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A new Regional Policy: Innovative Ideas for the Post-2013 Reform EPP-ED Hearing

A new Regional Policy: Innovative Ideas for the Post-2013 Reform EPP-ED Hearing. Prof. Dr. Gerhard Untiedt GEFRA – Society for Regional and Financial Analyses Brussels November 8, 2007. Ludgeristr. 56, D-48143 Münster Tel.: (+49-251) 263 9311 Fax: (+49-251) 263 9319

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A new Regional Policy: Innovative Ideas for the Post-2013 Reform EPP-ED Hearing

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  1. A new Regional Policy:Innovative Ideas for the Post-2013 ReformEPP-ED Hearing Prof. Dr. Gerhard UntiedtGEFRA – Society for Regional and Financial Analyses Brussels November 8, 2007 Ludgeristr. 56, D-48143 Münster Tel.: (+49-251) 263 9311 Fax: (+49-251) 263 9319 Email: untiedt@gefra-muenster.de

  2. GEFRA Overview Page: 2 • Preliminary remarks • The Cohesion Policy period: 2007-2013 • The Future of Cohesion Policy after 2013 • Summary

  3. GEFRA Cohesion Policy 2007-2013 Page: 3 Impulse: around 350 billion Euro (in current prices) Some relationships: More than a third of the total EU-budget Around a third percentage point of the EU GNP Up to 4 percent of the national GNP of receiving countries

  4. GEFRA Cohesion Policy 2007-2013 Page: 4 • Distribution by target: • 81.5 % for „Convergence“ • 16.0 % for „Competition and Employment“ • 2.5 % for „territorial co-operation“

  5. GEFRA Cohesion Policy 2007-2013 Page: 5 Income convergence (1997-2005) Income convergence within the EU-27 at the national level Strong positive „catch-up“ by the new member states „catch-up“ slows down with higher initial income Cohesion countries (Ireland, Spain Greece) are also successfulException: Portugal

  6. GEFRA Cohesion Policy 2007-2013 Page: 6 Long-run impact of the Cohesion Policy on the level of GDP per capita around 2 percent points (on average, depending on the national impulse) Stronger impacts in those economies that are more deregulated and have open labour markets Catch-up during the period 2007-2013 will reduce income disparites Impact of the Cohesion Policies is to small to change the spatial pattern substantially

  7. GEFRA Cohesion Policy after 2013 Page: 7 • Country specific needs should determine the areas of intervention • Human ressources • Research and Development • Infrastructure • Direct aid to the firms Cohesion Policy should not be overloaded with targets (climate change, aging population etc.)

  8. GEFRA Cohesion Policy after 2013 Page: 8 Lisbon-type interventions (especially R&D support) may not be the best way to spend the subsidies • Mix of interventions necessary depending on the development stage of the economy: • technological lagging economies will catch-up by imitation and adoption of existing technologies • technological leading economies need to invest in innovation to protect their welfare

  9. GEFRA Cohesion Policy after 2013 Page: 9 Different „social returns of investment“ by types of interventions Investment in infrastructure and human ressources probably have the highest returns Knowledge about social returns of „R&D support“ is limited. Existing evidence suggests a small positive impact Social return of direct aid to the firms more or less negligible (Investment decisions are seldom a function of the investment subsidies)

  10. GEFRA Cohesion Policy after 2013 Page: 10 Strengthen: Infrastructure and Human ressources in the most lagging regions R&D subsidies should not be the prior areas for the Cohesion Policies within the lagging regions Direct aid to the firms is at least problematic. A reduction of the upper limit of subsidies would be an appropriate reaction. But, the optimal mix of measures is an open questionProblem: Too much of a good thing

  11. GEFRA Cohesion Policy after 2013 Page: 11 Regional Concentration: Most lagging countries Evidence exists that during catch-up-processes regional disparities increase No specific orientation towards agglomerations necessary: Lot of the measures are demand driven. Exception: Infrastructure (in a wide definition) Cluster-type policies should be investigated critically.

  12. GEFRA Summary Page: 12 Convergence of Income at the national level Path dependence of development Interventions in dependence of the stage of development Concentration on most lagging countries or macro-regions Without further enlargements the distribution of aids will not change substantially

  13. Many thanks for your attention Gerhard Untiedt

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