme) • 60 percent increase for the Competitiveness and Innovation Programme (CIP) • 52 percent increase for knowledge/training (Life Long Learning and Erasmus Mundus programmes) • 21 percent increase for Cohesion for growth and employment (sub-heading 1b), including: • 11 percent increase for structural funds • 74 percent increase for the Cohesion Fund • 8 percent decrease for the Preservation & management of natural resources (heading 2) • 78 percent increase for Citizenship, freedom, security and justice (heading 3) • 8 percent increase for the EU as a global player (heading 4) Source: European Commission (2005b) 11 Basic infrastructure includes sectors such as transport, telecommunication, energy, etc.; human resources includes sectors such as education, training, and research and development; and production environment includes sectors such as agriculture, industry and services, and tourism. 12 Discussions with the European Commission on the specific country priorities regarding the use of these funds are based on the National Strategic Reference Frameworks prepared by countries and sent to the European Commission.
Figure 8: Additionality and Structural Funds, 2004-06 (in percent of GDP) 1.5 1.0 0.5 0 2.0 1.5 1.0 0.5 0 1.5 1.0 0.5 0 1.2 1.0 0.8 0.6 0.4 0.2 0 Basic infrastructure Basic infrastructure Basic infrastructure Basic infrastructure Base national total 2004–06 national non-cofin 2004–06 national cofin 2004–06 EU funding Czech Repubic Human ressources Hungary Human ressources Lithuania Human ressources Slovakia Human ressources Productive environment Productive environment Productive environment Productive environment Sources: European Commission (2006) and IMF(2006a) Note: Data only cover allocations in three categories, and the time frames for the allocations referred to as base national total in the graphs differ slightly due to data availability: Simple averages in 2001-02 for Czech Republic, Hungary, Lithuania, and Slovenia; and simple averages in 2000-02 for Estonia, Latvia, Poland, and Slovakia. 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0 2.0 1.5 1.0 0.5 0 3.0 2.5 2.0 1.5 1.0 0.5 0 2.0 1.5 1.0 0.5 0 Basic infrastructure Basic infrastructure Basic infrastructure Basic infrastructure Estonia Human ressources Latvia Human ressources Poland Human ressources Slovenia Human ressources Productive environment Productive environment Productive environment Productive environment EIB PAPERS Volume13 N°1 2008 137
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EIB Papers • Volume 13 • No1
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Volume 13 • No1 • 2008 EIB Pape
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Preface This year the European Inve
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Infrastructure investment, growth a
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Government investment is not the sa
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Different types of government inves
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Infrastructure accounts for one-thi
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A common feature for the new member
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The share of transport in governmen
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The proxies are subject to caveats.
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The shares of infrastructure and ho
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There have been marked differences
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Government transport investment has
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Transport and other infrastructure
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References 54 Volume13 N°1 2008 EI
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In some countries a shock to public
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The analysis accounts for long-run
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Table 1. Some VAR studies (publishe
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The ratio of private capital to GDP
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There is no systematic pattern for
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High variability of the public-capi
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Has the impact of public capital on
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Productivity of public capital incr
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The impact of public capital on out
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The economic cost of public funds c
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