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Attila Varga University of Pécs , Hungary

Economic impact evaluation challenges posed by the new European Union Cohesion policy: The case of the GMR-approach. Attila Varga University of Pécs , Hungary. Outline. Introduction The New Cohesion Policy and economic impact evaluation challenges The GMR approach Policy simulations

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Attila Varga University of Pécs , Hungary

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  1. Economic impact evaluation challenges posed by the new European Union Cohesion policy:The case of the GMR-approach Attila Varga University of Pécs, Hungary

  2. Outline • Introduction • The New Cohesion Policy and economic impact evaluation challenges • The GMR approach • Policy simulations • Conclusions

  3. Introduction • Project level vs. economic evaluation – the need for economic models • Cohesion Policy: regional development vs. monetary transfers • Smart growth, inclusive growth, sustainable growth • Place-based approach: Smart specialization • Challenges for economic impact evaluation

  4. Challenges in economic impact evaluation • Place-based approach to economic development • “smart specialization” • In target: place-specific industrial comparative advantages • integrated policy instruments (human capital, R&D, entrepreneurship) • multi-level governance • Participation (industry, universities, local organizations)

  5. Challenges in economic impact evaluation • Regional features determining the growth effects of development policies: • Local specificities (industrial structure, research specialization, factor endowment) • Cumulative agglomeration effects • Additional impacts (Keynesian demand effects, intersectoral linkages) • Interrregional impacts (spillovers, trade, migration)

  6. Challenges in economic impact evaluation • The macroeconomic dimension: selection of projects/regions – on what basis? • Same budget – diff results: depending on the instrumental distribution (ref. to the first simulation) • Same budget – diff results: depending on the regionaldistribution (ref. to the second simulation) • Need for macro level representation (costs/benefits, macroeconomic framework conditions)

  7. Challenges in economic impact evaluation • Representation of both: • Macroeconomic dimension: costs and benefits • Regional dimension: local specificities affecting policy needs and policy effectiveness

  8. Challenges in economic impact evaluation • Search for new impact modeling approaches: • MASST (Capello-Fratesi 2013) • GMR-type models • GMR-Hungary, GMR-Europe(Varga et al. 2010, 2013) • RHOMOLO (Brandsma et al. 2012)

  9. The GMR (Geographic Macro and Regional) impact modeling approach

  10. The GMR approach: Model versions and applications • Antecedents and model versions: • Links to theory: Acs-Varga 2002 • Empirical modeling framework (Varga 2006) • The EcoRet model (Schalk, Varga 2004, Varga, Schalk 2004) • GMR-Hungary: (Varga, Schalk, Koike, Járosi,Tavasszy 2008) • GMR-EU (Varga, Járosi, Sebestyén2011; Varga,Törma 2011) • GMR-HUNGARY II (Varga, Járosi, Sebestyén, 2013)

  11. The GMR approach: Model versions and applications • Applications: • Cohesion Policy impact studies for the Hungarian government (2003- ) • Cohesion Policy impact studies for the European Commission (DG Regio - 2011) • FP6 impact study (2010)

  12. The GMR- Europe model (163 EU NUTS 2 regions and the EU level) includes: • a regional Knowledge Production Function (KPF)sub-model (163 NUTS 2 regions) • a regional Spatial Computable General Equilibrium (SCGE)sub-model (163 NUTS 2 regions) • a macro(EU level) Dynamic Stochastic General Equilibrium (DSGE)sub-model (Quest III)

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