Ex-Post Evaluation of Objective 1 1994-1999ec.europa.eu/regional_policy/sources/docgener/... · Ex-Post Evaluation of Objective 1 1994-1999 A Final Report to the Directorate General

Ex-Post Evaluation of Objective 1 1994-1999

A Final Report to the Directorate General for Regional Policy, European Commission

ECOTEC Research & Consulting Limited Priestley House 28-34 Albert Street Birmingham B4 7UD United Kingdom Tel: +44 (0)121 616 3600 Fax: +44 (0)121 616 3699 Web: www.ecotec.com

Ex-Post Evaluation of Objective 1 1994-1999 A Final Report to the Directorate General for Regional Policy, European Commission C2110 ECOTEC Research and Consulting Limited Priestley House 28-34 Albert Street Birmingham B4 7UD United Kingdom Tel: +44 (0)121 616 3600 Fax: +44 (0)121 616 3699 Web: www.ecotec.com E-mail: [email protected]

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Contents EXECUTIVE SUMMARY 4 RESUME 29

1.0 INTRODUCTION..........................................................................................53

1.1 THE STUDY....................................................................................................53 1.2 OBJECTIVE 1 .................................................................................................54

1.2.1 Coverage ..............................................................................................54 1.2.2 The Structure of the Interventions in the regions.................................56 1.2.3 Aims and Objectives of the Structural Funds ......................................57

1.3 EVOLUTION OF ISSUES CONFRONTING THE REGIONS SINCE 1994...................59 1.3.1 GDP and Employment .........................................................................60 1.3.2 Productivity..........................................................................................64 1.3.3 Education and Skills Levels .................................................................65 1.3.4 Infrastructure .......................................................................................65 1.3.5 R&D .....................................................................................................65 1.3.6 The Environment ..................................................................................66 1.3.7 Institutional Context.............................................................................66 1.3.8 Disparities between the regions...........................................................66

1.4 METHODOLOGICAL APPROACH .....................................................................67 1.4.1 The Study Team....................................................................................72

2.0 APPROPRIATENESS OF THE STRATEGIES ADOPTED AND PURSUED...................................................................................................................74

2.1 OVERALL ASSESSMENT .................................................................................74 2.1.1 Geographical balance..........................................................................74 2.1.2 Programme balance.............................................................................76 2.1.3 Balance between Funds .......................................................................79

2.2 STRATEGY ASSESSMENT................................................................................79 2.2.1 Appropriateness of general strategy....................................................79 2.2.2 Regional Economic Development ........................................................82 2.2.3 SME development.................................................................................82 2.2.4 Research and Development (R&D) .....................................................83 2.2.5 Transport..............................................................................................84 2.2.6 Active Labour Market Support.............................................................84 2.2.7 Education and Training .......................................................................85 2.2.8 Agriculture and Rural Development....................................................85 2.2.9 Fisheries...............................................................................................86

2.3 THE STRATEGIES IMPLEMENTED....................................................................86 2.4 FORCES FOR CHANGE ....................................................................................89

2.4.1 External forces .....................................................................................89 2.4.2 Internal Forces.....................................................................................91

2.5 FACTORS RESTRAINING REPROGRAMMING ....................................................93 2.6 CONCLUSIONS...............................................................................................94

3.0 EFFECTIVENESS.........................................................................................97



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3.1 INTRODUCTION .............................................................................................97 3.2 EFFECTIVENESS BY IDENTIFIED THEME .........................................................98

3.2.1 Transport..............................................................................................98 3.2.2 SMEs ..................................................................................................103 3.2.3 Research and Development................................................................108 3.2.4 Education and Training .....................................................................112 3.2.5 Rural development .............................................................................118

3.3 SUPPORTING WIDER OBJECTIVES .................................................................121 3.3.1 The European Development Fund (ERDF) .......................................122 3.3.2 The European Social Fund (ESF)......................................................122 3.3.3 The European Agricultural Guarantee and Guidance Fund – Guidance element (EAGGF) ..............................................................................................123 3.3.4 The Financial Instrument of Fisheries Guidance (FIFG) .................123 i) The renewal and modernization of the fishing fleet .......................................124 ii) Development of acquaculture........................................................................125 iii) Support for processing and marketing .........................................................125 3.3.5 Effectiveness in supporting wider environmental objectives .............126 3.3.6 Effectiveness in supporting wider objectives in the area of equal opportunities ......................................................................................................128

3.4 OVERALL ANALYSIS....................................................................................130 3.5 CONCLUSIONS.............................................................................................134

4.0 EFFICIENCY...............................................................................................137

4.1 THE APPROACH ...........................................................................................137 4.2 IMPLEMENTATION ASPECTS ........................................................................137

4.2.1 Project Timetables .............................................................................138 4.2.2 Project Budgets..................................................................................141

4.3 UNIT COSTS ................................................................................................143 4.4 THE EFFICIENCY OF PROJECTS CO-FINANCED BY THE COHESION FUND .....145

4.4.1 Project Distribution in the Cohesion Countries ................................145 4.4.2 Project Timetables .............................................................................146 4.4.3 Project Budgets..................................................................................146

4.5 CONCLUSIONS.............................................................................................146

5.0 IMPACTS OF CSF/SPD STRATEGY ......................................................148

5.1 INTRODUCTION ...........................................................................................148 5.2 THE MODEL-BASED METHODOLOGY............................................................149 5.3 ASSESSMENT FOR THE MEMBER STATE REGIONS (GREECE, IRELAND, PORTUGAL AND SPAIN)...........................................................................................152 5.4 CSF 1994-99 IMPACTS ON GDP AND UNEMPLOYMENT .............................154 5.5 CSF 1994-99 IMPACTS ON GDP BY SECTOR...............................................156 5.6 CSF 1994-99 IMPACTS ON THE MANUFACTURING SECTOR.........................158 5.7 ROBUSTNESS AND SENSITIVITY ANALYSIS IN THE HERMIN SIMULATIONS 161 5.8 IMPACTS ON THE MACRO-REGIONS (EAST GERMANY, NORTHERN IRELAND, AND THE ITALIAN MEZZOGIORNO)..........................................................................166

5.8.1 East Germany.....................................................................................167



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5.8.2 Northern Ireland ................................................................................170 5.8.3 The Italian Mezzogiorno ....................................................................173

5.9 ROBUSTNESS AND SENSITIVITY ANALYSIS: EAST GERMANY AND NORTHERN IRELAND .................................................................................................................175 5.10 THE MICRO-REGIONS...................................................................................176

5.10.1 Micro-regional impacts on GDP .......................................................177 5.10.2 Employment........................................................................................177 5.10.3 Productivity........................................................................................181 5.10.4 Unemployment ...................................................................................181

5.11 AN OVERVIEW OF THE IMPACT OF OBJECTIVE 1 INTERVENTIONS ................182

6.0 MANAGEMENT AND IMPLEMENTATION ARRANGEMENTS.....186

6.1 INTRODUCTION ...........................................................................................186 6.2 MANAGEMENT OF OBJECTIVE 1 ..................................................................186

6.2.1 Regulatory framework .......................................................................186 6.2.2 Assessment of the partnership approach ...........................................187 6.2.3 Strategic management........................................................................193 6.2.4 Wider management arrangements .....................................................198 6.2.5 Management styles.............................................................................200 6.2.6 Management of the different Funds ...................................................207 6.2.7 The effectiveness of the overall management approach ....................210 6.2.8 Effectiveness of different types of management style .........................213

6.3 PROJECT SELECTION PROCEDURES..............................................................214 6.3.1 Project selection criteria....................................................................214 6.3.2 Selection of projects...........................................................................216 6.3.3 Acceptability to project applicants ....................................................217

6.4 FINANCIAL CONTROL ..................................................................................218 6.5 MONITORING AND EVALUATION SYSTEMS ..................................................219

6.5.1 Monitoring .........................................................................................219 6.5.2 Evaluation ..........................................................................................222

6.6 CONCLUSIONS.............................................................................................223

7.0 COMMUNITY ADDED VALUE...............................................................225

7.1 ACHIEVEMENT OF COMMUNITY POLICY OBJECTIVES ..................................226 7.1.1 The contribution to the objective of economic and social cohesion ..226 7.1.2 The contribution to the implementation of the Community priorities226

7.2 THE CONTRIBUTION TO THE OBJECTIVE OF BALANCED AND SUSTAINABLE DEVELOPMENT ........................................................................................................228 7.3 FINANCIAL EFFECTS....................................................................................230

7.3.1 Leverage of Public Funds ..................................................................230 7.3.2 Leverage of Private Sector Funds......................................................231

7.4 CRITERIA RELATED TO HOW OBJECTIVE 1 OPERATES..................................232 7.5 CO-OPERATION AND NETWORKING .............................................................234 7.6 CONCLUSIONS.............................................................................................234

8.0 CONCLUSIONS ..........................................................................................235

8.1 OVERVIEW ..................................................................................................235



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8.2 APPROPRIATENESS OF STRATEGIES .............................................................236 8.3 EFFECTIVENESS...........................................................................................238 8.4 EFFICIENCY.................................................................................................241 8.5 IMPACT .......................................................................................................241 8.6 MANAGEMENT AND IMPLEMENTATION .......................................................242 8.7 COMMUNITY ADDED VALUE........................................................................244 8.8 THE EXTENT TO WHICH EMERGING ISSUES HAVE BEEN ADDRESSED IN THE PROGRAMMING PERIOD, 2000-2006........................................................................245

9.0 RECOMMENDATIONS.............................................................................247

9.1 THE CURRENT PROGRAMMING PERIOD ........................................................247 9.2 THE POST 2006 FUTURE .............................................................................250

ANNEX 1: Sample of programmes and projects reviewed ANNEX 2: HERMIN Methodology ANNEX 3: Appropriateness Tables ANNEX 4: Bibliography



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EXECUTIVE SUMMARY I. INTRODUCTION Between 1994 and 1999 some €210 billion is estimated to have been spent through the Structural Funds and the Cohesion Fund to support investments in the Objective 1 areas of the European Union. This report sets out the findings of the ex-post evaluation of Structural Fund and Cohesion Fund interventions over the period 1994-1999 in favour of the EU Objective 1 regions. The study was strongly policy-focused and addressed the following elements. • Appropriateness of strategies – an assessment of the appropriateness of the

strategies adopted and implemented in the Objective 1 regions and the coherence of the approach at an EU level across the entire Objective 1 area

• Effectiveness – an analysis of the achievement of the objectives set out in the

programming documents based on results. The key priorities for this exercise were: transport (road, rail), SMEs (aid schemes, business service, business infrastructure, financial engineering and training schemes), research and development, education and training, as well as rural development.

• Efficiency – an analysis of the efficiency of the implementation of large projects

supported in Objective 1 regions, including those co-financed by the Cohesion Fund

• Impact – an assessment of the impact of the Structural Funds on economic and

social cohesion • Management and Implementation systems – an appraisal of the effectiveness of

management and implementation systems for the programmes co-financed by the Structural Funds

• Community Added Value – an assessment of Community added value achieved in

Objective 1 regions between 1994 and 1999. • Lessons for Current and Future Programming – identification of strengths and

weaknesses in the planning or implementation of Objective 1 programmes, an assessment of the extent to which strengths have been built on and weaknesses have been addressed in the 2000-2006 Structural Funds programmes, and identification of the longer term implications of the findings of the evaluation for the Structural Funds after 2006 in the context of enlargement.

Areas eligible for Objective 1 between 1994 and 1999 were those regions in which GDP per head was below 75% of the EU average. However, there was provision for extending eligibility to certain regions where the GDP was around 75% of the



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Community average but where special reasons for inclusion applied, including economic restructuring or particular geographical circumstances. This included, for example, Northern Ireland, the five new German Länder, East Berlin, the French overseas departments, the Azores, the Canary Islands and Madeira. The Cohesion Fund was established through the Treaty of Maastricht in 1993 to work alongside the Structural Funds. Its aim is to support environmental and infrastructure projects in those Member States with a GDP of less than 90% of the European union average. Between 1994 and 1999 Greece, Ireland, Portugal and Spain benefited from this facility. The gap between Objective 1 regions and the rest of the EU with regards to GDP per head (in PPS) has narrowed over the 1994-1999 programming period, from 64% of the EU average in 1993, to 69% in 2000. Nevertheless, this general evidence of convergence masks significant disparities amongst the Objective 1 regions themselves. Increased levels of GDP per head have generally not been the result of increased employment rates resulting from job creation. Consequently, although unemployment rates for Objective 1 regions had fallen, from 16.0% in 1993 to 15.7 % in 1999, they remained considerably higher than the EU average of 9.4%. Furthermore, participation rates remain low, resulting in even bigger disparities with regards to employment rates amongst the population of working age. II. APPROPRIATENESS OF THE STRATEGIES ADOPTED AND PURSUED Geographical balance In absolute terms the main beneficiaries were Germany, Spain, Italy, Greece and Portugal. A different pattern emerges however when one examines the intensity of aid (support per head of population). Based on the planned spend (EU subventions, domestic interventions and private sector contributions) the strongest interventions were planned in Germany, Austria and the Netherlands. In the latter two cases this is a reflection of the high levels of support planned from domestic and private sources. Examining the intensity of support just in terms of EU contributions provides a different pattern. In this instance principles of equity appear stronger with the most significant levels of support available in the four Cohesion countries, particularly Ireland, Portugal and Greece. An assessment of the regional balance within Member States has not been possible on a systematic basis owing to uncertainty over the geographical distribution of sectoral programmes. However, there is some evidence of concentration in terms of the geographical distribution of the funds within different programmes. This appears to have been undertaken for different reasons. In some places it was to support particular disadvantaged areas of the relevant country or region, whilst in others it was intended to build on existing and potential areas of growth.



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Programme balance Identifying the precise balance of programme expenditure is complicated by the different manner by which these are categorised within the various strategy documents. To undertake a precise assessment would entail identifying the balance of activities at a Measure level which was beyond the terms of this study. Physical infrastructure investments, particularly transport, have been a significant element of nearly all Objective 1 strategies. More than €24bn was committed to activities in this area totalling around 11% of Objective 1 funds. In general the Cohesion countries have invested a higher proportion of Objective 1 funds in physical infrastructure, although both the UK and France had strong investment orientated programmes and Ireland’s was relatively modest in this respect. The bulk of resources have been split between transport investment and environmental/energy projects. Support for business development remains the key area of investment for the majority of programmes, particularly support for industrial investment and SME development. This was the key focus in Austria, Belgium and Germany. In total almost half (45%) of Objective 1 was targeted on support for business development activities, with a value of some €95bn. In a number of cases, particularly Greece and Portugal, support for this sector is also contained in regional and local economic development priorities, which strengthened the overall support available. Relatively, it appears to be in Spain that this area received least support. Again, no strong patterns emerge in terms of the geographic balance in this area. Explicit commitments to R&D activities varied across the Member States. Only in Austria and the Netherlands were relatively significant provisions made; in Greece, Spain, Germany and the UK more modest provisions were made. In other Member States this tended to be subsumed within more general development priorities. The financial allocations for human resources development varied across the Member States: from 7.6% to 23% without accounting for training measures within specific sectoral programmes/priorities. The highest proportions for this sector were seen in Ireland. Overall, the support provided for human resource activities was viewed by the national evaluators as appropriate in the circumstances. Only in the case of Greece was it felt that this area received a lower importance within the overall strategy approach than was perhaps merited. Agriculture and rural development was an important element of most Objective 1 strategies. Given the nature of the Objective 1 economies, with a relatively strong dependency on agricultural activities this would appear highly appropriate. Germany and Austria programmed most to these activities whilst, in contrast, the Greek CSF allocated amongst the least. Again though, the regional programme provisions are likely to have provided support for this sector, boosting the overall importance of this within the strategy. As regards the fisheries sector, financial allocations were highest in Spain and the Netherlands with 4.5 and 5.4% respectively.



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A criticism that can be levelled at some regional programmes is the tendency to try to cover too many different activities, often resulting in a lack of co-ordination and coherence between the different aspects. This has been a particular issue for the individual regional programmes in countries such as the Netherlands, UK, Belgium and Austria, although it can also be raised in the case of Italy. Complicated programme structures, with as many as 53 measures as was the case in the Netherlands, was found to weaken the coherence of strategy and objectives and ultimately to reduce the flexibility of the programme, particularly with regards to re-allocating funding within priorities. Overall the strategic approach to Objective 1 taken in 1994 is viewed as broadly appropriate in each of the member States, although some detailed concerns have been expressed in the context of particular interventions and in the manner of implementation. In no instance was the published strategy regarded as inappropriate with most national experts assessing them as an adequate response to the identified needs of the area and the prevailing understanding of approaches to growth and development. The appropriateness of strategies was considered to be enhanced where they continued and/or complemented actions under the previous Objective 1 programming period (1989-1993). This allowed regions to enhance the appropriateness and implementation of strategies by learning from previous experience of good and bad practice and building on earlier initiatives. The role of the programme partners in encouraging more appropriate strategies is complex. The involvement of social and economic partners in the development of Spain’s strategy was recognised as strengthening the knowledge of demand for specific interventions. The most significant criticism of the strategies was that they did not constitute much more than the sum of their parts. Whilst each was an adequate response to the identified needs in particular fields there was less indication as to how these different elements contributed towards an overarching development strategy. This was a charge levelled by the national evaluators for the UK, Belgium and Italy but in the view of this synthesis evaluation can be applied to all CSFs and SPDs. There is a strong question as to whether the support provided has been sufficient to activate a development process, rather than simply responding to national or regional needs. There were also some criticisms levelled at particular aspects of the overall strategies. In practice, the strategies adopted at the outset of the programming period did not change significantly over the following years. On the whole this is because the broad thrust of the strategies remained appropriate over the following years. There was sufficient flexibility to introduce new activities where these proved to be desirable. However, to an extent, it also represents the focus of programme authorities on implementation of the adopted programmes, with a key concern being to ensure the absorption of financial resources available.



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On the whole the pattern of actual expenditure has followed the planned profile fairly closely. Significant changes are not apparent between Priorities or between Regional Programmes. This is not to say that changes did not occur, merely that these were focused at the Measure level and so did not have a substantial effect on the overall strategy implemented. The changes that were undertaken were partly a response to changing circumstances and partly driven by a desire to ensure full absorption of available resources. On the one hand all programme strategies were sufficiently flexible to incorporate changes to the adopted strategy when desired. On the other, however, there seems to have been little impetus to undertake such a strategic reviews. In Greece, for example, the national expert reports that “Under the (heavy) burden of implementing the budget of complicated and complex operational programmes, the decisions about policy retreated to the background, receiving little attention” (p.4-96). The main area of difference between planned financial implementation and its realisation was in terms of private sector contributions. In most cases the amount of private sector support realised was significantly below initial expectations, although in a minority of cases (Belgium and Holland) the realised amounts were higher. There is no evidence that this had a significant impact on the strategic approaches adopted in any case. III. EFFECTIVENESS The assessment of the effectiveness of Objective 1 has been based upon the analysis of a sample of selected programmes. Whilst this covers some 70% of the value of Objective 1 it does not allow the aggregation of outputs and results to provide a figure for the total achievements of Objective 1. Outputs and results are thus likely to be understated. The evaluation focuses on the effectiveness of the interventions in addressing a number of thematic topics, rather than calculating the overall outputs produced, or results achieved, against particular indicators. The five themes are: Transport, SMEs, R&D, Education and Training and Rural Development. An assessment of the effectiveness of Objective 1 is based on the extent to which expected effects have been obtained and objectives have been achieved. Effectiveness is usually calculated by relating an output, result or impact indicator to a quantified objective. The assessment of the effectiveness of Objective 1 for the 1994-1999 programming period has been constrained by a lack of quantified objectives, limited initial targets and a diverse and non-comparable information base regarding outputs and results obtained. Very often available indicators are programme specific and nationally specific. This makes robust comparisons difficult and has significantly constrained this aspect of the study. The analysis of effectiveness has thus had to rest to a substantial extent on qualitative judgements rather than quantified comparisons of results with targets.



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At a general level many of the apparently most effective actions have been those of a largely ‘mainstream’ character. However, funding has largely tended to reinforce existing patterns of economic development related activity, rather than providing a basis for developing new activities to meet identified objectives, or stimulating more innovative approaches. In the transport sector the focus of activity has been on roads, with at least 4,104km of motorway and 31,844km of other roads constructed or upgraded. In the cases for which targets and output data are both available, targets have mostly been met. Transport investment has produced significant benefits in terms of improving both internal and external accessibility and, to a lesser extent, in helping to tackle problems of urban congestion – reducing journey times and/or distribution costs in the process. Clear instances of resulting economic development benefits emerge but evidence to quantify such impacts on a more systematic basis is lacking. Interventions focussed on businesses have supported at least 214,188 firms, provided at least 3,839 hectares of industrial sites and supported the creation of at least 723,957 gross jobs. Where targets and data are available, targets for SMEs supported and hectares of industrial sites provided have mostly been exceeded, in the latter case substantially so. Good evidence on the results of those interventions is again limited. Often interventions have focussed on established sectors, particularly tourism, rather than supporting diversification. Deadweight and displacement have probably been substantial. Interventions combining investment incentives and support services seem to have been most effective and, in some contexts at least, venture capital and loan schemes have been relatively effective. Interventions focussed on smaller SMEs seem to have been the most effective in terms of job creation. In relation to Research and Development the interventions have achieved a range of positive results, particularly in terms of developing the physical infrastructure base. Where the evidence is available, targets have been achieved, and – perhaps more important for the longer term – R & D activity now has much greater policy prominence. However, at this stage at least, translating academic and public sector research into commercial spin-offs has generally proved difficult, although more enterprise – focussed, ‘softer’ measures have produced positive results. The interventions have supported the education and training of at least 8,149,595 people. Targets, where set, have generally been exceeded, often by impressive margins – although this clearly raises questions about the quality of the underlying analysis. Objective 1 support has also helped substantially in developing the educational infrastructure and capacity of the poorest member states. Again, good evidence on the effects of the resultant improvements on the stock of human capital is limited. It is clear that interventions have tended to be more



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effective where – as has not always been the case – they have been based on a proper assessment of the needs of the labour market and the economic and institutional contexts have been favourable. In the case of interventions in favour of socially excluded people, actions tailored to individual needs have proved the most effective. Most of the EAGGF resource provided through Objective 1 has focussed on support for the agricultural sector and its structural adjustment rather than the wider process of rural development. This only became an explicit focus of the Structural Funds for the first time during the 1994-1999 programming period. Most of the available evidence on effectiveness relates to the agricultural sector itself where targets – such as those for farm holdings modernised, land irrigated, land reparcelled and young farmers installed – have been exceeded. This has had a range of positive effects in increasing productivity, reducing costs, improving quality and extending growing seasons. Specific subsidies to producers in the Less Favoured Areas have had important effects in underpinning incomes and helping to maintain agricultural activity in these areas. More generally, Objective 1 resources have benefited significant – but unknown – numbers producers by supporting the shift to higher value – added products and assisting diversification into non-agricultural activities. Although systematic data is lacking, at a fund level the ERDF has brought about very large scale job creation, most importantly – or at least most directly – through support for productive investment. The ESF has greatly strengthened the human capital base of the Objective 1 regions, although the full benefits of this have not yet been realised. The major effects of the EAGGF have been in supporting and encouraging the restructuring of the agricultural sector, whilst the FIFG has been most effective in supporting the renewal and modernisation of the fishing fleet and the development of processing facilities and marketing. In total at least 798,000 gross jobs have been created across the Objective 1 area. A range of the interventions supported through Objective 1 – particularly in the areas of water infrastructure and waste treatment – are having substantial positive environmental effects, whilst the emphasis on ensuring that projects more generally comply with relevant EU and/or national standards has helped to minimise adverse effects. Some negative effects will, of course, have resulted from the development process, especially road traffic growth. However, the emphasis on sustainable development per se only emerged as a general European policy priority after this generation of programmes was put in place. Some of the Objective 1 programmes – particularly in Germany – have been characterised by a strong emphasis on equal opportunities, whilst a number of other regions developed particular actions to address the labour market needs of women. However, the development of this area as a major EU policy priority again post-dated the preparation and approval of these interventions. Nonetheless, in practice ESF supported projects have tended to include higher proportions of women than the



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proportion of women within the groups on which they have been targeted, indicating that the interventions have been making positive contributions in this area. Reflecting its lack of focus as a policy priority, there is little evidence that the interventions have significantly reduced spatial disparities within the Objective 1 regions. In some cases at least they have contributed to the concentration of growth within capital city and other relatively strongly performing regions. IV. EFFICIENCY The evaluation study has examined the efficiency of the implementation of large projects supported in Objective 1 regions, financed by the Structural Funds and Cohesion Funds. Efficiency usually reflects the fact that the effects were obtained at reasonable cost. An efficiency indicator is usually obtained by dividing the budgetary inputs by the quantity of effects obtained. This has proved difficult in the present case, not least because of the lack of any comparable benchmarks against which to compare performance. For the purposes of the present study efficiency is assessed with respect to delivery to cost and timetable as required by the Terms of Reference. There have been major problems in delivering large projects to time and budget. This underlines the need for better project planning and appraisal and a strengthening of implementation procedures. Only 1/3 of the 60 projects reviewed were completed within the originally planned timescale, with 1/3 over a year late. Environmental, and particularly water treatment, projects were the most susceptible to delay. Factors promoting timely delivery were: strong political commitment, externally imposed deadlines and strong project management and monitoring. Factors underlying delays included: inadequate planning, land ownership issues and weather conditions. Approximately two-thirds of the projects examined ran over budget, with 20% costing over 30% more than originally planned. Again environmental projects emerge as a particular problem area, along with roads. Factors underlying overruns included: modifications to projects; emerging environmental, geological and archaeological issues; delays; inadequate cost estimates; and, imperatives to meet particular deadlines. The assessment revealed wide variations in unit costs, often because of the multi-faceted nature of the projects concerned – and the effects of factors such as topography and geology. This limits the scope to establish ‘benchmark’ unit cost figures for particular types of project. V. IMPACT A dual approach was adopted to assess the impact of Objective 1 for period 1994-1999. Firstly, a macro-economic modelling approach was adopted to assess the



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impact of the Structural Funds on economic and social cohesion. This was based on the HERMIN model and was applied to all the main Objective 1 countries (Greece, Ireland, Portugal, Spain) as well as for the regions of East Germany and Northern Ireland. Secondly, a bottom-up estimation was undertaken for the remaining regions. In the case of Italy the planned construction of a HERMIN model was prevented by contracting difficulties experienced in Italy. The HERMIN model framework focuses on key structural features of developing and changing economies with respect to such issues as: • Economic openness, exposure to world trade, and response to external and internal

shocks; • Relative sizes and features of the traded and non-traded sectors and their

development, production technology and structural change; • Wage and price determination mechanisms; • The functioning and flexibility of labour markets with the possible role of

international and inter-regional labour migration; • The role of the public sector and public debt, and the interactions between the

public and private sector trade-offs in public policies. To satisfy these requirements, the HERMIN model is designed as a macroeconometric model composed of four sectors: manufacturing (a mainly traded sector), market services (a mainly non-traded sector), agriculture and government (or non-market) services. The HERMIN models themselves are not above criticism, and other models could be used and would be likely to give different answers. For example the Commission’s own QUEST model – which incorporates strong “crowding-out” mechanisms due to the inclusion of model-consistent expectations mechanisms – tends to give lower CSF impacts. A recent survey of cohesion policy analysis by researchers at the Dutch CPB suggests that simpler single-equation econometric techniques should be used, and this approach also suggests much smaller policy impacts (Ederveen et al 2002 a and 2002b). So, the methodology based on the HERMIN models is just one of many possible alternatives. The HERMIN modelling based approach captures both the transitory demand side effects of the interventions and their ongoing supply side impacts. The emerging results inevitably flow to some extent from assumptions made within the modelling process. The general pattern is for the maximum impacts on GDP to occur around the end of the CSF period when both the demand and supply side effects are operative, falling away in all but one case thereafter as the demand side effects decay. The peak effects in reducing unemployment largely derive from the demand side effects and tend to occur early on in the programme period. The maximum impacts on GDP during the CSF period amounted to 4.7% pa (Portugal), with increases of up to 4.0% pa in Germany, 2.8% pa in Ireland, 2.2% pa



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in Greece, 1.8% pa in Northern Ireland and 1.4% pa in Spain. The scale of the impacts in different cases reflects the relative importance and allocation of the CSF resources, as well as factors such as initial factor endowments, economic structures, levels of competitiveness and the degree of ‘openness’ of the economy concerned. Projected long term effects are greatest in East Germany - where GDP is expected to be boosted by 4.7% pa even in 2010 – followed by Portugal (2.1%), Ireland (1.0%), Greece (0.6%), Spain (0.6%) and Northern Ireland (just 0.1%). Such long term effects depend crucially on the extent to which CSF expenditures succeed in raising investment within, and the performance of, the manufacturing sector. More generally, the modelling work and the literature support other study findings which indicate that the success of interventions depends on whether the region concerned has an economic structure which provides the potential for growth and whether other conditions for growth – such as a supportive national policy environment and strong institutional structures – are also present. Achieving fundamental change clearly often requires interventions over more than one programming period Impacts tend to be greatest where they form part of a virtuous circle of improving competitiveness, increasing exports and domestic sales, and enhanced levels of indigenous – and/or inward – investment. Employment may or may not increase as part of this process. Clearly, as the modelling suggests, a focus on wider markets – and thus the potential to take advantage of the process of economic integration and the growth of trade – is crucial. There is no comparably systematic basis for assessing impacts on the micro-regions. The interventions in these regions have been more limited in scale and often in scope. The available monitoring data indicates that gross job creation has been substantial but it is clear that deadweight and displacement are also likely to have been substantial – even though estimates are rarely available. In some cases the underlying momentum of decline has meant that the relative performance of these regions has fallen back markedly, despite the benefits of the interventions. The view has been put forward by academic writers, Commission officials and some national consultees, that Structural Fund interventions in the micro-regions are insufficient to impact significantly upon GDP. However, most regional programmes established GDP-related objectives. Only in the case of Burgenland, Austria, was improving regional GDP not a target in some form. The available evidence suggests that in general overall levels of GDP have increased in the assisted Objective 1 micro-regions, although not sufficiently to improve the performance of the regions relative to European or national averages. It is unlikely that Objective 1 was a substantial contributor to this, although evidence in either direction is scarce. In one of the two UK regions – Merseyside - the ex-ante evaluation of the 2000-2006 Objective 1 programme concluded that whilst the differential in GDP per head between Merseyside and the UK had increased over the 1994-1999 period, the Objective 1



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programme had played a part in significantly slowing the continuing relative decline of Merseyside that would otherwise have taken place. VI. MANAGEMENT AND IMPLEMENTATION ARRANGEMENTS Management and implementation systems contribute to the effectiveness, efficiency and impact of Objective 1. They have varied both between and within Member States. Partnership working conveys a range of benefits. At a formal level it has been implemented primarily through the framework of Monitoring Committees. A range of factors – including their size, the infrequency with which they meet and shortcomings in the information available – have limited the significance of the Monitoring Committees (MC) in relation to decision making and they have functioned most effectively as information and communication channels. Membership of the Monitoring Committee is at the discretion of the Member State. In practice a wide and variable range of partners were involved. Common members included the European Commission, the Ministry of Finance (or equivalent), other Central Government representatives and representatives of regional governments. They have generally been inclusive in their membership, although the extent and nature of the involvement of the social partners in the implementation process has been quite variable in practice. In general, the European Commission played an important role in contributing to the partnership process in Member States and their involvement in Monitoring Committees was seen as positive by both programme representatives and community partners as it provided the means for direct input of the European Commission into the management process. At a national level the links with higher administrative levels have aided those programmes where complementarity existed with national and regional programmes, although communications through the national to regional level occasionally disrupted the overall vertical relationship. In these cases direct informal channels of communication were established between the Commission and regions to resolve any issues regarding regulations more quickly. Socio-economic partners have played an important role in the development and delivery of Objective 1. Sometimes as part of the vertical partnership but more often in the horizontal partnership arrangements adopted for particular programmes. Social and economic partners were present in roughly three-quarters of all monitoring committees at both a CSF/SPD and Programme Level, and only in Portugal was there no representation of social and economic partners at any level. A number of alternative routes were also taken to involve socio-economic partners in Objective 1 including consultations and discussion groups. In France, a series of debates was carried out with a large number of social and economic partners on the aims and objectives of the Structural Funds. In this respect horizontal partnership working was based strongly on informal structures.



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In practice, most significant decisions tend to be taken at the Monitoring Committee for the Operational Programmes rather than the CSF. The evidence suggests that the Monitoring Committees did manage to operate as strategic bodies, although with a very strong focus on financial management. Monitoring Committees were strongly preoccupied in achieving spend in the majority of the Member States and this led to decisions to significantly re-programme financial profiles in a number of cases. The role of MCs as strategic bodies in relation to the achievement of ‘objectives’ has, arguably, been much more limited. This may partly be explained by the fact that for the majority of countries the monitoring data brought to the Committees focused on spend rather than outputs and results. Also, where broad representation of social and economic partners was achieved this sometimes reduced the strategic focus taken by the Committees, through the encouragement of a ‘project level focus’. A strong role performed by MCs has been to act as information and communication bodies. For example, the involvement of social partners in the MC allowed for early communication of issues and opportunities to these groups. Because of their public visibility, the MCs also had the added benefit of acting as transparent bodies for raising problems. The resulting public exposure was felt by several national evaluators to have contributed towards the resolution of problems at both a national and regional level. Whilst the Monitoring Committee approach has proved broadly effective, a number of practical constraints have been identified which influenced the ability of Monitoring Committees to operate and, arguably, resulted in a number of shortcomings. These have led to a questioning of the practical role of the Monitoring Committee in some national evaluations. In a number of cases it has acted as a formal body that merely “rubber-stamped” decisions that had already been taken, partly as a consequence of the size of the Committee and the limited frequency with which meetings were held, but also due to the poor information base available. In addition to the formal Monitoring Committee structure, provided for in the relevant Regulations, Member States introduced a variety of informal mechanisms to suit their own institutional contexts. There was considerable variation in these arrangements from one Member State to another and, occasionally, within Member States. These supplementary arrangements were partly driven by a perceived need for alternative approaches to deal with the strategic, administrative, technical and political processes involved in implementing the Structural Funds. In practice MCs proved unable to address all these issues simultaneously. In part the wider management arrangements established in some Member States, to smooth the decision-making process, may also have contributed to the feeling that decisions were being made outside of the Monitoring Committees. Whilst the implementation of Objective 1 was dominated by public sector bodies related to governing authorities this was not always so. A number of different types of organisations were involved in the management of the Objective 1 programme 1994-1999, both in terms of acting as Programme Secretariat, and also in terms of the



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wider implementation of the programme. The organisations involved varied quite strongly across Member States. In some cases public management styles predominated, in others there was a stronger use of the private sector or other intermediate bodies. No one style of management offered significant benefits over another. In addition to differences in the use of public and private sector approaches to the management of Objective 1 differences also existed in the location of management activity. In some cases arrangements were highly centralised, in others they were very decentralised and in the remainder a mix of the two approaches prevailed. The evidence is that either centralised or decentralised arrangements worked best, with the hybrid arrangements most problematic – although this may reflect the existence of unresolved issues of responsibilities between tiers of government in the member states which took this path. Effectively, management of the four structural funds operated to a large extent in isolation. Each Fund had its own operational structures and own decision-making procedures. This was the case even within many notionally integrated programmes. Though not a major source of problems, this clearly contributed to the problems of achieving real integration between the different strands of the interventions. The degree of decentralisation occurring in the different Member States inevitably shaped the relations between key actors within partnerships and determined the competencies and composition of partnerships. This evaluation has found that there is no necessary relationship between the level of centralisation and the level of inclusiveness and exclusiveness. In all Member States, the capacity to manage varied between programmes and regions. Although there were problems in relation to the capacity to implement the 1994-1999 Objective 1 programme across the Member States, the programme managers interviewed for this evaluation rarely blamed this on the implementation requirements of the Objective 1 programme per se. Emphasis was rather placed on the weaknesses of the national/regional administration systems. One of the overall key factors which increased the difficulty of administering the Objective 1 programme was the need to be come familiar with new instruments which were difficult from traditional grants and aids. A particular problem was experienced across a number of the Member States in relation to the management of large projects. The absence of experience in managing interventions of the kind in Objective 1 programmes is cited in France, Italy, Greece and Ireland as being at least partly to blame for the delays that occurred in many of the large infrastructure projects. An important element in maximising the effectiveness and impact of objective 1 interventions is the strength of the actual projects funded. Programme Managers generally adopted one of two different approaches in relation to project selection - a competitive process (those which compare different applications to each other at a given time and choose between them) or a queuing process (whereby selection criteria



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are set and projects are funded as they apply and meet the criteria). Both of these systems appeared to have a series of advantages and disadvantages in relation to effectiveness. For example, competitive processes caused problems in a number of countries eg UK, because of the sheer number of projects bidding for funding, particularly in the first years. In some cases this promoted a switch to a queuing processes. However, queuing requires significantly more robust project selection techniques in terms of scoring processes and stronger links back to strategic overview to ensure that needs are being met, and that too many projects are not being approved in certain areas. The use of project selection criteria varied significantly over the Member States and within individual programmes. This mainly related to the use of ‘third level’ strategic selection criteria above and beyond eligibility and capacity issues. In the majority of cases eligibility and capacity criteria were used to a much greater extent than criteria relating to the strategic objectives of the strategy and the meeting of needs and few regions used a quantified scoring system. Project selection was found to be robust in the majority of cases, although some particular aspects of practice could be improved in different Member States. Financial control systems appear to have functioned relatively well within the Member States under the Objective 1 1994-1999 although some adjustments needed to be made to accommodate the new Financial Regulations in 1997. In the majority of countries financial control systems were felt to be fit for purpose and operated relatively efficiently. The main problem highlighted relates to a lack of integration of funds, and different rules for different funds, that caused a number of problems across Member States particularly UK and Portugal. Monitoring was significantly weak in the management of Objective 1 interventions during the period 1994-1999. Across all the Objective 1 programmes, monitoring was mainly financially driven, focusing on financial indicators rather than outputs and results, or physical indicators. Difficulties were experienced in relation to monitoring and evaluation across all the Member States, although in many cases there was improvement over the course of the programme. Across all of the Member States there was a lack of quantification to the objectives defined at the start of the programme. While context indicators were likely to be defined, output - and particularly - results indicators were less frequently used. The countries which attempted slightly more quantification, at least initially, were Austria, Ireland and the UK, although in Austria, some quantified targets were later abandoned. A recurrent problem across most of the Member States was the lack of linkages back from the monitoring systems to the rest of the programme. This had implications for the ability of the monitoring system to influence the overall effectiveness of the programme. The level of evaluation activity undertaken during the 1994-1999 period complied with the requirements of the European Commission. Aside from the Ex-ante and Mid-term evaluations, a number of other ongoing evaluations took place within the Objective 1 regions. These internal evaluations were carried out by the ministries or



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regional authorities, with assistance from universities and external agencies. The degree to which evaluation was carried out may, perhaps, be surprising in the light of the weakness of monitoring systems. This perhaps is a reflection of the perceived requirement to undertake evaluation activity, although the results did often feed through into programme management. The quality of evaluations varied. The lack of output and result indicators at the start of the programmes can partly be held responsible for this and was a significant hindrance. However, evaluations also varied in terms of the understandings of their aims and objectives. In Ireland, the CSF Evaluation Unit in particular noted that there was a lack of understanding of what evaluation actually means and that there was a tendency to confuse monitoring and evaluation. However the European Commission’s “Common Guide for Monitoring and Interim Evaluation” was viewed, at least in the Irish case, as having contributed to raising standards and in ensuring consistency in the coverage and depth of evaluations. The key factor in determining the effectiveness of evaluation activity is whether or not the recommendations were actually absorbed and acted upon. This did not happen in all cases. For example, in Greece, although internal evaluations were ongoing and of a relatively high standard, they were more about fulfilling an obligation held by the Ministries, rather than actually contributing to the effectiveness of the programme. VII. COMMUNITY ADDED VALUE Community resources, when used judiciously, should generate an “added value” in comparison with a situation characterised by the absence of such public intervention. The “community” dimension of this added value relates to the specific benefits which result if the intervention is carried out at Community and not state or regional level. In the past the presence of such an added value dimension has been an implicit assumption in the operation of the Structural Funds and it is only now that ex-post evaluations are beginning to consider the matter more explicitly. In a recent paper by the Commission four dimensions to added value are identified: (1) The achievement of Community objectives related to economic and social

cohesion, implementation of Community priorities of a transnational character, as well as the desire to promote balanced and sustainable development within the Union.

(2) Community resources mobilised (about one third of the community budget) having a triple prerequisite: a significant redistributive effect; an additional character as compared to the financial effort of the member States; and a guarantee of a maximum leverage effect, especially on the private sector.

(3) The method of implementation of the Structural Funds, which implies rules and principles (programming, partnership, control, monitoring and evaluation) to ensure greater effectiveness of interventions.



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(4) Co-operation and networking, facilitating transfer of know-how, an exchange of experience and the pooling of resources, which often would not happen in the absence of Community initiative.

Objective 1 has contributed to the promotion of economic and social cohesion, particularly at a national level. Inter-regional disparities remain and for some regions the position does not appear to have progressed significantly between 1994 and 1999. This raises some questions as to the ability of Objective 1 to support balanced territorial development, although this was not a particular focus in the 1994-1999 period. The Objective 1 interventions have also contributed significantly to a range of wider Community policy priorities, although detailed supporting quantitative evidence is lacking. Key areas of contribution have been in: strengthening infrastructure (particularly in the transport sector) and supporting the development of the TENS; helping to extend the base of competitive SMEs; and, developing human resources. Contributions have been made in relation to the environment and sustainable development, whilst the programmes also included substantial measures to further Community policies in relation to agriculture and fisheries. Through Objective 1 of the Structural Funds and the Cohesion Fund there was a significant transfer of community resources and the eligible regions between 1994 and 1999, with residual expenditure still occurring at the end of 2002. Financial transfers to the Objective 1 regions have amounted to an estimated €114bn and the evidence suggests that the principle of additionality has broadly been respected in most Member States. The need to provide national co-financing has drawn domestic public expenditure to the agreed priority activities and – whilst results have fallen short of original expectations – some €35bn in private funding has been levered in within the 9 Member States for which data is available. The final area where Objective 1 has added value is in terms of the development of effective contribution to delivery systems. The benefits of this between 1994-1999 are very clear and exist across all the Member States involved. Added value is observed across the board in terms of the management and administration of Objective 1. During the 1994–1999 period the multi-annual programming approach and the application of the partnership principle had a positive effect, supporting improvements in methods and approaches and strategy planning as well as improvements of the capacity of the public sector. In some cases positive developments in the monitoring and evaluation of interventions have had positive spillover effects, with changes to approaches to domestic programmes and initiatives. Improvements to audit control procedures were also noted in most Member States. There is no reliable evidence on which to base any judgements as to the durability of the changes introduced, nor how widespread the adoption of new approaches has been.



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Cross-programme co-operation and networking has not been a strong feature of Objective 1 and there has been limited explicit exchange of innovative ideas and good practice. Despite this there has undoubtedly been some diffusion and uptake of new approaches to development across Objective 1 but this is the exception rather than the rule. The bulk of the interventions adopted are characterised as relatively traditional approaches to tackle the acknowledged needs and opportunities of the areas in question. The process of innovation has been principally based on the gradual diffusion of information rather than explicit networking and exchange of information. For example in the Mezzogiorno, Objective 1 facilitated the introduction of agri-tourism activities, which were seen to have been previously successful in Tuscany (a non-Objective 1 region). The question may be posed as to whether opportunities for common learning are currently being maximised. The process of policy shift is incremental and differs across regions and Member States. Some authorities are more willing to introduce new ideas earlier than others; some are already in advance of Community thinking and provide the source for the next ideas in regional development. Furthermore, not all interventions are universally appropriate and what applies in one region does not necessarily apply in another. VIII. CONCLUSIONS A total of €232 billion was planned to be spent on Structural Policies in the 11 Objective 1 Regions between 1994 and 1999. In practice, a total of approximately €210 billion is estimated to have been spent, with most of the shortfall being represented by lower than anticipated private sector expenditure. The Structural Funds have had a positive impact on the GDP of the Objective 1 regions and their overall performance relative to the EU as a whole has improved. The impact is quantified in the modelling undertaken for the Cohesion countries, Eastern Germany and Northern Ireland, where the strongest impacts were found in Eastern Germany and Portugal, with less impacts evident in Spain and Greece. Lower long-term impacts are projected in Northern Ireland. It is difficult to draw summary conclusions in relation to the effectiveness and efficiency of the Structural Funds in Objective 1 regions, given the disparity of countries and contexts. The limitations of the available monitoring data, along with the lack of clearly quantified objectives in a substantial proportion of the programming documents, mean that while much has clearly been achieved, it is not possible to aggregate these results to give a reliable picture of the overall achievements of the Funds. Relative efficiency has been achieved, in the sense that money has been spent and substantial outputs have been secured. However, the more in depth examination of project implementation suggests that there are particular problems in delivering large projects according to time and cost projections.



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Management and implementation arrangements – though often characterised by weaknesses – were generally fit for purpose, and significant benefits were achieved through the partnership approach. Decision making structures typically failed to establish strong strategic direction. However, important benefits in terms of wider ‘added value’ were achieved through the programming approach and the development of public sector management capacity and practices. IX. RECOMMENDATIONS Our recommendations are divided into those which can be implemented, at least in part, within the current programming period and those which largely relate to the longer term. The latter are of particular importance in the context of the development of interventions for the new Member States. The recommendations are directed towards the implementation of current programmes by Programme Managers, as well as towards the European Commission and other partners. The current programming period

• There needs to be greater recognition of spatial differences in needs in resource allocation decisions, particularly where programmes typically span large geographical areas. Where programmes currently cover larger geographic areas there should be greater consideration given to the spatial patterns of development being promoted. This is not necessarily to argue that resources should automatically follow needs or, far less, that there should be area allocations. However, the spatial implications of the pattern of decisions is an issue that should receive consideration and many interventions could benefit from an explicit spatial strategy. This will become a particular issue in relation to interventions in the Accession States which are typically characterised by dominant capital city regions. This recommendation also holds for new programmes being developed within the current programming period, particularly where they may relate to new Member States.

• Research and Development activities should receive greater prominence

with a greater focus on the business utilisation of R and D results.

• In developing programmes in new Member States, there should be an explicit focus on identifying and addressing the contextual factors which are likely to constrain – or have the potential to enhance – the effectiveness of the interventions. This includes, for example, the extent to which taxation, regulatory, competition and domestic industrial support policies provide the sort of framework within which EU funded initiatives to encourage the development of SMEs can be effective. Getting the wider policy and institutional framework right will be particularly critical in relation to the Accession States.



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• Programme managers should consider ways in which the effectiveness of Human resource interventions can be increased. Interventions need to include: − a labour market analysis which seeks to identify existing and

prospective demands for different types of skill; − a policy framework which links and creates pathways from education

to initial vocational preparation to employment; − in the case of measures in favour of socially excluded people, a clear

focus on the needs of individual participants.

• Rural development needs to be considered as an explicit focus of all interventions which cover rural areas. . Rural development should be promoted as an integrated programme of activities in its own right. In this respect interventions should recognise the integration of different activities drawing on ERDF and ESF interventions as well as activities supported through the EAGGF

• Programme Operators should be encouraged to take a pro-active

approach to supporting the development of projects to address identified issues as part of a more objectives-led approach to programme management.

• A programme management culture which is more supportive of innovation and risk taking needs to be encouraged. This raises issues for both the way project proposals are appraised and for the ways in which programme managers are appraised and incentivised.

• Equal opportunities and sustainable development need to be clearly

embedded as horizontal themes. We are aware that this has happened in the new generation of programmes and is being assessed through the current mid-term evaluations. However, it is important that these themes are interwoven with, and reflect, local issues rather than being ‘imported’ to programmes as external requirements. This is a point that the mid-term evaluations should take on board.

• To address the unacceptable problems of cost-overruns and delays, a

major effort is required to utilise best practice management techniques – particularly in relation to major projects. This includes an emphasis on ensuring that there are adequate prior technical studies, that proper professional project management skill are brought in and that contracts are closely specified, providing an appropriate framework of incentives to contractors.

• An effort should be made to further encourage networking and the exchange of good practice. Current practice suggests that networking and exchange of experience occurs on the margin of programmes at best. The



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opportunity to learn from best practice elsewhere in Europe in the delivery of programmes based on very substantial resource transfers should be encouraged more actively than currently occurs.

• Interventions need to have more extensive, realistic and quantified targets

for outputs and results, with improved monitoring against these targets. For the process to be useful it is important that definitions are clear and that there is proper control of data quality. There is a strong case for:

• Focusing monitoring on a few, readily measurable and objectively verifiable output indicators;

• Leaving the measurement of results and impact to the evaluation process (which will then need to be vastly better resourced);

• Providing much greater discretion to those Member States which have effective domestic monitoring systems to utilise their own monitoring requirements in relation to EU supported initiatives. This would reduce the costs involved and the data which emerges would probably be more meaningful.

• In a number of areas – such as transport infrastructure – there is a need for

quality research on the extent of the associated economic development spin-off effects providing a clear indication of how these depend on different contextual factors. At present the evidential base is insufficient either to guide resource allocation decisions or to establish meaningful targets for the results of such interventions. It is not enough to rely on the formal evaluation process, such as the mid-term evaluations, but consideration should also be given to the commissioning of specific subjects on particular themes. At a programme level the results of these should be fed into the ongoing development of the programme. A similar exercise should also be undertaken by the European Commission, in order to build a stock of comparable project or thematic evaluations that can assist in developing stronger programme strategies in the future.

• The role of Monitoring Committees needs to be shifted towards one of

strategic direction rather than issues of financial management. This has implications for their composition, the data they need to receive and when they consider issues. The European Commission could look at the possibility of offering advice in this area, although this is more strictly the role of national authorities.

• As part of the shift towards a more objectives-led approach, decisions on

reprogramming need to focus more on questions of objectives, strategic needs and priorities and less on questions of absorption.

• The timing of interim and other evaluations has to ensure that findings are

available in good time to inform the decision making process.



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• In partially and fully decentralised management systems, information flows and co-ordination between the national and regional levels needs to be improved.

• More effective arrangements – probably generally involving integrated

Secretariats – are needed to bring together the administration of the individual funds in each region, enabling their administration and decision making to be better co-ordinated and helping to achieve a more integrated approach.

• Project selection needs to be on a transparent competitive basis wherever possible. This will generally be achieved best through the use of an objective, quantitative scoring system.

• In view of the risks that enhanced levels of monitoring activity lead to a

greater ‘weight of process’, to the detriment of smaller and community based project applicants, Member States should be encouraged to integrate the indicators and reporting requirements of domestic funding regimes and those of their EU programmes.

The Post 2006 Future

• A major effort will clearly be needed to build institutional capacity in the new Member States. This has to cover not just narrow issues related to the implementation of the structural funds but the broader ones of project management and institutional capabilities.

• The programmes for the new Member States need to be grounded in a

proper analysis of needs and opportunities, involving an explicit ‘model’ of the route to development, with explicit consideration of key strategic choices. Experience in existing Member States needs to be widely drawn upon. It will be important to use the negotiating process to implement these changes to ensure ‘buy-in’ by the new partnerships and a sense of local ownership.

• Interventions need to be put in place in good time to avoid the problems of

‘back end loading’ of expenditure and pressures to catch-up, which may have led to sub-optimal decision making.

• There is at least an argument for greater future flexibility in relation to

programming periods. In the case of many of the Accession States it is clear that a longer period of support is likely to be required and there is a



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case for putting the planning and funding of infrastructure support on a longer term basis.

• Mid-term reviews of future programmes could usefully be more fundamental in scope – particularly if the suggestion of longer programming periods were taken up, rather than – as in the past- largely being confined to incremental changes.

• More use could be made of independent ongoing evaluations – providing

an objective external input. These evaluations may include particular types of actions undertaken by Structural Fund programmes or major projects. Equally, it could cover aspects of process. One function of such evaluations could be to provide external expertise to act as a sounding board to assist in programme development and delivery, encouraging consideration of alternative approaches.

• Thought needs to given to how to achieve better integration between funds

and a more nationally/regionally customised focused approach within EAGGF and, where relevant, FIFG supported measures. This raises issues of whether the administration and procedures of the funds could be more closely aligned and how to tie interventions in relation to agriculture more closely into local priorities. The latter issue will clearly depend on how the CAP evolves, particularly in relation to the Accession States.

• For the future there is clearly a question of how much the detail of the Community method for the utilisation of Structural Fund resources will continue to add value in many of the existing Member States. Particularly for the micro-regions there is a case for allocating resources through a lighter, less prescriptive framework. This is particularly an issue of proportionality and the costs associated with implementing the Structural Funds for small programmes, especially where there is past experience of implementing similar programme. This requires a comprehensive review of appropriate mechanisms, perhaps with less central prescription.

• Increasing consideration also needs to be given to the ‘exit strategy’ from

Objective 1 of the existing Objective 1 regions. The presumption is that this will involve an increasing focus on the development of competitiveness as a reasonable level of infrastructure and basic education are achieved. Exit strategies need to consider how the momentum achieved during the programming periods can be maintained to safeguard and build upon the investments made and sustain the valuable partnerships previously established. Although it is beyond the scope of the current evaluation, it is not clear that this is happening to the degree that is desirable under the current transition programmes. This is an issue which requires further exploration following the mid-term reviews.



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RESUME

I. INTRODUCTION On estime à 210 milliards d’euros environ les montants dépensés de 1994 à 1999 par l’intermédiaire des Fonds Structurels et du Fonds de Cohésion pour soutenir les investissements des zones Objectif 1 de l’Union européenne. Le présent rapport présente les résultats de l’Evaluation Ex-Post des Interventions des Fonds Structurels et de Cohésion sur la période 1994-1999 en faveur des régions Objectif 1 de l’UE. Cette étude s’intéressait essentiellement aux politiques, et en particulier aux éléments suivants : • Adéquation des stratégies – il s’agit là d’une évaluation du caractère adéquat des

stratégies adoptées et mises en œuvre dans les régions Objectif 1, et de la cohérence de l’approche au niveau européen dans l’ensemble de la zone Objectif 1.

• Efficacité – analyse de la réalisation des objectifs indiqués dans les documents de

programme, sur la base des résultats. Les priorités clés pour cet exercice étaient : le transport (route, rail), les PME (programmes d’assistance, service commercial, infrastructure commerciale, programmes d’ingénierie financière et de formation), la recherche et le développement, l’enseignement et la formation, et enfin le développement rural.

• Efficience – analyse de l’efficience de la mise en œuvre des grands projets

soutenus dans les régions Objectif 1, y compris les projets cofinancés par le Fonds de cohésion.

• Impact – évaluation de l’impact des Fonds structurels sur la cohésion économique

et sociale. • Systèmes de gestion et de mise en œuvre – évaluation de l’efficacité des systèmes

de gestion et de mise en œuvre pour les programmes cofinancés par les Fonds structurels.

• Valeur ajoutée communautaire – évaluation de la valeur ajoutée communautaire

réalisée dans les régions Objectif 1 de 1994 à 1999. • Enseignements pour la programmation actuelle et à venir – identification des

forces et des faiblesses de la planification ou de la mise en œuvre des programmes Objectif 1, évaluation de l’utilisation des forces et de la compensation des faiblesses dans les programmes des Fonds structurels pour 2000-2006, et identification des implications à plus long terme des conclusions de l’évaluation pour les Fonds structurels après 2006, dans le cadre de l’élargissement.



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Les zones remplissant les conditions requises pour l’Objectif 1 entre 1994 et 1999 étaient celles dont le PIB par habitant était inférieur à 75% de la moyenne pour l’UE. Toutefois, certaines régions dont le PIB était d’à peu près 75% de la moyenne communautaire mais pour lesquelles il existait des raisons spéciales d’inclusion, par exemple la restructuration économique ou des conditions géographiques particulières, pouvaient également prétendre au statut Objectif 1. Parmi ces régions, on pouvait ainsi compter l’Irlande du Nord, les cinq nouveaux Länder allemands, Berlin-Est, les DOM français, les Açores, les Iles Canaries et Madère. Le Fonds de cohésion a été créé par le Traité de Maastricht en 1993 pour fonctionner au côté des Fonds structurels, et son objectif est d’apporter un soutien aux projets environnementaux et d’infrastructure des Etats membres dont le PIB est inférieur à 90% de la moyenne de l’Union européenne. De 1994 à 1999, la Grèce, l’Irlande, le Portugal et l’Espagne ont bénéficié de cet instrument. Sur la période de programmation 1994-1999, et en termes de PIB par habitant (en SPA), l’écart entre les régions Objectif 1 et le reste de l’UE s’est réduit de 64% de la moyenne communautaire en 1993 à 69% en 1999. Néanmoins, cette apparente convergence générale masque des disparités importantes entre les diverses régions Objectif 1. L’augmentation du PIB par habitant n’est pas en général le résultat d’une augmentation des taux d’emploi consécutive à la création d’emplois. Par conséquent, même si les taux de chômage des régions Objectif 1 ont chuté de 16,0% en 1993 à 15,7% en 1999, ils restent considérablement supérieurs à la moyenne européenne de 9,4%. Par ailleurs, les taux de participation demeurent faibles, ce qui crée des disparités encore plus importantes entre les taux d’emploi des populations actives. II. ADEQUATION DES STRATEGIES ADOPTEES Equilibre géographique Dans l’absolu, les principaux bénéficiaires ont été l’Allemagne, l’Espagne, l’Italie, la Grèce et le Portugal. Cependant, ce tableau se modifie lorsque l’on considère l’intensité de l’aide (financement par habitant d’habitant). Sur la base des dépenses prévues (subventions de l’UE, interventions internes et contributions du secteur privé), les interventions les plus conséquentes ont été prévues en Allemagne, en Autriche et aux Pays-Bas. Dans les deux derniers cas, cela reflète l’importante du soutien prévu par les sources intérieures et privées. Un examen de l’intensité des seules contributions de l’UE révèle une situation différente. Dans ce cas, les principes d’équité semblent avoir joué davantage, le soutien le plus important ayant été apporté aux quatre pays de la Cohésion, en particulier l’Irlande, le Portugal et la Grèce. Il n’a pas été possible de procéder à une évaluation systématique de l’équilibre régionale en raison d’incertitudes concernant la répartition géographique des programmes sectoriels. Toutefois, certaines concentrations apparaissent dans le cadre



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de la répartition géographique des fonds au sein de divers programmes. Les raisons de cette répartition semblent avoir été différentes. Dans certains cas, il s’agissait d’aider des zones particulièrement défavorisées du pays ou de la région en question, tandis qu’à d’autres moments l’intention était de développer des zones de croissance potentielles et existantes. Equilibre du programme L’identification de la répartition exacte des dépenses du programme est compliquée par les différentes manières dont elles sont catégorisées dans les divers documents de stratégie. Une évaluation précise exigerait une identification de la répartition des activités à un niveau de mesure qui dépasse le cadre de la présente étude. Les investissements dans l’infrastructure physique, en particulier les transports, ont représenté un élément significatif de la quasi-totalité des stratégies Objectif 1. Plus de 24 milliards d’euros ont été engagés dans des activités relatives à ce domaine, soit au total environ 11% des fonds Objectif 1. En général, les pays de la Cohésion ont investi un pourcentage plus important des fonds Objectif 1 dans l’infrastructure physique, bien que le Royaume-Uni et la France aient eu l’un et l’autre des programmes fortement axés sur l’investissement, tandis que celui de l’Irlande était relativement modeste. La majorité des ressources ont été réparties entre les transports et les projets environnementaux/énergétiques. Le soutien au développement commercial reste la composante investissement clé de la majorité des programmes, en particulier l’aide au développement industriel et au développement des PME, qui ont constitué le principal objectif en Autriche, en Belgique et en Allemagne. En tout, près de la moitié (45%) d’Objectif 1 visait l’assistance aux activités de développement commercial, d’une valeur de 95 milliards d’euros environ. Dans plusieurs cas, notamment la Grèce et le Portugal, le soutien à ce secteur est également compris dans les priorités de développement économique régionales et locales, qui sont venues renforcer l’ensemble des aides disponibles. Relativement parlant, il semblerait que ce soit l’Espagne qui ait été le moins soutenue dans ce domaine. Encore une fois, on n’obtient pas de schémas clairs dans ce domaine. Les engagements explicites en faveur des programmes de recherche et de développement ont varié suivant les Etats membres. Les mesures prises n’ont été relativement conséquentes qu’en Autriche et aux Pays-Bas, et beaucoup plus modestes en Grèce, en Espagne, en Allemagne et au Royaume-Uni. Dans les autres Etats membres, cet aspect a tendu à se fondre dans des priorités de développement plus générales. Les allocations financières pour le développement des ressources humaines ont varié suivant les Etats membres : de 7,6% à 23%, sans compter les mesures de formation au sein de programmes/priorités sectoriels spécifiques. Les proportions les plus élevées



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pour ce secteur ont été allouées en Irlande. De manière générale, les évaluateurs ont considéré que l’aide aux activités dans le domaine des ressources humaines était justifiée par les circonstances. Ce n’est que dans le cas de la Grèce qu’ils ont estimé que ce domaine n’avait peut-être pas reçu toute l’importance qu’il méritait au sein de l’approche stratégique générale. L’agriculture et le développement rural constituaient des éléments importants dans la plupart des stratégies Objectif 1. Etant donné la nature des économies Objectif 1, fortement dépendantes de l’activité agricole, cela peut sembler tout à fait normal. Ce sont l’Allemagne et l’Autriche qui ont attribué le plus à ces activités, et le Cadre communautaire d’appui (CCA) pour la Grèce le moins. Il convient cependant de faire remarquer encore une fois qu’il est probable que les programmes régionaux ont subvenu aux besoins de ce secteur et donc augmenté son importance dans le cadre de la stratégie. En ce qui concerne le secteur de la pêche, les allocations financières ont été les plus élevées en Espagne et aux Pays-Bas, de 4,5 et 5,4% respectivement. L’une des critiques que l’on peut émettre à l’encontre de certains programmes régionaux, c’est une tendance à vouloir couvrir trop d’activités différentes, ce qui entraîne souvent un manque de coordination et de cohérence entre les divers aspects. Ce problème se pose avec une intensité particulière dans le cadre des programmes aux Pays-Bas, en Belgique, au Royaume-Uni et en Autriche, voire même en Italie. Les structures de programme complexes (jusqu’à 53 mesures dans le cas des Pays-Bas) affaiblissent la cohérence de la stratégie et des objectifs, et finissent par réduire la souplesse du programme, particulièrement lorsqu’il s’agit de redistribuer les subventions parmi les priorités. En général, on considère que l’approche stratégique choisie en 1994 pour l’Objectif 1 était adéquate pour chacun des Etats membres, bien que certains problèmes soient évoqués en détail dans le contexte d’interventions particulières et en ce qui concerne la mise en œuvre. La stratégie publiée n’a en aucun cas été considérée comme inappropriée et la majorité des experts nationaux ont jugé qu’il s’agissait de réponses adéquates aux besoins identifiés de la zone ainsi qu’à la vision prédominante des approches de la croissance et du développement. Les stratégies étaient considérées comme particulièrement appropriées lorsqu’elles poursuivaient et/ou complétaient les actions de la période de programmation précédente pour l’Objectif 1 (1989-1993). Ceci a permis aux régions de consolider l’adaptation et la mise en œuvre des stratégies à la lumière des expériences passées, positives et négatives, et de bâtir sur la base des initiatives anciennes. Le rôle joué par les partenaires du programme dans l’encouragement de stratégies plus appropriées est complexe. La participation des partenaires sociaux et économiques dans le développement de la stratégie espagnole a manifestement renforcé la connaissance des demandes d’intervention spécifiques. La principale critique adressée aux stratégies est qu’elles ne représentaient guère plus que la somme de leurs parties. Bien que chacune de ces parties ait constitué une



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réponse adéquate dans des domaines particuliers, il est moins clair qu’elles aient contribué, et de quelle manière elles ont contribué, à une stratégie de développement générale. Cette critique a été formulée par les évaluateurs pour le Royaume-Uni, la Belgique et l’Italie, mais peut s’appliquer à tous les Cadres communautaires d’appui et DOCUP. On peut se demander si le soutien fourni a été suffisant pour lancer un processus de développement plutôt que de se contenter de répondre aux besoins nationaux ou régionaux. Certains aspects des stratégies générales ont également été remis en cause. En pratique, les stratégies adoptées au début de la période de programmation n’ont pas changé de manière significative au cours des années qui ont suivi. En général, la raison en est que les orientations générales des stratégies sont restées valables. Les stratégies présentaient suffisamment de souplesse pour permettre l’introduction d’activités nouvelles lorsqu’elles s’avéraient souhaitables. Cependant, cela est également dû à la continuité de la mise en œuvre par les autorités des programmes, dont le souci principal a été l’absorption des ressources financières disponibles. Dans l’ensemble, les dépenses réelles ont été conformes au profil prévisionnel. Il n’apparaît pas de différences significatives entre les priorités ou les programmes régionaux, ce qui ne veut pas dire qu’il n’y a pas eu de changements. Cela signifie simplement que ceux-ci ont eu lieu au niveau des mesures et n’ont donc pas eu d’effet conséquent sur la stratégie générale. Les modifications mises en œuvre l’ont été en partie pour répondre à l’évolution des circonstances, et aussi afin d’assurer l’entière absorption des ressources disponibles. D’une part, l’ensemble des stratégies du programme avaient suffisamment de souplesse pour intégrer les modifications des stratégies adoptées lorsque cela s’avérait nécessaire. Pourtant, il semble que de telles modifications stratégiques n’aient pas été assez fréquentes, par manque de motivation. En Grèce par exemple, l’expert national rapporte que « En raison de la lourdeur de la mise en œuvre du budget de programmes opérationnels complexes et compliqués, les décisions de politique ont été repoussées au second plan et n’ont bénéficié que de peu d’attention »(p 4-96). La principale différence entre la mise en œuvre financière prévisionnelle et sa réalisation s’est située au niveau des contributions du secteur privé. Dans la plupart des cas, le montant des appuis fournis par le secteur privé était sensiblement inférieur à ce qui était attendu au départ, quoique dans une minorité de cas (Belgique, Pays-Bas) des montants plus importants aient été obtenus. De toute façon, rien ne démontre que cette situation ait eu un impact significatif sur les approches stratégiques adoptées. III. EFFICACITE L’évaluation de l’efficacité d’Objectif 1 se base sur l’analyse d’un échantillon de programmes sélectionnés. Bien que cette méthode couvre environ 70% de la valeur de l’Objectif 1, elle ne permet pas l’agrégation des résultats et donc l’obtention d’un



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chiffre pour l’ensemble des réalisations de l’Objectif 1. Les résultats ont donc des chances d’être sous-estimés. L’évaluation se focalise sur l’efficacité des interventions par thème, plutôt que sur le calcul du résultat général en fonction d’indicateurs particuliers. Les cinq thèmes sont les transports, les PME, la recherche et le développement, l’enseignement et la formation, ainsi que le développement rural. L’évaluation de l’efficacité de l’Objectif 1 repose sur la mesure dans laquelle les effets attendus ont été obtenus et les objectifs ont été atteints. En général, on calcule l’efficacité en établissant un rapport entre un résultat ou un indicateur d’impact et un objectif quantifié. L’évaluation de l’efficacité de l’Objectif 1 pour la période 1994-1999 a été limitée par l’absence d’objectifs quantifiés, des objectifs initiaux limités et des informations concernant les résultats obtenus très diverses et non comparables. Très souvent, les indicateurs disponibles sont spécifiques aux programmes et aux pays concernés, ce qui rend les comparaisons difficiles et a fait peser une contrainte significative sur cet aspect de la présente étude. Il a donc fallu largement baser l’analyse d’efficacité sur des jugements qualitatifs plutôt que sur des comparaisons quantifiées entre résultats et objectifs. Au niveau général, la plupart des actions apparemment les plus efficaces ont été des actions « traditionnelles ». Toutefois, le financement a largement tendu à renforcer les schémas d’activité existants liés au développement économique plutôt qu’à jeter les bases d’un développement d’activités nouvelles pour atteindre des objectifs identifiés, ou à stimuler des approches plus novatrices. Dans le secteur des transports, les activités ont été développées surtout dans le secteur routier, avec la construction ou l’amélioration d’au moins 4104 km d’autoroutes et de 31 844 km d’autres routes. Lorsque les chiffres sont disponibles pour les objectifs et les réalisations, on constate que les objectifs ont été atteints dans la plupart des cas. L’investissement dans les transports a amélioré l’accessibilité interne et externe, et aussi aidé à lutter contre les problèmes d’engorgement urbain, tout en réduisant les temps de déplacement et/ou les coûts de distribution. Bien qu’on puisse trouver des exemples manifestes de développement économique positif, les éléments manquent pour quantifier ces impacts de manière plus systématique. Les interventions visant le commerce ont permis d’assister au moins 214 188 entreprises, ont créé au moins 3839 ha de sites industriels et ont financé la création d’au moins 723 957 emplois bruts. Lorsqu’il existe des chiffres concernant les objectifs et les résultats, les objectifs concernant le soutien aux PME et la superficie des sites industriels ont été le plus souvent dépassés, considérablement même dans le second cas. Encore une fois, l’évaluation des résultats de ces interventions reste limitée. Souvent, les interventions ont porté sur des secteurs déjà en place, en particulier le tourisme, plutôt que sur l’encouragement à la diversification. Il est probable que le poids mort et le déplacement ont été considérables. Ce sont les interventions combinant incitants à



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l’investissement et services de soutien qui semblent avoir été les plus efficaces, tandis que dans certaines situations le capital-risque et les systèmes de prêt ont connu un succès relatif. Les interventions visant les petites PME semblent avoir été les plus performantes en termes de création d’emplois. Dans le domaine de la recherche et du développement, les interventions ont permis d’atteindre un certain nombre de résultats positifs, notamment en ce qui concerne le développement de l’infrastructure physique. Lorsqu’ils existent, les éléments probants montrent que les objectifs ont été atteints, et – ce qui compte peut-être davantage à long terme – les activités de recherche et de développement occupent maintenant une place beaucoup plus importante dans les politiques. Reste que pour le moment la transposition de la recherche universitaire et du secteur public dans des applications commerciales s’avère difficile, bien que des mesures ciblées et plus « douces » visant les entreprises aient généralement donné des résultats positifs. Les interventions ont financé la formation d’au moins 8 149 595 personnes. Lorsqu’ils existaient, les objectifs ont été le plus souvent dépassés, et souvent de manière impressionnante – quoiqu’évidemment le problème de la qualité des analyses sous-jacentes se pose. Le soutien Objectif 1 a également joué un rôle important dans le développement de l’infrastructure et de la capacité d’enseignement des Etats membres les plus défavorisés. Encore une fois, on manque d’éléments concernant les effets des améliorations sur le capital humain. Il est manifeste que les interventions ont été plus efficaces lorsque – ce qui n’a pas toujours été le cas – elles se basaient sur une estimation rigoureuse des besoins du marché du travail et que les contextes économique et institutionnel étaient favorables. Dans le cas des interventions visant les exclus, les actions conçues en fonction des besoins individuels ont été les plus efficaces. La majeure partie des ressources du FEOGA versées par l’intermédiaire de l’Objectif 1 a été utilisée pour le secteur agricole et ses modifications structurelles plutôt que dans le cadre d’un processus plus large de développement rural. Ce dernier n’est devenu un objectif explicite des Fonds structurels qu’au cours de la période de programmation 1994-1999. La plus grande partie des informations disponibles relatives à l’efficacité concerne le secteur agricole lui-même, où les objectifs – modernisation des exploitations agricoles, irrigation des terres, remembrement des terres et installation de jeunes agriculteurs – ont été dépassés. Tout cela a eu une kyrielle d’effets positifs : augmentation de la productivité, réduction des coûts, amélioration de la qualité et allongement des saisons de croissance. L’impact des subventions spécifiques aux producteurs des zones moins favorisées a été important, dans la mesure où leurs revenus ont été étayés, ce qui a permis de maintenir l’activité agricole dans ces régions. Plus généralement, les ressources Objectif 1 ont profité à un nombre important – quoique inconnu – d’agriculteurs en encourageant le passage à des produits à plus forte valeur ajoutée ainsi que la diversification vers des activités non agricoles.



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Bien que nous manquions de données systématiques, les fonds du FEDER ont permis la création d’emplois à très grande échelle, le plus souvent, ou du moins le plus directement, par le soutien à l’investissement productif. Le FSE a considérablement renforcé la base de capital humain des régions Objectif 1, même si les avantages de ce renforcement ne se font pas encore pleinement sentir. Les effets principaux du FEOGA ont été le soutien et l’encouragement de la restructuration du secteur agricole, tandis que l’IFOP s’est montré fort efficace dans le domaine du renouvellement et de la modernisation de la flotte de pêche, ainsi que du développement des installations de transformation et du marketing. Au total, au moins 798 000 emplois bruts ont été créés dans l’ensemble de la zone Objectif 1. De nombreuses interventions soutenues dans la zone Objectif 1 – en particulier dans les domaines des infrastructures hydrauliques et du traitement des déchets – ont eu des effets positifs considérables pour l’environnement. Le fait de veiller à ce qu’en général les projets soient conformes aux normes communautaires et/ou nationales correspondantes a contribué à en minimiser les effets négatifs. Il est évident que le processus de développement aura eu certain effets négatifs, en particulier l’augmentation du trafic routier. Cependant, l’insistance sur le développement durable en tant que tel n’est apparu comme une priorité générale au niveau des politiques de la Communauté qu’après la mise en place de cette génération de programmes. Certains des programmes Objectif 1 – en particulier en Allemagne – se caractérisent par une grande attention à l’égalité des chances, tandis que d’autres régions ont développé des actions particulièrement orientées vers les besoins spécifiques des femmes en matière de travail. Encore une fois, ceci n’est devenu une priorité communautaire de premier plan qu’après la préparation et l’approbation de ces interventions. Il reste que dans la pratique les projets appuyés par le FSE ont eu tendance à inclure une proportion de femmes supérieure à leur proportion dans les groupes ciblés, ce qui indique que l’effet des interventions dans ce domaine a été positif. Il semblerait que les interventions n’aient que fort peu gommé les disparités spatiales au sein des régions Objectif 1, ce qui reflète bien le peu d’importance accordé à cet aspect dans les politiques. Dans certains cas, elles ont contribué à concentrer la croissance dans les capitales et les autres régions relativement performantes. IV. EFFICIENCE L’étude d’évaluation s’est penchée sur l’efficience de la mise en œuvre des grands projets financés dans les régions Objectif 1 par les Fonds structurels et de cohésion. De manière générale, l’efficience révèle que les effets ont été obtenus à un coût raisonnable. On obtient généralement un indicateur d’efficience en divisant les intrants du budget par la quantité d’effets obtenus, ce qui dans ce cas s’est avéré difficile, notamment en raison du manque de repères auxquels comparer la performance. Dans le cadre de la présente étude, l’efficience est estimée en fonction



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de la livraison par rapport au coût et au planning, comme exigé par les Termes de référence. La livraison des grands projets en temps voulu et dans le respect des limites budgétaires s’est avérée très difficile. Il est indispensable d’améliorer la planification et l’estimation des projets, et de renforcer les procédures de mise en œuvre. Un tiers seulement des 60 projets étudiés ont été réalisés suivant le calendrier de départ; un tiers d’entre eux avaient plus d’un an de retard. Ces retards affectaient particulièrement les projets environnementaux, surtout les projets de traitement de l’eau. Les facteurs d’une livraison ponctuelle étaient la fermeté de l’engagement politique, l’existence de délais imposés de l’extérieur et une planification et un suivi assidus. Les facteurs des retards comprenaient notamment une planification insuffisante, les problèmes liés à la propriété des terrains et les conditions atmosphériques. Le budget a été dépassé pour deux tiers environ des projets étudiés. Dans 20% des cas, ce dépassement était de plus de 30% du montant d’origine. Encore une fois, ce sont les projets environnementaux qui ont posé le plus de problèmes, ainsi que les routes. Les facteurs de ces dépassements étaient : la modification des projets, l’apparition de problèmes d’ordre environnemental, géologique et archéologique, une estimation insuffisante des coûts et le caractère impératif de certains délais. L’évaluation a révélé de fortes disparités entre les coûts unitaires, en raison souvent du caractère complexe des projets concernés et des effets de facteurs tels que la topographie et la géologie. Ces facteurs limitent la possibilité d’établir des coûts à l’unité « repère » pour des types de projet particuliers. V. IMPACT Pour évaluer l’impact de l’Objectif 1 pour 1994-1999, nous avons eu recours à une approche double. Tout d’abord, une approche macroéconomique a été adoptée pour déterminer l’impact des Fonds structurels sur la cohésion économique et sociale. Cette approche était basée sur le modèle HERMIN et a été appliquée à tous les principaux pays Objectif 1 (Grèce, Irlande, Portugal, Espagne), ainsi qu’à l’Allemagne de l’Est et à l’Irlande du Nord. Ensuite, une estimation ascendante a été réalisée pour les autres régions. Dans le cas de l’Italie, la construction d’un modèle HERMIN a été rendue impossible par les problèmes de passation de marchés rencontrés dans ce pays. Le modèle HERMIN se base sur des aspects structurels clés des économies en voie de développement ou de changement dans les domaines suivants : • Ouverture économique, exposition au commerce mondial et réaction aux chocs

économiques intérieurs et extérieurs ;



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• Taille et caractéristiques relatives des secteurs de production échangés et non échangés et de leur développement, leur technologie de production et leur évolution structurelle ;

• Mécanismes de détermination des salaires et des prix ; • Fonctionnement et souplesse des marchés du travail, y compris le rôle potentiel

des migrations de travail internationales et interrégionales ; • Rôle du secteur public et de la dette publique, et interactions entre les compromis

des secteurs public et privé dans les politiques officielles. Pour satisfaire à ces impératifs, le modèle HERMIN a été conçu comme un modèle macroéconométrique comprenant quatre secteurs : la fabrication (secteur de production majoritairement échangé), les services de marché (secteur majoritairement non échangé), les services agricoles et administratifs (c’est-à-dire hors marché). Les modèles HERMIN eux-mêmes ne sont pas à l’épreuve de toute critique. Il serait possible d’en utiliser d’autres, qui donneraient des résultats différents. Par exemple, le modèle de la Commission, QUEST (qui comprend des mécanismes forts d’éviction suite à l’inclusion de mécanismes d’attente cohérents avec le modèle) tend à révéler des impacts moins forts pour les Cadres communautaires d’appui. Une étude récente de l’analyse de la politique de cohésion par des chercheurs néerlandais suggère qu’il faudrait utiliser des techniques économétriques plus simples, à équation unique, ce qui suggère également que l’impact des politiques est nettement plus faible (Ederveen et coll., 2002a et 2002b). La méthodologie basée sur les modèles HERMIN ne constitue donc qu’une alternative possible parmi bien d’autres. L’approche basée sur le modèle HERMIN permet d’appréhender à la fois les effets transitoires des interventions sur la demande et leur impact sur l’offre. Les résultats qui en découlent sont inévitablement dérivés, du moins en partie, d’hypothèses posées au cours du processus de modélisation. En général, l’impact maximum sur le PIB a lieu aux alentours de la fin de la période « Cadre communautaire d’appui », lorsque les effets sur l’offre et la demande sont l’un et l’autre opérationnels, et se réduit à mesure que s’estompent les effets sur la demande, à une seule exception près. L’effet maximum sur la réduction du chômage tend à se produire dans les premiers temps du programme, et découle largement des effets sur la demande. L’impact maximum sur le PIB au cours de la période de Cadre communautaire d’appui a été le plus fort au Portugal (4,7% par an), puis en Allemagne (jusqu’à 4% par an), en Irlande (2,8% par an), en Grèce (2,2% par an), en Irlande du Nord (1,8% par an) et en Espagne (1,4% par an). Dans divers cas, l’importance de l’impact reflète l’importance relative et l’attribution des ressources Cadre communautaire d’appui, ainsi que des facteurs tels que les sommes allouées au départ, les structures économiques, les degrés de compétitivité et le degré d’ouverture de l’économie en question. C’est pour l’Allemagne de l’Est que les prévisions à long terme sont les plus élevées (4,7% par an même en 2010), suivie du Portugal (2,1%), de l’Irlande (1,0%), de la



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Grèce (0,6%) de l’Espagne (0,6%) et de l’Irlande du Nord (à peine 0,1%). Ces effets à long terme dépendent de façon cruciale de l’augmentation de l’investissement suscitée par les dépenses Cadre communautaire d’appui dans le secteur de la fabrication, ainsi que de la performance de ce dernier. Plus généralement, les travaux de modélisation ainsi que la littérature confirment les résultats d’autres études, qui indiquent que la réussite des interventions dépend du fait que la région possède ou non une structure économique qui permet la croissance, et que d’autres conditions de soutien à la croissance soient également présentes, par exemple un encouragement au niveau des politiques nationales ainsi que des strctures institutionnelles fortes. Les changements en profondeur nécessitent souvent des interventions sur plus d’une période de programmation. Les impacts tendent à être particulièrement forts lorsqu’ils sont inclus dans un cercle vertueux d’amélioration de la compétitivité, d’amélioration des exportations et des ventes intérieures, et d’augmentation de l’investissement autochtone et/ou intérieur. L’augmentation de l’emploi peut ou non faire partie de ce processus. Comme suggéré par la modélisation, l’orientation vers des marchés plus larges, et donc la possibilité de tirer parti du processus d’intégration économique et de la croissance commerciale, est fondamentale. Il n’existe pas de base systématique comparable pour l’estimation des impacts sur les microrégions. Dans ces régions, l’échelle et – souvent – la portée des interventions ont été plus limitées. Les données de suivi disponibles indiquent que la création d’emplois bruts a été importante, mais que le poids mort et le déplacement sont tout aussi probables, et ce alors même que les estimations sont rares. Dans certains cas, le déclin sous-jacent a fait reculer de façon marquée la performance relative de ces régions, malgré les avantages apportés par les interventions. Des universitaires, des fonctionnaires de la Commission et certaines personnes consultées sur le plan national ont avancé l’idée que les interventions du Fonds structurels dans les microrégions ne suffisent pas à créer un impact sur le PIB. Toutefois, la plupart des programmes régionaux ont établi des objectifs liés au PIB. Seul le Burgenland (Autriche) n’a pas fait de l’amélioration du PIB régional un objectif. Les informations disponibles suggèrent que le niveau général du PIB a augmenté dans les microrégions bénéficiant de l’assistance Objectif 1, bien que cette augmentation n’ait pas été suffisante pour améliorer la performance de ces régions par rapport aux moyennes européennes ou nationales. Il est peu probable que l’Objectif 1 ait joué un rôle substantiel dans cet état de fait, bien que les indications soient rares dans l’un comme dans l’autre sens. Dans l’une des deux régions britanniques – le Merseyside – l’évaluation ex ante du programme Objectif 1 pour 2002-2006 a conclu que bien que la différence au niveau du PIB par habitant entre le Merseyside et le Royaume-Uni ait augmenté de 1994 à 1999, le programme Objectif 1 a joué un rôle important dans le ralentissement du déclin relatif du Merseyside, qui sans cela n’aurait pas manqué de se produire.



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VI. SYSTEMES DE GESTION ET DE MISE EN ŒUVRE Les systèmes de gestion et de mise en œuvre contribuent à l’efficacité, à l’efficience et à l’impact d’Objectif 1. Ils ont varié d’un Etat membre à l’autre, ainsi qu’au sein de ces derniers. Le travail en partenariat apporte un certain nombre d’avantages. Au niveau formel, le partenariat a été mis en œuvre principalement dans le cadre des Comités de suivi. L’importance de ceux-ci dans les processus de prise de décision a été limitée par un certain nombre de facteurs, dont leur taille, la rareté de leurs réunions et les lacunes au niveau des informations disponibles, si bien qu’ils ont essentiellement servi de relais d’information et de communication. C’est l’Etat membre qui nomme les membres du Comité de suivi. En pratique, la qualité des partenaires a été variable. Parmi les membres communs, on comptait la Commission européenne, le ministère des finances (ou équivalent), d’autres représentants du gouvernement central et des représentants des gouvernements régionaux. La règle générale était l’inclusivité, même si dans la pratique l’importance et le caractère de la participation des partenaires sociaux au processus de mise en œuvre ont fortement varié. De façon générale, la Commission européenne a joué un rôle important dans le processus de partenariat au sein des Etats membres, et leur participation aux Comités de suivi a été vécue de manière positive par les représentants du programme et les partenaires communautaires. En effet, cette participation permettait à la Commission européenne d’apporter une contribution directe au processus de gestion. Au niveau national, les liens avec les niveaux administratifs supérieurs ont aidé les programmes pour lesquels il existait une complémentarité avec les programmes nationaux et régionaux, bien que les communications vers le niveau régional via le niveau national aient parfois perturbé la relation verticale d’ensemble. Dans ces cas, des voies de communication informelles ont été établies entre la Commission et les régions afin de résoudre plus rapidement tous les problèmes d’ordre réglementaire. Les partenaires socio-économiques ont joué un rôle important dans le développement et la réussite d’Objectif 1, parfois dans le cadre du partenariat vertical, mais le plus souvent dans celui des partenariats horizontaux adoptés pour certains programmes. Les partenaires socio-économiques ont été présents dans environ trois-quarts de tous les Comités de suivi aux niveaux Cadre communautaire d’appui/DOCUP et programme, sauf au Portugal, où les partenaires sociaux et économiques n’ont été représentés à aucun niveau. Des voies alternatives ont également été adoptées pour impliquer les partenaires socio-économiques dans Objectif 1, par exemple les consultations et les groupes de discussion. En France, une série de débats a été organisée avec de nombreux partenaires sociaux et économiques sur les objectifs des Fonds structurels. Les travaux réalisés en partenariat horizontal l’ont souvent été dans le cadre de structures informelles. Dans la pratique, la plupart des décisions importantes sont prises par le Comité de suivi pour les Programmes opérationnels plutôt que pour le Cadre communautaire



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d’appui. Les faits laissent entendre que les Comités de suivi ont pu fonctionner comme des organismes stratégiques, avec toutefois une orientation très forte vers la gestion financière. Les Comités de suivi étaient fort préoccupés par le fait de dépenser dans la majorité des Etats membres, ce qui a conduit à une reprogrammation significative des profils financiers dans plusieurs cas. Le rôle joué par les Comités de suivi en tant qu’organismes stratégiques dans le cadre de la réalisation d’objectifs a probablement été beaucoup plus limitée. Cela s’explique sans doute en partie par le fait que pour la majorité des pays les données de suivi fournies aux Comités concernaient davantage les dépenses que les résultats. Par ailleurs, dans le cas d’une représentation large des partenaires sociaux et économiques, la vision stratégique adoptée par les Comités, qui était encouragés à se concentrer plutôt sur les projets, s’en trouvait parfois réduite. Les Comités de suivi ont notamment joué le rôle d’organismes de transmission et d’information. Par exemple, l’implication des partenaires sociaux dans les Comités de suivi permettait de communiquer rapidement à ces groupes les problèmes et les opportunités qui pouvaient se présenter. En raison de leur visibilité, les Comités de suivi pouvaient également jouer le rôle d’organismes transparents pour soulever d’éventuels problèmes. Plusieurs évaluateurs nationaux ont estimé que cette visibilité a contribué à la résolution de problèmes tant au niveau national qu’au niveau régional. Bien que dans l’ensemble l’effet des Comités de suivi ait été positif, un certain nombre de contraintes d’ordre pratique ont été identifiées, qui ont affecté la capacité de fonctionnement des Comités de suivi et partant, ont entraîné certaines faiblesses. Ainsi, le rôle concret du Comité de suivi dans certaines évaluations nationales a été remis en cause. Dans certains cas, le Comité a joué le rôle d’un organisme purement formel, qui se contentait d’avaliser des décisions prises à l’avance, en raison de la taille du Comité et de la fréquence limitée de ses réunions, mais aussi de la rareté des informations disponibles. En plus de la structure formelle des Comités de suivi, qui est précisée dans les Règlements, les Etats membres ont introduit divers mécanismes informels adaptés à leurs propres contextes institutionnels. Ces arrangements différaient considérablement d’un Etat membre à l’autre, et parfois même au sein des Etats membres. Ces arrangements supplémentaires étaient en partie motivés par la perception de la nécessité d’approcher différemment les processus stratégiques, administratifs, techniques et politiques liés à la mise en œuvre des Fonds structurels. Dans la pratique, les Comités de suivi ont été dans l’incapacité de traiter simultanément toutes ces questions. Il se peut que ces arrangements de gestion élargie adoptés dans certains Etats membres pour faciliter les processus de prise de décision aient contribué au sentiment que certaines décisions se prenaient en dehors des Comités de suivi. Bien que la mise en œuvre d’Objectif 1 ait été le plus souvent dominée par des administrations publiques liées aux autorités, cela n’a pas toujours été le cas. Plusieurs types d’organismes ont participé à la gestion du programme Objectif 1 1994-1999, en jouant le rôle de secrétariat du programme et dans le contexte plus large de sa mise en



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œuvre. Les organisations participantes différaient considérablement en fonction de l’Etat membre. Dans certains cas, c’était le secteur public qui l’emportait, tandis qu’ailleurs on voyait prédominer le secteur privé ou des organismes intermédiaires. Aucun style de gestion ne s’est avéré plus avantageux que les autres. En plus de ces différences dans l’utilisation des secteurs public et privé, il existait également des différences de localisation des activités de gestion. Dans certains cas, ces activités étaient fortement centralisées, tandis que dans d’autres elles étaient très décentralisées, ou encore de type mixte. L’expérience tend à montrer que ce sont les organisations centralisées ou décentralisées qui fonctionnent le mieux, alors que les systèmes hybrides posent parfois problème. Toutefois, cette situation pourrait n’être que le reflet de problèmes de répartition des responsabilités entre les divers niveaux administratifs des pays ayant emprunté cette voie. Dans une large mesure, la gestion des quatre fonds structurels s’est faite isolément. Chacun des Fonds disposait de ses propres structures opérationnelles et de ses propres procédures de prise de décision, même au sein de programmes censément intégrés. Bien que n’ayant pas suscité de dysfonctionnements graves, cette situation a manifestement contribué à rendre plus difficile une intégration véritable des divers volets des interventions. La décentralisation propre à chacun des Etats membres a inévitablement déterminé les relations entre les acteur clés des partenariats ainsi que les compétences et la composition de ces partenariats. D’après la présente évaluation, il n’existe pas nécessairement de rapport entre le niveau de centralisation et le niveau d’inclusivité ou d’exclusivité. Dans l’ensemble des Etats membres, la capacité de gestion a été variable suivant les programmes et les régions. Bien que la capacité de mise en œuvre du programme Objectif 1 1994-1999 ait posé des problèmes dans l’ensemble des Etats membres, les gestionnaires de programme questionnés ont rarement rejeté la faute sur les impératifs mêmes de mise en œuvre du programme Objectif 1, et ont plutôt mis en évidence les faiblesses des systèmes d’administration nationaux ou locaux. L’un des facteurs qui de manière générale rendait plus difficile l’administration du programme Objectif 1 était la nécessité de se familiariser avec des instruments nouveaux et différents des subventions et des aides traditionnels. La gestion des grands projets s’est avérée particulièrement difficile dans plusieurs Etats membres. En France, en Italie, en Grèce et en Irlande, les retards qui se sont produits dans de nombreux projets d’infrastructure à grande échelle ont été, en partie du moins, attribués au manque d’expérience dans la gestion des interventions de ce type dans le cadre des programmes Objectif 1. L’un des éléments fondamentaux de la maximisation de l’efficacité et de l’impact des interventions Objectif 1 a été la vigueur des projets subventionnés. En général, les gestionnaires de programme adoptaient pour la sélection des projets soit une approche compétitive (comparaison entre différentes applications à un moment donné, suivie



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d’un choix), soit une approche au coup par coup (détermination des critères de sélection et subvention des projets au fur et à mesure qu’il sont soumis et répondent aux critères). Chacune de ces approches comportait des avantages et des inconvénients propres. Par exemple, l’approche compétitive a causé des problèmes dans certains pays, par exemple le Royaume-Uni, en raison du grand nombre de projets candidats, en particulier au cours des premières années. Dans certains cas, ces difficultés ont entraîné un recours à la méthode au coup par coup. Par contre, cette dernière nécessite des techniques de sélection beaucoup plus rigoureuses au niveau de la notation ainsi qu’une mise en rapport plus soutenue avec une vue d’ensemble, afin d’assurer que les besoins sont couverts et que trop de projets ne sont pas approuvés dans un domaine particulier. L’utilisation des critères de sélection de projet a considérablement varié d’un Etat membre à l’autre ainsi qu’au sein de programmes individuels. En général, cela tenait à l’utilisation de critères de sélection stratégiques de « troisième niveau », au-delà des questions d’éligibilité et de capacité. Dans la majorité des cas, l’éligibilité et la capacité ont été utilisés bien plus souvent que les critères relatifs aux objectifs stratégiques de la stratégie et à la satisfaction des besoins, et peu de régions ont eu recours à un système de notation chiffrée. Le plus souvent, la sélection des projets s’est avérée fiable, bien que certains aspects pratiques soient susceptibles d’amélioration dans différents Etats membres. Les systèmes de contrôle financier semblent avoir relativement bien fonctionné au sein des Etats membres pour le programme Objectif 1 1994-1999, bien que certaines modifications se soient avérées nécessaires pour l’adaptation au nouveau règlement financier de 1997. Dans la plupart des pays, les systèmes de contrôle financier ont été jugés adaptés à leur objectif et ont fonctionné de manière relativement efficace. Le principal problème mis en évidence est le manque d’intégration des fonds ainsi que l’existence de règlements différents pour chacun d’entre eux, ce qui a entraîné des problèmes, en particulier au Royaume-Uni et au Portugal. Le suivi n’a joué qu’un faible rôle dans la gestion des interventions Objectif 1 en 1994-1999. En général, ce suivi était financier et visait les indicateurs financiers plutôt que les résultats ou les indicateurs physiques. Le suivi et l’évaluation ont posé problème dans l’ensemble des Etats membres, bien que dans de nombreux cas la situation se soit améliorée au cours du programme. Dans tous les Etats membres, il manquait une quantification des objectifs définis au début du programme. Quoiqu’en général les indicateurs de contexte fussent définis, les indicateurs de résultat étaient beaucoup moins fréquemment utilisés. Les pays ayant tenté une quantification plus poussée, du moins au départ, étaient l’Autriche, l’Irlande et le Royaume-Uni, bien qu’en Autriche certains objectifs quantifiés aient été abandonnés par la suite. Un problème s’est posé de manière récurrente dans la plupart des Etats membres, qui était l’absence d’un retour d’information depuis les systèmes de suivi vers le reste du programme, et qui a affecté la capacité du système de suivi à influencer l’efficacité générale du programme.



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Le niveau d’activité d’évaluation entrepris en 1994-1999 était conforme aux impératifs de la Commission européenne. En dehors des évaluations ex ante et de mi-parcours, d’autres évaluations continues ont eu lieu dans les régions Objectif 1. Ces évaluations internes ont été réalisées par les ministères ou les instances régionales, avec l’assistance d’universités et d’organismes externes. L’importance de ces évaluations peut surprendre, eu égard à la faiblesse des systèmes de suivi. Cela reflète peut-être la perception du caractère obligatoire des évaluations, même si les résultats ont souvent eu un effet sur la gestion des programmes. La qualité des évaluations a été variable. Cela peut tenir en partie au manque d’indicateurs de résultat au début des programmes, qui a constitué un obstacle considérable. Cependant, les évaluations ont également varié en fonction de la compréhension de leurs objectifs. En Irlande, l’unité Cadre communautaire d’appui a noté en particulier que la signification de l’évaluation était mal comprise et qu’il y avait une tendance à confondre le suivi et l’évaluation. Toutefois, le « Common Guide for Monitoring and Interim Evaluation » de la Commission européenne était considéré, du moins dans le cas de l’Irlande, comme ayant contribué à améliorer la qualité et à assurer une cohérence au niveau de la portée et de la profondeur des évaluations. Le facteur clé de la détermination de l’efficacité des évaluations est le fait de savoir si les recommandations ont effectivement été absorbées et utilisées, ce qui n’a pas toujours été le cas. Par exemple, en Grèce, et malgré le fait que les évaluations aient été continues et d’une qualité relativement soutenue, il s’agissait davantage de se plier à un impératif émanant des ministères que de contribuer véritablement à l’efficacité du programme. VII. VALEUR AJOUTEE COMMUNAUTAIRE Lorsqu’elles sont utilisées à bon escient, les ressources communautaires doivent en principe créer de la « valeur ajoutée » par rapport à une situation où elles ne sont pas disponibles. L’aspect « communautaire » de cette valeur ajoutée concerne les bénéfices spécifiques à une intervention de la Communauté et non nationale ou régionale. Jadis, l’existence d’une telle valeur ajoutée était considérée comme implicite dans le fonctionnement des Fonds structurels, et ce n’est qu’aujourd’hui que les évaluations ex post commencent à s’y intéresser de manière plus explicite. Un document récent de la Commission définit quatre aspects de la valeur ajoutée : (5) La réalisation d’objectifs communautaires relatifs à la cohésion économique et

sociale, la mise en œuvre de priorités communautaires à caractère transnational, ainsi que le désir de promouvoir un développement équilibré et durable au sein de l’Union.

(6) Mobilisation des ressources communautaires (un tiers environ du budget communautaire), à trois conditions : effet de redistribution significatif; apport



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supplémentaire par rapport à la contribution financière des Etats membres; garantie d’un effet de levier maximum, en particulier dans le secteur privé.

(7) La méthode de mise en œuvre des Fonds structurels, qui implique des règles et des principes (programmation, partenariat, contrôle, suivi et évaluation), afin d’assurer une plus grande efficacité des interventions.

(8) Une coopération et une mise en réseau facilitant le transfert du savoir-faire, un échange d’expériences et la mise en commun des ressources, qui souvent ne se produiraient pas sans l’initiative de la Communauté.

Objectif 1 a contribué à la promotion de la cohésion économique et sociale, en particulier au niveau national. Il subsiste des disparités entre les régions, et dans le cas de certaines d’entre elles la situation ne semble pas s’être améliorée grandement entre 1994 et 1999, ce qui soulève des interrogations concernant la capacité d’Objectif 1 à encourager un développement territorial équilibré, bien qu’il n’en ait pas été particulièrement tenu compte en 1994-1999. Les interventions Objectif 1 ont également contribué de manière significative à plusieurs priorités communautaires plus larges, bien qu’on manque de données quantitatives pour étayer ce propos. Des interventions clés ont notamment eu lieu dans les domaines suivants : renforcement de l’infrastructure (en particulier dans le secteur des transports) et développement des RTE ; assistance à l’extension de la base des PME compétitives; développement des ressources humaines. Des apports ont également eu lieu au niveau de l’environnement et du développement durable, et les programmes ont également inclus des mesures substantielles de développement des politiques communautaires en matière d’agriculture et de pêche. L’Objectif 1 des Fonds structurels et du Fonds de cohésion a permis un transfert important de ressources communautaires vers les régions éligibles de 1994 à 1999, quelques dépenses résiduelles restant en cours à la fin de 2002. Le montant estimé des transferts de fonds vers les régions Objectif 1 est de 114 milliards d’euros environ, et il est probable que le principe d’additionnalité a été plus ou moins respecté dans l’ensemble des Etats membres. La nécessité d’un cofinancement national a attiré les dépenses intérieures nationales vers les activités prioritaires convenues et, bien que le résultat se soit avéré décevant par rapport aux attentes, le secteur privé a contribué à hauteur d’environ 35 milliards d’euros dans les 9 Etats membres pour lesquels des données sont disponibles. Enfin, Objectif 1 a également ajouté de la valeur dans le domaine du développement d’une contribution efficace aux systèmes de livraison. Les avantages tirés au cours de la période 1994-1999 sont évidents et manifestes dans tous les Etats membres concernés. On observe partout cette valeur ajoutée dans la gestion et l’administration d’Objectif 1. En 1994-1999, la programmation pluriannuelle et l’application du principe de partenariat ont eu un effet positif, dans la mesure où ils ont sous-tendu l’amélioration des méthodes et la planification des stratégies, ainsi que l’augmentation des capacités du secteur public.



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Dans certains cas, l’évolution positive du suivi et de l’évaluation des interventions a entraîné une réaction en chaîne, c’est-à-dire une modification de la gestion des programmes et des initiatives nationaux. La plupart des Etats membres ont également amélioré leurs procédures d’audit de contrôle. Cependant, on ne dispose d’aucun élément permettant de déterminer la durabilité des modifications apportées, ni l’ampleur de cette adoption d’approches nouvelles. La création de réseaux et la collaboration entre programmes n’ont pas particulièrement figuré au programme d’Objectif 1, ce qui a limité l’échange explicite d’idées innovantes et de bonnes pratiques. Néanmoins, de nouvelles approches du développement ont bel et bien été diffusées et adoptées d’une zone Objectif 1 à l’autre, mais cela a été l’exception plutôt que la règle. La plupart des interventions adoptées étaient relativement traditionnelles et destinées à répondre aux besoins et au potentiel connus des zones concernées. Le processus d’innovation a reposé sur la diffusion progressive d’informations plutôt que sur une création explicite de réseaux ou un échange d’informations. Par exemple, dans le Mezzogiorno, Objectif 1 a facilité l’introduction d’activités liées à l’agritourisme, qui avaient connu un succès en Toscane (région ne relevant pas d’Objectif 1). On peut à juste titre se demander si les opportunités d’apprentissage commun sont pleinement exploitées à l’heure actuelle. Le processus de modification des politiques se fait par étapes et varie suivant la région et l’Etat membre. Certaines instances sont plus disposées que d’autres à introduire des idées nouvelles; d’autres ont déjà pris de l’avance sur la Communauté et servent d’inspiration pour les évolutions à venir du développement régional. Par ailleurs, les interventions ne sont pas toutes « polyvalentes », et ce qui peut être appliqué dans une région ne convient pas nécessairement à une autre. VIII. CONCLUSIONS Il était prévu de dépenser un total de 232 milliards d’euros pour les Politiques structurelles dans les 11 régions Objectif 1 entre 1994 et 1999. Dans la pratique, on estime le montant des dépenses à 210 milliards d’euros environ, la différence étant principalement due à la contribution moins importante que prévu du secteur privé. Les Fonds structurels ont eu un impact positif sur le PIB des régions Objectif 1, et leur performance générale s’est améliorée par rapport à celle de l’UE. Cet impact est quantifié dans la modélisation entreprise pour les pays de la Cohésion, l’Allemagne de l’Est et l’Irlande du Nord. L’impact le plus fort a été constaté en Allemagne de l’Est et au Portugal; c’est un peu moins évident en Espagne et en Grèce. Les impacts à long terme projetés pour l’Irlande du Nord sont plus modestes. Il est difficile de tirer des conclusions sommaires en ce qui concerne l’efficacité et l’efficience des Fonds structurels dans les régions Objectif 1, en raison de la disparité



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des pays et des contextes. Les limites des données de suivi et l’absence d’objectifs clairement quantifiés dans un pourcentage appréciable des documents de programmation ont fait qu’il n’est pas possible d’agréger ces résultats dans une représentation d’ensemble fiable des résultats obtenus par les Fonds, et ce même s’il est manifeste que les réalisations ont été considérables. L’efficience a été au rendez-vous, c’est-à-dire que des fonds ont été dépensés et des résultats appréciables obtenus. Cependant, une étude plus approfondie de la mise en œuvre des projets indique que des problèmes particuliers se posent pour la livraison des grands projets dans les temps et sans dépassement de budget. Bien que présentant certaines faiblesses, les systèmes de gestion et de mise en œuvre étaient le plus souvent adéquats, et les partenariats se sont avérés tout à fait bénéfiques. En règle générale, les structures de prise de décision n’ont pas réussi à imprimer une orientation stratégique bien définie. En revanche, une valeur ajoutée plus large a été obtenue grâce à la programmation et au développement des capacités et des pratiques du secteur public. IX. RECOMMANDATIONS Nous avons divisé nos recommandations en recommandations pouvant être mises en œuvre pendant la période de programmation en cours et recommandations valables pour le long terme. Ces dernières ont une importance toute particulière dans le cadre du développement des interventions pour les nouveaux Etats membres. Les recommandations concernent la mise en œuvre de programmes en cours par les gestionnaires de programme, et s’adressent également à la Commission européenne ainsi qu’aux autres partenaires. Période de programmation actuelle

• Une meilleure différenciation géographique entre les besoins est nécessaire, en particulier lorsque les programmes couvrent des régions étendues. Lorsque les programmes couvrent des régions étendues, il est nécessaire d’apporter plus d’attention aux schémas géographiques de développement. Cela ne veut pas dire que les ressources doivent automatiquement être attribuées en fonction des besoins, et encore moins que ces attributions doivent avoir lieu par zones. En revanche, les conséquences géographiques des décisions doivent être prises en considération, et de nombreuses interventions gagneraient à faire l’objet d’une stratégie géographique explicite. Cette question va s’avérer particulièrement importante dans le cadre des interventions dans les pays candidats à l’adhésion, généralement caractérisés par une prédominance des villes capitales. Cette recommandation vaut également pour les nouveaux programmes en voie de développement pendant la période de programmation en cours, et particulièrement lorsqu’ils concernent les nouveaux Etats membres.



48

• Les activités de recherche et de développement doivent recevoir plus d’attention, et notamment l’utilisation commerciale de leurs résultats.

• Lors du développement de programmes dans les nouveaux Etats membres, il est nécessaire de tenir compte explicitement des facteurs contextuels pouvant freiner – ou au contraire augmenter – l’efficacité des interventions. Par exemple, l’existence d’un cadre de politiques fiscales, réglementaires, en matière de concurrence et de soutien intérieur à l’industrie qui rende efficace les initiatives financées par l’UE pour encourager le développement des PME. L’existence d’un cadre politique et institutionnel adéquat va jouer un rôle particulièrement critique dans le cas des pays candidats à l’adhésion.

• Il serait souhaitable que les gestionnaires de programme envisagent les

modalités d’une augmentation des interventions dans le domaine des ressources humaines, dont : − une analyse du marché du travail déterminant la demande existante et

prévisionnelle en compétences particulières; − un cadre politique qui relie et crée des voies entre l’enseignement, la

formation professionnelle initiale et l’emploi; − dans le cas des mesures en faveur des exclus, une définition précise des

besoins des participants individuels.

• Il est nécessaire de viser explicitement le développement rural dans toutes les interventions concernant des zones rurales. Le développement rural doit être soutenu comme un programme d’activités intégré à part entière. Il est donc nécessaire que les interventions reconnaissent l’intégration de différentes activités dépendant d’interventions du FEDER et du FSE aussi bien que du FEOGA.

• Il faudrait encourager les opérateurs de programme à jouer un rôle

proactif dans le soutien au développement de projets destinés à résoudre des questions précises, dans le cadre d’une approche de la gestion de programme plus axée sur les objectifs.

• Il faut encourager une culture de la gestion de programme plus axée sur

l’innovation et la prise de risques. Cela soulève des questions relatives à l’évaluation des propositions de projet ainsi qu’à l’évaluation et à l’incitation des gestionnaires de programme.

• L’égalité des chances et le développement durable doivent figurer

clairement dans l’ensemble des programmes à titre de « thèmes horizontaux ». Nous sommes conscients que c’est le cas dans la nouvelle génération de programmes, qui fait actuellement l’objet d’évaluations de mi-parcours. Toutefois, il est important que ces aspects soient parfaitement intégrés aux enjeux locaux et les reflètent, plutôt qu’« importés » de



49

l’extérieur sous la forme d’impératifs. Il doit en être tenu compte dans les évaluations de mi-parcours.

• Afin de résoudre le problème inacceptable des dépassements de budget et

des retards, un effort considérable doit être fait pour mettre en œuvre les meilleures pratiques en matière de gestion, en particulier dans le cadre des nouveaux projets. Il faut notamment insister sur l’importance des études techniques préliminaires, d’une gestion professionnelle des projets et de la précision des contrats, qui doivent constituer un incitant adéquat pour les entrepreneurs.

• Il faut encourager davantage la mise en place de réseaux et l’échange des

bonnes pratiques. Il semblerait qu’à l’heure actuelle ces activités n’ont lieu qu’en marge des programmes, et ce dans le meilleur des cas. Il faut, beaucoup plus qu’à l’heure actuelle, développer la possibilité de tirer un enseignement des meilleures pratiques de toute l’Europe, sur la base d’un transfert de ressources conséquent.

• Les résultats attendus des interventions doivent être plus étendus, plus

réalistes et mieux quantifiés, et les résultats obtenus doivent être contrôlés à l’aune de ces objectifs. Il importe donc que les définitions soient sans ambiguïté et que le contrôle de la qualité des données soit adéquat. Nous conseillons de :

• Limiter le suivi à un petit nombre d’indicateurs de résultat facilement mesurables et objectivement vérifiables;

• Laisser la mesure des résultats et de l’impact au processus d’évaluation (dont les ressources doivent par conséquent être considérablement améliorées);

• Laisser aux Etats membres disposant de leurs propres systèmes de suivi efficaces la possibilité d’appliquer à leur discrétion leurs propres impératifs de suivi. Cela réduirait les coûts et permettrait sans doute d’obtenir des données plus pertinentes.

• Dans certains domaines – par exemple les infrastructures de transport –

il est nécessaire de lancer une recherche de qualité sur l’importance des effets secondaires du développement, en indiquant clairement de quelle manière ceux-ci dépendent des divers facteurs contextuels. A l’heure actuelle, les faits dont nous disposons ne suffisent pas à orienter les décisions d’attribution des ressources ni à établir des objectifs pertinents pour les interventions concernées. Il ne suffit pas de se fier au processus d’évaluation officiel, par exemple les évaluations de mi-parcours. Il faut également envisager d’étudier des aspects particuliers. Les résultats de telles études devraient ensuite être incorporés au développement du programme. Il serait souhaitable que la Commission européenne en fasse autant, afin de se constituer une base d’évaluations



50

de projet ou thématiques qui puisse permettre d’élaborer par la suite des stratégies de programmes plus efficaces.

• Le rôle des Comités de suivi doit être réorienté vers une direction

stratégique plutôt que financière. Cela aura des conséquences pour leur composition, les données qui leur seront nécessaires et leur manière d’envisager les problèmes. Il serait judicieux que la Commission européenne envisage la possibilité de donner son avis dans ce domaine, quoique cela relève plutôt des compétences des instances nationales.

• Dans le cadre d’une gestion plus axée sur les objectifs, les décisions

concernant la reprogrammation doivent concerner les objectifs ainsi que les besoins et les priorités stratégiques plutôt que les questions liées à l’absorption.

• La planification des évaluations provisoires et autres doit assurer la

disponibilité en temps voulu de données permettant d’informer le processus de prise de décision.

• Dans le cadre des systèmes de gestion partiellement et totalement

décentralisés, les flux d’informations et la coordination entre les niveaux national et régional doivent être améliorés.

• Il faut trouver des systèmes plus efficaces – probablement sous la forme de

secrétariats intégrés – pour regrouper la gestion des divers fonds dans chaque région, afin d’améliorer la coordination de leur administration et de leurs prises de décision et de permettre une approche mieux intégrée.

• Chaque fois que cela est possible, la sélection des projets doit se faire sur

une base transparente et compétitive. Pour ce faire, le mieux est de recourir à un système de notation objectif et quantitatif.

• Compte tenu de l’alourdissement du processus que risque d’entraîner une

augmentation des activités de suivi, au détriment des candidats de petite taille ou des collectivités, il convient d’encourager les Etats membres à intégrer les indicateurs et les impératifs de reporting de leurs programmes de financement nationaux et ceux de leurs programmes communautaires.

L’avenir après 2006

• La construction d’une capacité institutionnelle dans les nouveaux Etats membres va exiger un effort considérable. Cette capacité devra couvrir non seulement la mise en œuvre des fonds structurels, mais également la gestion des projets et les capacités institutionnelles.



51

• Les programmes des nouveaux Etats membres doivent se baser sur une bonne analyse des besoins et des opportunités, comprenant un modèle explicite de la voie vers le développement qui tienne explicitement compte des choix stratégiques essentiels. Pour ce faire, il faudra utiliser largement l’expérience des Etats membres actuels. Il est important de recourir à la procédure de négociation pour faciliter l’acceptation par les nouveaux partenariats et encourager un sentiment d’appartenance local.

• Les interventions doivent être mises en place en temps voulu afin d’éviter

les problèmes de concentration des frais en fin de projet et la pression des délais, qui peuvent grever les processus de prise de décision.

• Il existe au moins un argument en faveur d’une plus grande souplesse vis-

à-vis des périodes de programmation. Il est manifeste que la période de soutien sera plus longue que prévu dans le cas de nombreux pays candidats à l’adhésion, et il est sans doute souhaitable de planifier et de financer le soutien à l’infrastructure à plus long terme.

• Il serait utile que les évaluations de mi-parcours touchent davantage aux questions de fond, surtout si les périodes de programmation sont allongées, plutôt que de se limiter comme par le passé au différentiel.

• Il est souhaitable de recourir davantage aux évaluations continues

indépendantes, qui assureraient la fourniture d’informations objectives. Ces évaluations pourraient comprendre certains types d’action entrepris dans le cadre des programmes ou des grands projets des Fonds structurels, ou encore certains aspects des processus. L’une des fonctions de ces évaluations serait de fournir un avis d’expert indépendant, qui servirait au développement et à l’aboutissement du programme, et encouragerait la prise en compte d’approches alternatives.

• Il faut tenter d’améliorer l’intégration des fonds et d’adapter aux

caractéristiques nationales/régionales les mesures financées par le FEOGA ou l’IFOP. Cela soulève la question de savoir s’il serait possible de mieux aligner les unes sur les autres l’administration et les procédures des fonds, et de mieux intégrer les interventions relatives à l’agriculture aux priorités locales. Ce dernier point va manifestement dépendre de l’évolution de la PAC, en particulier à l’égard des pays candidats à l’adhésion.

• La question se pose de savoir si à l’avenir le détail des méthodes communautaires pour l’utilisation des Fonds structurels continuera d’ajouter de la valeur dans de nombreux Etats membres. Il serait possible d’attribuer des ressources par l’intermédiaire d’un cadre moins lourd et moins directif, en particulier dans le cas des microrégions. Cela touche à la proportionnalité ainsi qu’au coût de la mise en œuvre des Fonds



52

structurels pour les petits programmes, en particulier lorsqu’il existe une expérience de tels programmes. Pour ce faire, il faudrait modifier considérablement les mécanismes concernés et peut-être réduire le nombre des prescriptions centrales.

• Il convient également d’étudier davantage la « stratégie de sortie » de

l’Objectif 1 des régions Objectif 1. Actuellement, on part du principe qu’il sera nécessaire de développer la compétitivité une fois qu’une infrastructure et un enseignement de base adéquats auront été mis en place. Les stratégies de sortie doivent veiller au maintien de l’élan pris au cours des périodes de programmation, de manière à ce que les investissements réalisés puissent être maintenus et développés et que les partenariats créés puissent continuer d’exister. Bien que tout cela se situe en-dehors du périmètre de l’évaluation en cours, il n’est pas évident que les objectifs des programmes de transition actuellement mis en œuvre soient respectés. Ce problème devra être abordé une fois les évaluations de mi-parcours terminées.



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1.0 INTRODUCTION

1.1 The study

Between 1994 and 1999 some €114 billion was made available through the Structural Funds and the Cohesion Fund to support investments in the Objective 1 areas of the European Union. This was supplemented by at least a further €95 billion of matching public or private sector investment. This report sets out the findings of the ex-post evaluation of Structural Fund and Cohesion Fund interventions over the period 1994-1999 in favour of the EU Objective 1 regions. The study was strongly policy-focused and addressed the following elements: Box 1.1: Key study elements • Appropriateness of strategies – an assessment of the appropriateness of the strategies

adopted and implemented in the Objective 1 regions and the coherence of the approach at an EU level across the entire Objective 1 area

• Effectiveness – an analysis of the achievement of the objectives set out in the

programming documents based on results. The key priorities for this exercise were: transport (road, rail), SMEs (aid schemes, business service, business infrastructure, financial engineering and training schemes), research and development, education and training, as well as rural development.

• Efficiency – an analysis of the efficiency of the implementation of large projects

supported in Objective 1 regions, including those co-financed by the Cohesion Fund • Impact – an assessment of the impact of the Structural Funds on economic and social

cohesion • Management and Implementation systems – an appraisal of the effectiveness of

management and implementation systems for the programmes co-financed by the Structural Funds

• Community Added Value – an assessment of the Community added value achieved in

Objective 1 regions between 1994 and 1999. • Lessons for Current and Future Programming – identification of strengths and

weaknesses in the planning or implementation of Objective 1 programmes, an assessment of the extent to which strengths have been built on and weaknesses have been addressed in the 2000-2006 Structural Funds programmes, and identification of the longer term implications of the findings of the evaluation for the Structural Funds after 2006 in the context of enlargement.

Source: Terms of Reference



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The Terms of Reference for the study stressed the analytical and policy-driven nature of the work, with a strong focus on providing Member State evaluations which would enable analysis, draw conclusions and put forward recommendations at EU-policy level rather than providing a detailed assessment of individual programmes.

1.2 Objective 1

1.2.1 Coverage

The Structural Funds and the Cohesion Fund are the key instruments to promote the economic and social cohesion of the European Union. Following the reforms of 1988, spending has been concentrated on the Objective 1 regions – the regions identified as the most disadvantaged parts of the EU – with an overall objective to promote “the development and structural adjustment of regions whose development is lagging behind”. The budget for the 1994-1999 period was a total of € 141 billion1, or a third of the total Community budget. Of this, Objective 1 received almost € 94 billion. Areas eligible for Objective 1 between 1994 and 1999 were those regions in which GDP per head was below 75% of the EU average. However, there was provision for extending eligibility to certain regions where the GDP was around 75% of Community average but where special reasons for inclusion applied, including economic restructuring or particular geographical circumstances. This included, for example: Northern Ireland, the five new German Länder, East Berlin, the French overseas departments, the Azores, the Canary Islands and Madeira. In 1994, 10 Member States were eligible either in whole or in part for support under Objective 1 of the Structural Funds, rising to 11 in 1995 following the accession of Austria to the Union. Eligible regions are identified in Table 1.1. The Cohesion Fund was established through the Treaty of Maastricht in 1993 to work alongside the Structural Funds. Its aim is to support environmental and infrastructure projects in those Member States with a GDP of less than 90% of the European union average. Between 1994 and 1999, four Member States benefited from this facility: Greece, Ireland, Portugal and Spain. The intention of the Cohesion Fund was to assist countries meet the convergence criteria for economic and monetary union whilst still being able to invest in infrastructure. For the 1993-1999 period, the budget of the Cohesion Fund amounted to €15.5 billion. 1 1993 prices



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Table 1.1: Population covered by Objective 1 during the 1994-1999 period

Member State

Eligible regions

Millions of inhabitants

% of national population covered

Belgium Province of Hainaut 1.279 12.80 1.279 12.80 Germany The five new Länder (Brandenburg, Sachsen, Sachsen-

Anhalt, Mecklenburg-Vorpommern and Thüringen) and East Berlin

16.447 20.70

Greece The entire country 10.209 100.00 Spain Andalucia, Asturias, Cantabria, Castilla y León, Castilla-

La Mancha, Ceuta y Melilla, Comunidad Valenciana, Extremadura, Galicia, Canarias, Murcia

23.269 58.20

France The overseas departments, Corsica and the districts of Valenciennes, Douai et Avesnes

2.546 4.40

Ireland The entire country 3.500 100.00 Italy Abruzzo (for a three-year transition period, from 1/1/94

to 31/12/97), Basilicata, Calabria, Campania, Molise, Puglia, Sardegna, Sicilia

21.133 36.60

Netherlands Flevoland 0.217 1.45 Portugal The entire country 9.868 100.00 UK Northern Ireland, Merseyside, Highlands & Islands

Enterprise Area 3.414 6.00

Austria Burgenland 0.269 3.50 EU Total 92.151 25.00

Source: European Commission: "Reform of the Structural Funds 2000-2006 Comparative analysis (June 1999)", p.6 Includes Austria for 1995-1999 The nature of Objective 1 regions is highly variable, although most, but by no means all, are characterized by a relatively high level of agricultural activity and may be categorized as rural areas. The reform of the Structural Funds in 1993 introduced a wider range of regions to the Objective 1 programme than under the 1989-1993 period. As a result, the homogeneity which had previously existed amongst eligible areas was reduced, with industrialised regions from the north of the EU, including the former East Germany, becoming eligible alongside the lesser developed regions of the earlier programme period. The Sixth Periodic Report on the Social and Economic Situation and Development of the Regions of the EU reflects identifies two key groups of Objective 1 regions, each suffering similar problems2. The first, found mostly in the North of the EU, have a relatively high GDP per person employed but low employment rates, as a result of

2 Sixth Periodic Report on the Social and Economic Situation and Development of the Regions of the EU, 1999, p.151.



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narrow economic bases and a lack of jobs for the working age population. In contrast a second group of regions have employment rates comparable or even above the EU15 average, but as a result of low productivity, a low GDP per person employed. The effective size of the contiguous programming area forms a further means of categorizing Objective 1 regions. In four cases Objective 1 covers the whole or most of the Member State territory. These are Ireland, Greece, Portugal and Spain. In two cases, Germany and the Mezzogiorno, Objective 1 covers a number of contiguous regions, forming macro-regional programmes. In addition, although Northern Ireland is only one of the twelve standard economic regions of the United Kingdom, we include it as a macro-region when considering the impact of Objective 1, mainly because it has reasonably comprehensive regional accounts, is sufficiently large (with a population greater than that of Estonia or Slovenia), and has a range of devolved policy-making powers. In Austria, Belgium, Netherlands, France and the UK one or more discrete regions are the focus of individual programmes. These have been categorized as micro-regional programmes. In evaluating Objective 1 we have drawn upon this characterisation as an organizing framework where this has proved valuable.

1.2.2 The Structure of the Interventions in the regions

Following the reform of the Structural Funds in 1988, a series of core principles were adopted for the implementation of the Structural Funds: concentration of effort, partnership, programming and additionality. These were retained and strengthened in the 1993 Regulation governing the 1994-1999 programming period. In short: • Concentration is the key principle to ensure and increase efficiency of the

measures. • Programming is the process of preparing and implementing multiannual

development programmes (i.e. for the 1994-1999 period). • Partnership refers to the closest possible cooperation between the Commission and

the appropriate authorities at national, regional or local level in each Member State. The principle of Partnership is to be followed throughout the whole process of the programmes, from the preparatory stage to the implementation of measures.

• Additionality ensures that Community assistance complements the contributions of the Member States rather than reduces them. Except for special reasons, the Member States are obliged to maintain their spending in the eligible areas at no less than the level reached in the preceding period.

Objective 1 programmes are implemented through a series of programming documents drawn up after a consultation process between Member State representatives and the European Commission. Under the 1994-1999 regulations, two different procedures were possible for planning and administering Objective 1 funding: A three stage procedure, in which:

• A development plan is submitted by the Member State



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• A Community Support Framework (CSF) is established by the Commission on the basis of this plan, in cooperation with the Member State and the regions concerned

• A strategy for intervention on the ground is developed, usually in the form of an Operational Programme (OP), a major project or a global grant

Or the alternative procedure: • Development plan submitted by the Member State • Single Programming Document (SPD) established combining the development

strategy together with the programme to be supported in a single agreement. In practice, where Objective 1 covered the whole of a Member State, the CSF and OP model was followed. Where discrete regions were eligible for Objective 1, an SPD was more often prepared.

1.2.3 Aims and Objectives of the Structural Funds

The aim of Objective 1 is to support the development of the lagging regions of the EU. To achieve this eligible areas receive support from:

• The European Development Fund (ERDF) • The European Social Fund (ESF) • The European Agricultural Guarantee and Guidance Fund – Guidance element

(EAGGF) • The Financial Instrument of Fisheries Guidance (FIFG)

Each of the three Structural Funds and the fisheries instrument has a different focus. The detailed aims are set out in Box 1.2 below. Broadly, the ERDF promotes regional development through support for productive investment, the creation or modernization of social and economic infrastructure, promoting R&D and environmental protection. The focus of the ESF is on facilitating access to the labour market, including the promotion of equal opportunities, developing skills and qualifications and strengthening or improving education and training systems. The EAGGF promotes agricultural modernization and diversification and the development of rural areas, whilst the FIFG focuses on supporting the diversification and modernization of fishing activities and diversification away from fishing. Box 1.2: Aims of the Structural Funds i) The European Development Fund (ERDF) • To provide support for productive investment to permit the creation or

maintenance of permanent jobs • To provide support for the creation or modernisation of infrastructure which

contributes to the development or convergence of the regions concerned, supporting the establishment or development of TENs in transport, telecommunications or energy



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• To provide support for measures to exploit the potential for internally generated development of the regions concerned, encouraging local development initiatives and the activities of SMEs,

• To provide support for investment in the field of education and health • Productive investment and investment in infrastructure aimed at environmental

protection • To support regional development, particularly in the field of research and

technological development ii) The European Social Fund (ESF) • To contribute to facilitating access to the labour market • To contribute to promoting equal opportunities in the labour market • To contribute to developing skills, abilities and professional qualifications • To contribute to encouraging job creation • Support employment growth and stability through continuous training and

guidance and counselling • Boost human potential in research, science and technology • Strengthen and improve education and training systems • Contribute to development through the training of public officials iii) The European Agricultural Guarantee and Guidance Fund – Guidance element (EAGGF) • Strengthening and reorganising agricultural (and forestry) structures, including the marketing and processing of agricultural products • Ensuring the conversion of agricultural production and fostering the development of supplementary activities for farmers of either sex • Helping to ensure a fair standard of living for farmers of either sex • Helping to develop the social fabric of rural areas, to safeguard the environment and to preserve the countryside • Promoting rural development and the structural adjustment of regions whose development is lagging behind iv) The Financial Instrument of Fisheries Guidance (FIFG) • To contribute to achieving a sustainable balance between resources and their

exploitation • To strengthen the competitiveness of structures and the development of

economically viable enterprises in the sector • To improve market supply and the value added to fisheries and aquaculture

products The following table (Table 1.2) shows the breakdown of expenditure by Member State for 1994-1999. Spain was clearly in receipt of the most funding during this period, followed by Portugal, Italy, Germany and Greece, both for the Cohesion Fund and Objective 1. The ERDF was the most significant of the Structural Funds,



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followed by the ESF. This pattern did not vary significantly by Member State, although relative proportions did. Table 1.2: Planned Structural Fund contribution to Objective 1 expenditure by Member State, 1994-1999 (€M 1999 prices) Member state

Cohesion Fund**

Objective 1*

% of total Objective 1

Spain 9,251.1 31,146 27.7Portugal 3,005.4 17,857 15.9Greece 2,998.2 13,980 12.4Ireland 1,495.2 7,640 6.8Italy n/a 17,051 15.1Germany n/a 15,911 14.1UK n/a 5,137 4.6France n/a 2,702 2.4Belgium n/a 794 0.7Austria n/a 232 0.2Netherlands n/a 164 0.1EU Total 16,749.9 112,614 100.0

* Based on the European Commission "Second report on economic and social cohesion" (January 2001), Table A.36 ** 1993-1999 The maximum level of grant available through the Structural Funds is 75% of total eligible expenditure, although for some activities lower rates of assistance can apply. The maximum level of grant available through the Cohesion Fund is between 80-85% of total eligible expenditure and may be used for environmental projects and transport infrastructure projects within the Trans-European Network or making connections to the network. The Fund was split 50:50 between these two types, a division that has been respected in the overall distribution of funding. Between 1993 and 1999 assistance totalling around €16.7 billion was received by the eligible Member States, with Spain the largest beneficiary (see Table 1.2 above).

1.3 Evolution of issues confronting the regions since 1994

At the outset of 1994 each region faced a unique mix of needs and opportunities. Low GDP per capita, which was used to define eligibility for Objective 1, is the one common issue facing Objective 1 regions. Outside of this there are few issues that were common across all regions, or even a consistent set of regions, in 1994. Rather, a range of key issues can be identified that affected most, but not all regions, with the mix of regions concerned changing constellation depending upon the issue at hand. The following section briefly outlines a limited number of these issues, which applied across the Objective 1 regions during the period 1994-1999. These are:

• GDP and employment • Productivity



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• Educational attainment • Infrastructure • R&D • Environmental concerns

1.3.1 GDP and Employment

Low average GDP is the key determinant of eligibility for Objective 1. For the four member states covered wholly, or almost wholly, by Objective 1 average GDP has risen in all cases between 1993 and 2001 demonstrating that a degree of convergence has occurred over the 1994-1999 programming period, and in the case of Ireland has wholly occured. This is the case when GDP is measured both by purchasing power parity (Table 1.3) and, more simply, by Euro (Table 1.4). Table 1.3: Gross domestic product at current market prices per head of population (PPS EU15=100) 1993 2000 2001 Greece 64.1 68.1 69.8 Spain 79.6 81.5 82.0 Ireland 83.0 118.8 121.6 Portugal 68.8 74.4 74.3 Source: Table 9 European Economy (Spring 2003) Table 1.4: Gross domestic product at current market prices per head of population (€ EU15=100) 1993 2000 2001 Greece 47.2 51.4 52.9 Spain 66.9 68.4 70.2 Ireland 73.1 121.2 129.5 Portugal 41.4 51.1 52.3 Source: Table 8 European Economy (Spring 2003) At a regional level stronger differences in performance can be observed, both within and between Member States, as shown in Table 1.5. Using data from the Second Cohesion Report and the latest regional data published by Eurostat illustrates the wide divergence that existed in 1993 and the position in 2000. Clearly, whilst there has been progress in some regions in others the situation has remained poor and, in some cases, has indeed worsened. Greatest success has been found in Ireland, whilst in the UK and Portugal the situation is somewhat weaker. It is thought unlikely that significant demographic effects will have influenced these figures. The gap between Objective 1 regions and the rest of the EU with regards to GDP per head (in PPS) has narrowed over the 1994-1999 programming period, from 64% of the EU average in 1994, to 69% in 2000. Nevertheless, a number of regions have fallen back on this basis – including some of the more disadvantaged.



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Table 1.5 GDP per capita 1994 and 2000 (PPS, EU15=100)

GDP per head (in PPS)

Region GDP per head (in PPS) Region

1993 2000 1993 2000

Objective 1 Germany

Objective 1 France

Berlin-Ost, Stadt 72 961 Nord Pas de Calais na 81 Brandenburg 57 69 Corse 82 76 Mecklenburg-Vorpommern

52 69 Guadaloupe 40 58

Sachsen 53 70 Martinique 53 67 Sachsen-Anhalt 54 68 Guyane 50 54 Thüringen 52 70 Reunion 46 50 Objective 1 Greece

Ireland 81 115

Anatoliki Makedonia,Thraki

56 55 Objective 1 Italy

Kentriki Makedonia

63 68 Abruzzo 81 84

Dykiki Makedonia 58 67 Molise 74 79 Thessalia 57 61 Campania 66 65 Iperios 42 47 Puglia 69 67 Ionia Nisia 58 59 Basilicata 64 73 Dytiki Ellada 53 51 Calabria 59 62 Sterea Ellada 64 76 Sicilia 68 62 Peloponnisos 56 58 Sardegna 76 76 Attiki 70 77 Objective 1

Netherlands

Voreio Aigaio 47 66 Flevoland 73 80 Notio Aigaio 71 80 Objective 1

Austria

Kriti 67 66 Burgenland 70 73 Objective 1 Spain Objective 1

Portugal

Galicia 60 65 Norte 58 56 Prinicipado de Asturias

72 71 Centro 54 54

Cantabria 75 80 Lisboa & Vale do Tejo

85 91

Castilla y León 72 76 Alentejo 53 54 Castilla-La Mancha

65 67 Algarve 69 66

Extremadura 55 53 Açores 48 52



62

GDP per head (in PPS)

Region GDP per head (in PPS) Region

1993 2000 1993 2000

Comunidad Valenciana

75 79 Madeira 49 74

Andalucía 57 61 Objective 1 UK Región de Murcia 68 69 Merseyside 74 70 Ceuta & Melilla 67 68 Highlands &

Islands 79 75

Canarias 74 78 Northern Ireland 78 78 Objective 1 Belgium

Hainaut 82 71 Sources: 1994 from CEC Second Cohesion Report, 2000 from Eurostat Statistics in Focus (Jan 2003) 1 Berlin Significant job shortages resulted in a workforce unemployment rate of 16.0% across Objective 1, against 10.7% over the Union as a whole in 1993 (Table 1.6). Such circumstances limited employment amongst the working age population (15-64) of these regions and deterred many people from entering or re-entering the labour market, with just 52% of this age group in employment compared to 61% across the EU15. Such low participation rates were particularly evident for women and young people. Increased levels of GDP per head have generally not been the result of increased employment rates resulting from job creation. Consequently, although unemployment rates for Objective 1 regions had fallen, from 16.0% in 1994 to 15.7% in 1999, they remained considerably higher than the EU average of 9.4%. Furthermore, participation rates remain low, resulting in even bigger disparities with regards to employment rates amongst the population of working age. Table 1.6: Objective 1 Regions: Employment Rate; Unemployment Rate

Employment Rate (% pop. aged 15-64)

Unemployment Rate (% of labour force) Region

1993 1999 1993 1999 Objective 1 Belgium 14.0 16.6 Hainaut 49.8 51.3 14.0 16.6 Objective 1 Germany 15.4 16.7 Berlin-Ost, Stadt - 60.7 10.9 17.3 Brandenburg 62.2 63.0 14.9 16.0 Mecklenburg-Vorpommern 62.7 61.3 17.6 17.5 Sachsen 60.9 64.0 14.8 16.2 Sachsen-Anhalt 61.6 59.7 17.4 19.9 Thüringen 61.6 65.1 15.9 14.3 Objective 1 Greece 8.6 11.7 Anatoliki Makedonia,Thraki 64.9 60.0 6.6 12.8



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1993 1999 1993 1999 Kentriki Makedonia 53.5 55.5 6.4 11.7 Dykiki Makedonia 54.3 54.7 9.8 14.6 Thessalia 57.9 57.0 7.2 12.8 Iperios 56.0 54.2 7.6 13.9 Ionia Nisia 64.3 70.2 3.8 5.5 Dytiki Ellada 56.9 57.7 9.4 11.8 Sterea Ellada 54.9 57.1 9.5 14.2 Peloponnisos 66.2 64.3 5.8 7.6 Attiki 50.7 54.3 11.1 12.5 Voreio Aigaio 52.5 53.8 4.3 11.3 Notio Aigaio 56.4 61.3 4.5 7.3 Kriti 67.9 69.4 3.5 7.3 Objective 1 Spain 25.2 19.3 Galicia 51.9 53.0 17.6 16.8 Prinicipado de Asturias 44.5 45.5 20.4 18.2 Cantabria 46.9 48.5 19.9 15.7 Castilla y León 47.0 52.2 20.0 15.6 Castilla-La Mancha 46.2 52.7 19.5 15.6 Extremadura 40.1 46.2 30.3 25.5 Comunidad Valenciana 46.9 55.0 23.9 14.3 Andalucía 37.6 43.3 32.4 26.8 Región de Murcia 45.8 52.0 24.5 14.4 Ceuta & Melilla 39.8 44.3 22.9 25.5 Canarias 41.0 52.7 27.9 14.4 Objective 1 France 25.1 (11.91) 29.7 (14.31) Nord Pas de Calais 51.1 51 13.9* 15.6 Corse 48.5 42.8 11.9 14.3 Guadaloupe - - 24.0* 32.0 Martinique - - 26.2* 32.0 Guyane - - 18.2* 32.0 Reunion - - 31.7* 32.0 Objective 1 Ireland 52.7 63.9 15.7 5.9 Objective 1 Italy 17.3 22.4 Abruzzo 53.7 52.4 9.2 10.6 Molise 52.8 49.9 13.3 16.6 Campania 42.2 40.7 19.5 23.7 Puglia 44.6 43.1 14.1 19.8 Basilicata 45.6 44.4 13.1 17.3 Calabria 42.9 39.1 21.2 28.7 Sicilia 42.2 39.7 18.1 24.8 Sardegna 44.3 44.9 19.6 21.9



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1993 1999 1993 1999 Objective 1 Netherlands 5.9 3.1 Flevoland 66.4 72.8 5.9 3.1 Objective 1 Austria 2.8 3.3 Burgenland - 67.9 2.8 3.3 Objective 1 Portugal 5.3 4.7 Norte 67.6 71.3 4.5 4.7 Centro 71.0 82.3 3.6 2.4 Lisboa & Vale do Tejo 65.9 68.0 6.5 6.1 Alentejo 62.0 65.4 8.8 6.7 Algarve 66.1 70.4 5.1 3.7 Açores 59.6 60.9 5.3 3.7 Madeira 67.7 66.4 3.7 3.4 Objective 1 UK 14.8 9.8 Merseyside 60.1 59.7 15.0 11.7 Highlands & Islands 66.5 74.4 12.4 6.0 Northern Ireland 60.0 64.1 15.1 9.4 Total Objective 1 16.0 15.7 EU15 60.7 62.8 10.7 9.4

Sources: Second Report on Economic and Social Cohesion, Statistical Annex, 2001, p.64. Sixth Periodic Report on the Social and Economic Situation & Development of Regions in the EU,

1999, p.227 1 Excluding DOM *1994

1.3.2 Productivity

No Objective 1 region has seen a considerable increase in employment without a corresponding rise in productivity. Productivity rates (GDP per person employed) and employment rates (employment levels in relation to the working-age population) remain low across the Objective 1 regions and did not increase significantly between 1993 and 2000. The Second Cohesion Report identifies that GDP/employed was 76% of the EU average across Objective 1 regions in 1993 rising to 77% in 2000. These two factors underline the findings of The Sixth Periodic Report on the Social and Economic Situation and Development of the Regions of the EU3. This report argued that the productivity, and hence competitiveness, of the Objective 1 regions has improved during the 1994-1999 programming period, but that whilst this will ultimately enhance job creation in the long-term, it had little immediate impact on employment rates. Whilst various Objective 1 regions have been able to significantly increase their productivity rates (GDP per person employed), very few have been able to combine this with significant increases in employment rates. Exceptions to this

3 Sixth Periodic Report on the Social and Economic Situation and Development of the Regions of the EU, 1999, p.152.



65

include Ireland, Flevoland and Portugal’s Centro region. Consequently job creation is still a key issue for these regions, with a need to enhance skills and improve access to the labour market, particularly for disadvantaged groups including women and young people.

1.3.3 Education and Skills Levels

In 1994, the average educational attainment of the workforce in most Objective 1 regions was generally below the EU average, with a higher proportion of the working population having no qualifications. Likewise these regions had relatively lower levels of young people in post-compulsory education or vocational training. Skill levels were particularly weak with regards to supporting the needs of the service sector, especially with regards to ICT. Disparities between the EU’s regions are now less than they were in 1994. Nevertheless there remains a large imbalance in educational achievements, particularly for the Cohesion countries. There also remain disparities between Objective 1 regions and the rest of the EU with regards to the number of young people in post-compulsory education or training.

1.3.4 Infrastructure

Insufficient infrastructure with regards to supporting physical and technological links to the rest of the Union was a significant weakness for many regions in 1994, particularly for those regions located on the periphery of the EU. Transport infrastructure, especially the development of improved road and rail networks, has progressed since 1994, but there remain considerable imbalances in provision between regions, with the Cohesion countries in particular still lagging. Much progress has been made with regards to telecommunications infrastructure, with the quality of the most networks widely considered to be parallel to non-assisted regions, although in some regions the coverage of networks is still below the EU average. Energy gaps have also been reduced, although some Objective 1 regions remain constrained by infrastructure and/or market structures (particularly natural gas), with implications for economic growth as a result of continuing relatively higher energy costs.

1.3.5 R&D

In 1994 Objective 1 regions generally experienced low levels of R&D activity; a dominance of the public sector and correspondingly low private sector involvement; and low levels of technology transfer. Spending on R&D relative to GDP has increased across the Objective 1 area, but, with the exception of Ireland, this has not considerably reduced the gap between these regions and the rest of the EU. Above all investment in the Objective 1 regions appears to have reaped rewards for infrastructure and improvements in human capital, especially through research networks drawing together universities and industry. The percentage of projects



66

under the EU’s RTD Framework Programmes for which at least one participant is from an Objective 1 region increased from 27% in 1994 to 41% in 1998. Nevertheless there remain substantial differences between regions in this field, with the Second Report on Economic and Social Cohesion stating that R&D activity within these regions tends to focus around capital cities and the more prosperous areas, with around a third of Objective 1 regions remaining ‘technological deserts’4.

1.3.6 The Environment

The quality of the environment in many Objective 1 regions is relatively high, although for many regions significant issues were identified relating to poor connections to water supplies and treatment facilities. In other regions problems of pollution and environmental degradation were stronger concerns. Significant improvements since 1994 have been recorded in water supply and distribution, and waste drainage and treatment systems, especially in the Cohesion countries. Such achievements have brought indirect benefits for agriculture, industry and tourism, alongside greater compliance with European environmental directives. Further environmental benefits have been seen concerning the identification and management of protected natural areas; improved controls over air pollution and river degradation.

1.3.7 Institutional Context

Economic growth can depend on the development of efficient and effective institutional structures, including public administration, business support services and social facilities. The efficiency of such structures continues to vary between Member States. Another key factor limiting the competitiveness of Objective 1 regions was their low levels of social capital, a factor identified as a catalyst for growth, particularly through innovation.

1.3.8 Disparities between the regions

Disparities amongst the Objective 1 regions themselves remain evident in 1999. Convergence has not been balanced across these assisted regions, with capital cities, such Dublin and Lisbon, and the new German Länder approaching EU averages much quicker than more rural or peripheral regions. Whilst significant progress has been made in many areas identified as problematic at the outset of the 1994-1999 Objective 1 programme period many problems still remain. The aim of this evaluation is to assess the contribution of the Structural Funds and the Cohesion Fund to the progress made in the areas eligible for support from Objective 1. On the basis of this assessment recommendations will then be made for the implementation, where relevant, of current Objective 1 programmes (2000-2006) and potential future programmes. The following section describes how the evaluation study has approached this task before we embark on an evaluation of Objective 1 itself.

4 Second Report on Economic and Social Cohesion, 2001, p. 133.


ECOTEC Research and Consulting Lim

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1.4 Methodological approach

In order to evaluate the impact of Objective 1 across the EU separate evaluations were undertaken in each eligible Member State. A separate macro-economic modelling-based evaluation was also undertaken for a number of Member States and regions when a suitable model was available. The results of these separate studies were then analysed to provide an evaluation of Objective 1 across the EU. This was also informed by a review of information available at a European scale. This report is based upon the outcomes of that work. The manner in which the different elements of the study relate to each other is presented in Figure 1.1 below. Figure 1.1: Schematic overview of method of approach. Much of the evaluation was based upon the analysis of a sample of identified programmes (based on Operational Programmes or Single Programming Documents), the results of which formed the focus of each Member State study. The overall mix of programmes analysed is set out in Table 1.7 below, illustrating the widespread coverage achieved. The full list of programmes and projects assessed is set out in Annex 1.

EU-level Preliminary

Analysis

MeS

An

Mac

EU SYNTHESIS

mber tate alysis

ited

ro-economic Analysis

Programme and project

level analysis



68

Table 1.7: Method of approach Task Coverage Sample Appropriateness of Strategies Comprehensive All Effectiveness 68% of expenditure Sample of 70 OPs/.SPDs drawn

up in consultation with EC Efficiency Sample of 60 major projects co-

financed by ERDF or Cohesion Fund

Sample drawn up by evaluators and agreed with the Commission

Impact Comprehensive Macroeconomic assessment at level of CSF or bottom-up assessment of SPDs

Management and Implementation

30 programmes, of which 13 on small/medium sized OPs/SPDs and 17 on large OPs/SPDs

Sample drawn up by evaluators based on list for the effectiveness analysis and agreed with the Commission.

Community Added Value Comprehensive – with focus on EU level drawing on material from Member State studies

N/A

Lessons for current and future programming

Comprehensive – with focus on EU level drawing on Member State experiences

N/A

The evaluation has been based upon an analysis of 124 programmes or projects (Table 1.8 below). These fall into three categories: 64 programmes were analysed to assess effectiveness. Of these, a sub-set of 30 programmes was analysed to examine management and implementation issues. The mix of case studies by country was broadly determined by the number of programmes that were supported by Objective 1. Finally, the study analysed 60 large projects to assess efficiency. Projects which fit the selection criteria were not present in all Member States. Table 1.8: Sample size by Member State Member State Effectiveness Management and

Implementation Efficiency projects

Austria 1 1 N/A Belgium 1 1 N/A France 3 1 4 Germany 10 3 6 Greece 13 5 10 Ireland 4 2 8 Italy 9 5 7 Netherlands 1 1 N/A Portugal 7 4 10 Spain 13 6 12 UK 2 1 3 Total 64 30 60



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In addition to a balanced geographical distribution, a balanced thematic representation was sought. Table 1.9 illustrates the themes covered by the programme and project analysis. Efficiency projects were only studied in the fields of transport, environment and industry. Table 1.9: Sample size by type of programme Effectiveness Management and

Implementation

Efficiency projects

Transport infrastructures 5 2 25 SMEs N/A 3 N/A R&D 4 3 N/A Education and training 6 5 N/A Rural development 3 4 N/A Industry and services 3 N/A 13 Scientific infrastructures 1 N/A N/A Fisheries 1 N/A N/A Modernisation of the economic fabric

1 N/A N/A

Environment N/A N/A 22 Total sectoral programmes 24 17 N/A Regional programmes 40 13 N/A Total 64 30 60 A final criterion was applied in the choice of the efficiency sample, relating to the size of the projects. Projects had to have an eligible expenditure of over €25million for transport and environmental projects or over €15 million for industrial projects. The evaluation has drawn upon a range of sources, both in completing the Member State evaluations and the EU synthesis work. This includes: • An extensive programme of interviews with those involved in the Structural Fund

programmes in different capacities. A total of 353 interviews have been completed across the EU with a range of actors. This is synthesised in Table 1.10 below.

• A wide-ranging literature review drawing upon: programme information (such as programme documentation and EU documentation on the Structural Funds more generally); evaluation reports (of individual programmes, collections of programmes or particular themes) and more general literature (such as material published by academic or other research institutions)

Although based upon programme-level analysis, the evaluation of Objective 1 within Member States focused on the national level in the case of Ireland, Portugal, Greece and Spain, at the level of the combined eligible area in the German Lander and the Mezzogiorno and the individual programme areas in other Member States.



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Table 1.10: Profile of interviewees Member

state

Public

Sector

Private

Sector

Social and

economic

partners

Community

organisations

and voluntary

sector

Think tanks

and

universities

Total

EU National Regional Local

Austria 4 4 4 12

Belgium 1 7 5 1 14

France 3 45 6 4 58

Germany 53 1 10 1 65

Greece 2 11 1 14

Ireland 39 7 5 2 53

Italy 2 45 42 15 3 3 110

Netherlands 1 2 2 1 3 9

Portugal 54 23 19 14 110

Spain 33 56 4 1 94

UK 11 3 6 4 1 3 28

Total 6 191 243 29 33 52 2 11 567

The macro-economic modelling approach, adopted to assess the impact of the Structural Funds on economic and social cohesion, was based on the HERMIN model. This was applied to all the main Objective 1 countries (Greece, Ireland, Portugal, Spain) as well as for the regions of East Germany and Northern Ireland. The HERMIN model framework focuses on key structural features of developing and changing economies with respect to such issues as: • Economic openness, exposure to world trade, and response to external and internal

shocks; • Relative sizes and features of the traded and non-traded sectors and their

development, production technology and structural change; • Wage and price determination mechanisms; • The functioning and flexibility of labour markets with the possible role of

international and inter-regional labour migration; • The role of the public sector and public debt, and the interactions between the

public and private sector trade-offs in public policies. To satisfy these requirements, the HERMIN model is designed as a macroeconometric model composed of four sectors: manufacturing (a mainly traded sector), market services (a mainly non-traded sector), agriculture and government (or non-market) services. A full outline of the model approach adopted is set out in Annex 2. We briefly outline some of the key features below. Before any macroeconomic evaluation of the CSF can take place, the large number of individual investment and other programmes that make up the CSF need to be amalgamated into more aggregate economic categories. There are various reasons for this. First, although it is necessary to present a CSF in great administrative detail for



71

the purposes of planning, implementation and monitoring, there is less rationale for this detail from an economic perspective. Second, if the unit of analysis is a country or a single macro-region of a country, there is no requirement to distinguish, say, the impact of a new road in one sub-region as compared with another sub-region.5 Third, if the CSF expenditures are aggregated into economically meaningful categories, one can make use of research on the impacts of public investment on the performance of the private sector. The most useful and logical categories for aggregating the CSF is as follows:

i. Investment expenditures on physical infrastructure; ii. Investment expenditure on human resources;

iii. Expenditures on direct production/investment aid to the private sector. For each of these economic categories of public and private expenditure, there are three possible sources of funding:

i. EU transfers in the form of subventions to the domestic public authorities, as set out in the CSF;

ii. Domestic public sector co-financing, as set out in the CSF; iii. Domestic private sector co-financing, as set out in the CSF. Inclusion of the private sector co-financing is of questionable value for an impact evaluation that is based on the use of a formal macromodel, other than is cases where draw-down of public funds is made explicitly dependent on the provision of private co-finance. Of course, there are indirect impacts of publicly financed CSF investment on private sector investment which are included in the analysis. Since these indirect effects are automatically included in our analysis, and since considerable uncertainty and ambiguity surrounds the driving mechanisms behind the private sector CSF co-finance expenditures, we exclude them from our analysis.6 CSF actions influence the Objective 1 economies through a mixture of supply and demand effects. Short term demand (or Keynesian) effects arise in the models as a consequence of increases in the expenditure and income policy instruments associated with CSF policy initiatives. Through the “multiplier” effects contained in the models, there will be knock-on increases in all the components of domestic expenditure (e.g., total investment, private consumption, the net trade surplus, etc.) and the components of domestic output and income. These demand effects are of transitory importance and are not the raison d’etre of the CSF, but merely a side-effect. Rather, the CSF interventions are intended to influence the long-run supply potential of the economy. These so-called “supply-side” effects arise through policies designed to:

5 Of course, in the design of a CSF, a sub-regional breakdown is an essential part of comparing the benefits of alternative investment strategies. But our brief in this project is to analyse the macro impacts of the actual CSF 94-99, and not to speculate on the likely impacts of alternative CSFs. 6 In previous model-based macroeconomic analysis of the CSF carried out for the European Commission, it was suggested that one should exclude all private sector co-finance from the analysis.



72

• Increase investment in order to improve physical infrastructure as an input to

private sector productive activity;

• Increase in human capital, due to investment in training, an input to private sector productive activity;

• Channel public funding assistance to the private sector to stimulate

investment, thus increasing factor productivity and reducing sectoral costs of production and of capital.

Thus the CSF interventions are designed in order to improve the regional aggregate stock of public infrastructure and human capital, as well as the private capital stock. Providing more and better infrastructure, increasing the quality of the labour force, or providing investment aid to firms, are the mechanisms through which the CSF improves the output, productivity and cost competitiveness of the economy. These policies create conditions where private firms enjoy the use of additional productive factors at no cost to themselves. Alternatively, they may help to make the current private sector inputs that firms are already using available to them at a lower cost, or the general conditions under which firms operate are improved as a consequence. In all these ways, positive externalities may arise out of the CSF interventions.

1.4.1 The Study Team ECOTEC Research and Consulting Ltd was responsible for the overall co-ordination of the study and the ex-post evaluation of Objective 1 for the EU as a whole. In this task we were assisted by a range of partners who were responsible for the evaluation of Objective 1 in each of the 11 eligible Member States. The relevant responsibilities have been: • CIDEC Portugal • ECOTEC Research and Consulting Ltd Spain and the UK • EEO group Greece • Eureconsult Austria and Germany • Fitzpatrick Associates Ireland • IDEA Belgium • ISMERI Europa Italy • NEI Netherlands • Reverdy Associés France The Economic and Social Research Institute (ESRI) was responsible for the macro-economic modelling undertaken for the study. An expert panel consisting of a small number of high-level experts was established to provide external and independent advice at different stages of the study. This was comprised of:



73

• J. Fitzgerald; ESRI • J. Bradley; ESRI • R. Leonardi; LSE • L. Senn; Universita Commerciale Luigi Bocconi The study has been managed by a Steering Group comprising representatives of the Commission Services chaired by the Directorate General for Regional Policy.



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2.0 APPROPRIATENESS OF THE STRATEGIES ADOPTED AND PURSUED

2.1 Overall assessment

The starting point for the evaluation has been to make an assessment of the appropriateness of the strategies adopted and implemented through the Objective 1 interventions. In this instance appropriateness has been defined by reference to whether the strategies have addressed the prevailing strengths and weaknesses of the programme area (sectoral or regional). The assessment is primarily undertaken at the level of the priorities set out in the various CSFs and SPDs. Appropriateness can be assessed at two levels, firstly was the distribution of funds between different areas appropriate – geographical balance - and secondly was the mix of priorities appropriate – programme balance. We turn first to geographical balance. The evaluation is based upon the premise that the aim of Objective 1 is to have a lasting impact on economic development in the regions concerned, rather than simply boosting income in the short-run. Interventions are broadly appropriate in so far as they overcome recognised cases of market failure, such as through the provision of public goods that were previously under-provided or where market prices do not adequately reflect the costs and benefits to society. Other cases where interventions would be appropriate are where constraints on growth are recognised to exist which prevent market forces from operating effectively. Shortages of physical or human capital often fall into this category.

2.1.1 Geographical balance

The financial allocations at a European level are set out in Table 2.1 below. This reflects both the size of the eligible population within the Member State and the economic situation in terms of measured GDP. In absolute terms the main beneficiaries were Germany, Spain, Italy, Greece and Portugal. A different pattern emerges however when one examines the intensity of aid (support per head of population). Based on the planned spend (EU subventions, domestic interventions and private sector contributions) the strongest interventions were planned in Germany, Austria and the Netherlands. In the latter two cases this is a reflection of the high levels of support planned from domestic and private sources. Examining the intensity of support just in terms of EU contributions provides a different pattern. In this instance principles of equity appear stronger with the most significant levels of support available in the four Cohesion countries, particularly Ireland, Portugal and Greece. The lowest levels of support were provided to Italy and Belgium. The proposed regional typology of Member State, macro-region and micro-region does not demonstrate strong relevance in the determination of levels of financial support.



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The geographical balance of funding at the Member State level broadly follows principles of equity, although no significant statistical relationship is identifiable from the limited number of observations available7. Table 2.1 also demonstrates the strong contributions planned in many Member States to support Objective 1, either from public sources or the private sector. Calculated on a per capita basis a clear pattern emerges. In the four Cohesion states EU subventions clustered around 53% of planned programme expenditure, in Italy, the UK and France it clustered around 44% and in Germany, Austria and the Netherlands it clustered around 22%. In Belgium EU subventions were around 30% of total value. Table 2.1 Planned programme expenditure (€M 1994) Member State Planned programme

expenditure (EU, domestic and private)

Eligible population

(‘000)

€ per capita (all sources)

€ per capita (EU only)

Germany 63,100 16,447 3,837 904Spain 48,905 23,269 2,102 1,130Italy 32,439 21,133 1,535 703Greece 28,210 10,209 2,763 1,470Portugal 26,678 9,868 2,704 1,417Ireland 10,253 3,500 2,929 1,595United Kingdom 5,670 3,414 1,661 691France 5,005 2,546 1,966 860Belgium 2,412 1,279 1,886 571Austria 906 269 3,368 669Netherlands 845 217 3,894 733EU Total 224,423 92,151 2,435 1,044

Source: Adapted from National Evaluation Reports An assessment of the regional balance within Member States has not been possible on a systematic basis owing to uncertainty over the geographical distribution of sectoral

7 Estimation 2: Log (CSF aid/head) = a1 + a2* log(GDP/per head)

Log_EU_CSF_PH : Ecu per capita EU only, Log_GDP_PH : GDP per head of population.

Variable Coefficient Std. Error t-Statistic Prob.

C 7.987262 3.608748 2.213305 0.0542

LOG_GDP_PH -0.272565 0.844985 -0.322568 0.7544

R-squared 0.011429 Mean dependent var 6.823772

Adjusted R-squared -0.098412 S.D. dependent var 0.359310

S.E. of regression 0.376575 Akaike info criterion 1.047568

Sum squared resid 1.276280 Schwarz criterion 1.119912

Log likelihood -3.761623 F-statistic 0.104050

Durbin-Watson stat 0.770152 Prob (F-statistic) 0.754390



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programmes. However, there is some evidence of concentration in terms of the geographical distribution of the funds within different programmes. This appears to have been undertaken for different reasons. In some places it was to support particular disadvantaged areas of the relevant country or region, for example, it was decided in Austria that infrastructure investment would be focused on the southern part of Burgenland. The aim here can be summarised as one of promoting internal equity. Whilst in others it was intended to build on existing and potential areas of growth. In the case of Greece a strategic decision was made to focus development on the north-to-south axis of the Eastern mainland. Such an approach is focused more strongly on promoting the overall efficiency with which interventions are used. This decision may in part have been the result of limited resources and the recognition of the need to enhance economic activity around the Athens-Thessaloniki axis. In the case of France and Ireland, it was highlighted that attempts had been made to balance investment according to the population spread as well as socio-economic strength of sub-regions. In Ireland the Irish CSF focused relatively strongly on the Dublin area – an efficiency approach, although no formal allocations were made to different parts of the country. In France weaknesses in GDP – an equity approach - were also taken into account. In Italy, there was a relative concentration of expenditure on the smaller regions of Molise and Basilicata, partly because of their smaller size and because they had previously demonstrated a capacity to draw down available funds.

2.1.2 Programme balance

Identifying the precise balance of programme expenditure is complicated by the different manner by which these are categorised within the various strategy documents. To undertake a precise assessment would entail identifying the balance of activities at a Measure level which was beyond the terms of this study. The following assessment (Table 2.2) has been made on the basis of available data for priority level allocations, detailed tables are contained in Annex 3. Some anomalies are present, such as the apparent lack of planned expenditure on Rural Development or Infrastructure investment in Portugal. The lack of data for a particular field should not be taken as an indication that no investment of this type was undertaken. No comparable analysis was possible for the UK or France. Physical infrastructure investments, particularly transport, have been a significant element of nearly all Objective 1 strategies. At least €24,401m was planned to be spent in this area (11%). All countries committed between 10% and 20% of their programme to this sector, with the exception of Belgium, Germany and Austria, which allocated significantly less. No clear patterns emerge in terms of the geographical balance of this activity: Greece and Spain committed significant proportions of programme funding. Similarly, no strong patterns are visible in terms of environmental and energy plans. In general the Cohesion countries have invested a higher proportion of Objective 1 funds in physical infrastructure, although both the UK and France had strong investment orientated programmes and Ireland’s was



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relatively modest in this respect. The bulk of resources have been split between transport investment and environmental/energy projects. These allocations do not take into account Cohesion Fund expenditures and this may have influenced the balance of the programme strategy in practice. Expenditure on health care facilities and telecommunications was broadly focused on the Cohesion Countries. Table 2.2 Planned Expenditure

Micro-Regions Macro-Regions

Member States

A B NL D I E EL IR P Policy Field

% % % % % % % % % Transportation, Communications & Energy Infrastructure

- 3.2 10.71 - 16.1 21.7 22.7 19.3 -2

Environment - - - 4.8 20.93 16.34 9.0 - 6.65 Business Support/Infrastructure

76.3 86.1 61.9 63.9 37.9 32.3 15.0 35.8 58.46

Regional/Local Development

- - - - - - 25.7 4.17 18.3

Human Resources 7.6 10.4 8.7 11.8 9.8 18.1 14.5 23.0 15.6 Agriculture, Rural Development & Fisheries

15.0 - 18.0 18.7 14.9 11.1 12.9 18.9 -

Technical Assistance 1.0 0.3 0.8 0.7 0.4 0.5 - 0.1 1.0 Source: Adapted from National Evaluation Reports 1 Includes energy infrastructure 2 See note 6 3 Includes R&D and energy infrastructure 4Includes R&D, energy and health facilities 5 Includes health 6Includes agriculture and fisheries, OP breakdown not provided for planned expenditure. 7 Includes rural development Support for business development remains the key area of investment for the majority of programmes, particularly support for industrial investment and SME development. This was the key focus in Austria, Belgium and Germany. In total some €95,249m were planned to be committed in this area (45% of all allocations). In a number of cases, particularly Greece and Portugal, support for this sector is also contained in regional and local economic development priorities, which strengthened the overall support available. Relatively, it appears to be in Spain that this area received least support. Again, no strong patterns emerge in terms of the geographic balance in this area. The tourism sector was drawn out as a specific issue to be addressed by most countries. By far the highest proportion allocated to tourism was in Austria, where 13.6 % of the SPD was targeted on the development of the tourist economy. Similarly 6% to 8% of programme monies were directed at tourism in Belgium, Ireland and Italy. Explicit commitments to R&D activities varied across the Member States. Only in Austria and the Netherlands were relatively significant provisions made. In Greece,



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Spain and Germany more modest provisions were made. In other Member States this element tended to be subsumed within more general development priorities. Total planned expenditure on human resource development activity was some €30,491m (14% of all allocations). The financial allocations for human resources development varied across the Member States: from 7.6% to 23% without accounting for training measures within specific sectoral programmes/priorities. The highest proportions for this sector were seen in Ireland. Overall, the support provided for human resource activities was viewed by the national evaluators as appropriate in the circumstances. Only in the case of Greece was it felt that this area received a lower importance within the overall strategy approach than was perhaps merited. Agriculture and rural development was an important element of most Objective 1 strategies. Given the nature of the Objective 1 economies, with a relatively strong dependency on agricultural activities this would appear highly appropriate. Germany and Austria programmed most to these activities whilst, in contrast, the Greek CSF allocated amongst the least. Again though, the regional programme provisions are likely to have provided support for this sector, boosting the overall importance of this within the strategy. As regards the fisheries sector, financial allocations were highest in Spain and the Netherlands at 4.5% and 5.4% respectively. A criticism that can be levelled at some regional programmes is the tendency to try to cover too many different activities, often resulting in a lack of co-ordination and coherence between the different aspects. This has been a particular issue for the individual regional programmes in countries such as the Netherlands, UK, Belgium and Austria, although it can also be raised in the case of Italy. Complicated programme structures, with as many as 53 measures as was the case in the Netherlands, was found to weaken the coherence of strategy and objectives and ultimately to reduce the flexibility of the programme, particularly with regards to re-allocating funding within priorities. Such structures also limited the opportunities for synergies across the programme, often leaving individual elements to work in isolation despite overlapping remits. This was noted with regards to the Northern Ireland SPD, where nine sub-programmes worked virtually in isolation; in Italy where ESF activities were very fragmented, with a large number of individual projects and transportation projects were split across three OPs, one project and various regional measures. At the level of the CSF, similar decisions have to be taken. For example, the spread of the priorities selected in Greece was more comprehensive than in other Member States, with a decision made not to focus on just a few policy fields. This approach was appropriate based on the need to develop a broad range of sectors/activities in order to converge with European averages. In contrast the German CSF opted to focus its resources and concentrate on employment promotion, with strong support for industrial and SME development interventions, again considered an appropriate strategy due to labour market issues within the targeted Länder.



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2.1.3 Balance between Funds

Some concerns about the balance of ERDF and ESF funding within Objective 1 programmes were expressed in various countries. In the UK’s programmes the proportion of ESF allocations were not considered to have been appropriate by some stakeholders, with insufficient resources for labour market, education and training and social inclusion measures - despite, in the case of Merseyside, the ‘re-balancing’ of ESF and ERDF funding in the initial negotiation of the SPD with the European Commission in order to emphasise local community partnerships at the expense of ERDF infrastructure activities. The amount of ESF funding within the Austrian Burgenland programme was also considered to have been too low, and to have been an obstacle in the programme developing a comprehensive labour market strategy. Additional resources could have disadvantaged groups such as the long-term unemployed.

2.2 Strategy assessment

2.2.1 Appropriateness of general strategy

Overall the strategic approach to Objective 1 taken in 1994 is viewed as broadly appropriate in each of the member States, although some detailed concerns have been expressed in the context of particular interventions and in the manner of implementation. In no instance was the published strategy regarded as inappropriate with most national experts assessing strategies to be an adequate response to the identified needs of the area and the prevailing understanding of approaches to growth and development. Table 2.3 summarises the judgement of national evaluators regarding the appropriateness of the strategies adopted. Table 2.3: Appropriateness of Strategies Adopted in 1994 State Appropriateness of strategy adopted Austria Adequate/ Strong Belgium Adequate/Strong Germany Adequate/Strong Spain Adequate Greece Adequate France Adequate Italy Adequate Ireland Adequate Netherlands Adequate/ Strong Portugal Adequate UK Adequate/Strong Source: Adapted from National Evaluation Reports In all cases the strategies tackled the identified weaknesses of the national or regional situation. The emphasis placed on some aspects of the programme was questioned in some cases by those interviewed for the national evaluations, such as the perception in



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the Austrian programme that the focus on the issues of long-term unemployment was insufficient, but these concerns were at the margins. The need to comply with other Community policies, such as the Common Agricultural Policy and the Central Fisheries policy, was highlighted in some quarters as partly driving the strategy set out in the CSF or the SPD. This was explicitly commented on in the case of Ireland but was also present in other strategies. In the case of Greece, the emphasis on physical investment, at the expense of interventions that more directly tackled high unemployment and low employment rates, was questioned. However, at the time it was consistent with the belief that the need to improve the infrastructure deficit in Greece was the biggest challenge facing the country. On the whole, the CSFs and SPDs linked well to national and regional strategies, where these were present. In some cases they were seen as a successful mechanism for helping authorities move towards new approaches to regional development. This was recognised in both the UK and in Italy, where the Structural Funds strategy was seen as acting as a ‘bridge’ between different ‘phases’ of government policy. In a number of cases, strategies were adopted that clearly reflected existing regional programmes. This helped to improve overall synergies with external programmes but largely depended on the assumption that these programmes were equally appropriate responses to identified needs. Nevertheless, many of the programmes developed under such circumstances have undergone very limited changes during the programming period. Notable examples were Austria and Corsica, where the existence of regional and/or national development plans (Regionalwirtschaftliche Konzepte; Plan de Développement de la Corse), underpinned the programmes adopted through the pre-identification of key development issues; established partner engagement; and the preparation of administrative expertise. This was also true in Germany where the regional Operational Programmes closely reflected the existing regional support policies promoted by the Länder and to an extent in Spain where the administration of the autonomous regions allowed for the development and implementation of more appropriate strategies. A detailed assessment of the social and economic conditions and/or the supply and demand for specific interventions allowed for a realistic identification of regional/sectoral needs and the development of appropriate strategies for meeting these. In Belgium two region-specific studies were used for the development of an appropriate strategy, with work on Hainault’s labour market and macroeconomic conditions underpinning the Objective 1 programme. Similarly in Ireland, through the late 1980s and early 1990s, an extensive debate and consultation preceded the development of the country’s CSF. This process contributed to identifying those social and economic issues to be addressed, and engaged a wide range of actors in the development of the CSF. Other strategies benefiting from previous analysis included Portugal and Italy, particularly due to the latter’s absence of pre-existing development strategies. In



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Portugal three strategic documents were drawn upon during the development of the country’s CSF: a social and economic analysis; strategic options; and the Regional Development Plan. This allowed for the identification of Portugal’s key development issues and for various options for the CSF to be considered. Nevertheless greater involvement of the Portuguese sectoral ministries in the initial development of the strategies would have allowed for greater appropriateness and fewer subsequent changes in some areas. In Italy the development plans were preceded by an economic survey, an analysis of administrative demands and an assessment of available regional and national co-financing resources. These contributions to an extent reduced the obstacle of not having other development strategies on which to build. A broad recognition of key development issues and opportunities and constraints was also developed through consensus and partnership working. The appropriateness of strategies was considered to be enhanced where they continued and/or complemented actions under the previous Objective 1 programming period (1989-1993). This allowed regions to enhance the appropriateness and implementation of strategies by learning from previous experience of good and bad practice and building on earlier initiatives. This was seen, for example, in Northern Ireland where the region’s transport sub-programme complemented the ‘external gateways’ developed between 1989 and 1993 by turning to the development of ‘internal gateways’. Some of the German programmes also built on earlier transport interventions. Equally the programme in Guadeloupe continued large infrastructure work initiated under the previous programme. The development of strategies in this way allowed for the evolution of programmes in line with key issues and the potential to support ‘proven’ activities. The role of the programme partners in encouraging more appropriate strategies is complex. The involvement of social and economic partners in the development of Spain’s strategy was recognised as strengthening the knowledge of demand for specific interventions. The most significant criticism of the strategies was that they did not constitute much more than the sum of their parts. Whilst each was an adequate response to the identified needs in particular fields there was less indication as to how these different elements contributed towards an overarching development strategy. This was a charge levelled by the national evaluators for the UK, Belgium and Italy but in the view of this synthesis evaluation can be applied to all CSFs and SPDs. There is a strong question as to whether the support provided has been sufficient to activate a development process, rather than simply responding to national or regional needs. For example, in Italy, the national experts concluded that whilst the overall strategy approach was broadly appropriate it was weakly specified in practice. There were also some criticisms levelled at particular aspects of the overall strategies. For example, the detailed strategy for delivering programme objectives in the Fisheries sector in Spain was weakened by a lack of previous experience in this area on which to base the new strategy. In Austria the need for a stronger focus on



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particular labour market issues, such as the long-term unemployed, was expressed by some respondents in the course of the evaluation and, in Greece, it has been argued that the human resource interventions adopted did not sufficiently take into account national or regional issues, such as skill gaps. In this sense, although the general strategy was broadly appropriate it can be the case that the manner in which it is operationalised can, in some instances, be debated more strongly. This point is further considered in the assessment of the effectiveness of the interventions. Equally programmes within some other countries were considered to have excluded important issues relevant to specific regions, such as population growth in Flevoland and urban communications and local development in Italy. We briefly assess the approach taken in some of the more common policy fields below. These are related to the key themes identified in the Terms of Reference against which to assess the effectiveness of Objective 1, with the addition of Regional Economic Development, Active Labour Market Support and Fisheries.

2.2.2 Regional Economic Development

Most programme strategies adopted an approach to regional development focused on promoting indigenous growth, moving away from earlier strategies seeking to encourage inward investment. This was particularly evident in the programmes in the UK, Austria, Belgium and Italy, but also in other regions/countries. This strategic approach is broadly considered to have been appropriate as a means of reducing the reliance on investment coming from outside of the region and increasing the sustainability of internal growth, particularly with regards to better exploiting the human resources of the targeted regions. In only two cases were significant reservations raised as to the overall appropriateness of the approach to regional economic development in the national evaluations. In Flevoland it was considered that the implications of the unique demographic position of the region was not appropriately recognised by the strategy. In particular the tension between underlying population growth trends and promoting economic growth was inadequately addressed. In Portugal, the financial allocations for the regional OPs were not believed to have adequately reflected their ambitious strategic objectives, reflecting on the balance between competing priorities within the national CSF.

2.2.3 SME development

Spend on SME development was proportionately highest in the Northern European programme areas, such as Germany, the Netherlands and Austria. The appropriateness of the approach adopted is regarded as broadly positive by the national evaluators with programmes supporting SMEs seen as being targeted on identified needs, particularly in Portugal, Germany, Belgium and the Netherlands. In Germany the programmes’ approach to SMEs was found to be very appropriate since support was urgently needed in the lights of the declining primary and industrial sectors. Equally the Portuguese strategy towards SMEs was considered to be very



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suitable to identified needs, being both well-balanced in the support provided and with regards to geographical spread. This area of intervention was felt by many observers to have been previously neglected in several countries, often despite their high dependence on companies of this size. The Objective 1 strategies overcame this previous omission. The targeting of particular strategies was also seen as appropriate in one case. In the Flevoland programme, despite misgivings about the overall strategic approach highlighted above, the focus on the development of a specific group of SMEs - those in ‘high-added value’ industries - has been widely praised as being particularly appropriate to regional needs and circumstances.

2.2.4 Research and Development (R&D)

Strong differentiation can be drawn when considering the appropriateness of strategies adopted in the field of R&D. The smaller regional-scale programmes of the UK, Netherlands and Belgium spent a larger proportion of overall SPD spend on R&D in comparison to macro- and member state- level CSFs. This reflected a new emphasis on innovation-driven growth. In these cases the approach adopted was considered highly appropriate for R&D activities, with the Dutch programme, for example, providing measures such as the Regional Technological Plan, R&D facilities and R&D funds for SMEs. Elsewhere, the approach adopted towards R&D is considered to have been insufficient. There is general agreement that R&D was an area in need of intervention, but criticism has focused on the scale and type of interventions chosen. Nevertheless such observations are perhaps better made with hindsight since the interventions promoted within these regions were largely typical of their time, with a large emphasis on scientific developments. In Portugal, for example, the programme focused too greatly on strictly scientific activities and failed to encourage long-term collaborative links between research institutions and the business community. Similarly the Land actors in Austria have been criticised for paying insufficient attention to RTD to promote the attractiveness of the region for investment. The scale of intervention within R&D was considered inappropriate in Greece and the German Länder, with the evaluators believing that more finance should have been provided for such activities. Whilst programmes in Greece were successful in increasing R&D expenditure, their relative gains towards European norms were often offset by equal or greater expenditure in the EU’s northern Member States. In Germany a significant 4.5% of the European funding for the CSF was allocated to R&D and innovation. However, given that these activities had almost completely disappeared after German unification, this was considered a relatively modest share.



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2.2.5 Transport

The underlying importance of transport infrastructure for economic development was recognised in many of the strategies. The appropriateness of this approach varies however. In Greece weaknesses in public infrastructure had been recognised as key factor contributing to the country having social and economic indicators lower than the corresponding EU averages. As a result the Objective 1 CSF’s focus on physical infrastructure, and transport in particular is regarded as appropriate for promoting convergence with the rest of the EU and providing a foundation for long-term economic development. Similarly, the Irish CSF’s focus on transport is regarded as an appropriate approach for underpinning the future economy, improving internal and external transport infrastructure on an integrated basis. Nevertheless there remained some CSF/OPs in which the approach taken to transport was not considered appropriate. This often had more to do with the focus of the transport investments, rather than questioning the identified need per se. The appropriateness of strategies for transport was highlighted in Germany, particularly for supporting business development through improved connections between business centres and technology parks, and in Belgium and the Netherlands for strengthening Trans-European Networks (TENs) and reducing identified bottlenecks. In comparison, in Portugal the strategy was regarded as a suitable catalyst for development at local and municipal levels, but less suitable for improving national and transnational accessibility. Levels of investment in transport were considered inappropriate in some countries. Most notably in Greece and Spain it is considered that the financial resources concentrated on this sector could not be justified by their potential contribution to growth rates. The proportion of resources allocated was thought to be out of proportion to the economic gains they might bring. In contrast, in Corsica provisions within this sector were not believed to be adequate for the island’s aspirations in relation to economic development.

2.2.6 Active Labour Market Support

The labour market strategies adopted were viewed as broadly appropriate in most programmes. In Portugal, the CSF was seen to address the key issues for labour market conditions. This point is picked up further in the effectiveness analysis. In Ireland the CSF’s human resources development programme adequately addressed the key issue of high unemployment, although measures related to tackling long-term unemployment were weak. In Germany, the main objective of the CSF to create new jobs and safeguard existing ones was considered appropriate in the light of prevailing labour market conditions. Some modest concerns have been highlighted with respect to the appropriateness of the labour market strategies adopted. It was believed that in some countries, including Greece and Ireland, that programmes failed to address some specific labour market issues, particularly those contributing to high levels of unemployment and/or long-



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term unemployment. In Greece, where intervention in this field was very much needed, the formal and legalistic approach of the programmes was considered inappropriate for tackling the exceptionally high levels of unemployment amongst young people and women and low employment levels. In the case of Austria the limited resources available to this element of the strategy represented insufficient attention for an important aspect of the regional situation.

2.2.7 Education and Training

The approach towards education and training issues is regarded as broadly appropriate across all programmes. The Irish CSF’s manner of addressing low levels of educational attainment and upskilling was considered a particularly good example of an appropriate response to identified needs. Similarly education and training measures within Flevoland’s programme targeted groups that experienced greater difficulties in acquiring jobs; again this was an appropriate approach considering the particular regional circumstances. In Portugal the overall approach was regarded as broadly appropriate to identified needs and some elements were praised for their innovative contribution. Within the overall strategy though the Operational Intervention for Education (PRODEP II) and Operational Intervention for Support for Human Resource Training and Management (PESSOA) initiatives failed to be sufficiently integrated, under-exploiting potential synergies. The appropriateness elements of the strategies adopted towards education and training interventions was questioned in the national evaluation in a number of countries. In particular, in Greece the CSF’s approach to education and training provisions was not considered to have been sufficiently tailored to the needs of the labour market. In particular the programme failed to address the tertiary education sector’s focus on the needs of the public sector, or to fill existing gaps in this sector with regards to secondary level vocational education and further adult education. The balance of ESF funding was also questioned in Austria and UK, where greater support for human resources development would have been more appropriate.

2.2.8 Agriculture and Rural Development

The approach towards agriculture is broadly regarded as appropriate and relevant to identified needs. On a positive note, measures addressing the processing and marketing of products as a means of diversifying economies depending heavily on agriculture were regarded as particularly appropriate. Nevertheless, in interviews conducted for the national evaluations, concerns were raised by some stakeholders within the sector both with respect to the levels of resources available and the approaches adopted. The main concerns related to the balance of the strategies adopted. In the Netherlands, the approach adopted was perceived to create more unemployment rather than promoting job creation. Whilst in Greece it was considered that the CSF should have focused more on support for smaller farm units, to mitigate a trend of CAP transfers increasingly going to larger



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specialised units. Resource issues were also raised in two instances. In Ireland it was thought that the strategy taken for agriculture concentrated too greatly on one measure, the Compensatory Allowances (60% of programme expenditure). In Austria the scale of EAGGF resources was considered to have been inadequate in light of the importance of the agricultural sector to the Burgenland region. The approach to rural development was praised in some countries. In particular the focus of the Flevoland programme on improving the renewal of villages, basic facilities and investment in tourism was considered very suitable for addressing the region’s need for village renewal. However, in other areas programmes failed to adequately address the need for local development in rural areas. This was particularly true of the German programmes where stronger rural development initiatives would have been appropriate alongside the village renewal and environmental improvements measures.

2.2.9 Fisheries

Much of the praise and criticism of the approaches to agriculture were mirrored for the fisheries sector. Like agriculture, the approach was considered to be broadly appropriate, particularly with regard to diversifying local economies through encouraging more processing and marketing of fisheries products. However, the appropriateness of promoting activities which would inherently reduce employment in this sector, such as the reduction in the fishing fleet, were not seen as appropriate for addressing key issues in Objective 1 regions, namely high unemployment levels and low levels of transferable skills. On the other hand, efforts to reduce the fishing fleet were regarded as particularly appropriate in Greece for their part in the required reduction in over-fishing and in creating and safeguarding jobs. In Portugal vocational training measures for the fisheries sector were not considered to be greatly appropriate to the identified needs and in Ireland it was thought that greater emphasis should have been given to the modernisation of the fishing fleet.

2.3 The strategies implemented

In practice, the strategies adopted at the outset of the programming period did not change significantly over the following years, as demonstrated in Table 2.4. On the whole this is because the broad thrust of the strategies remained appropriate over the following years. There was sufficient flexibility to introduce new activities where these proved to be desirable. However, to an extent, it also represents the focus of programme authorities on implementation of the adopted programmes, with a key concern being to ensure the absorption of financial resources available. Every Objective 1 strategy underwent changes with regard to its financial allocations. Such changes were both as a result of strategic changes emphasising new or more successful areas of the CSF/OPs and a means of programming the monies received through indexation to current prices. In some Member States indexation monies were not used to compensate for inflation, but rather utilised for re-programming. The



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clearest example of this use of this ‘additional’ finance was seen in Italy where it was used to support a series of new Operational Programmes addressing arising issues such as security and employment pacts. For some programmes these changes were quite significant. Key examples include the diversion of finance to the Portuguese OP for the Azores region largely to compensate for storm damage; the considerable increase in finance for the Italian Airport OP; and reductions to the Greek Combating Exclusion from the Labour Market OP and the Italian Telecommunications and Fisheries OPs. However, when considered against the overall strategy the changes were less significant. New measures and new programmes were introduced, into SPDs and CSFs respectively, in a small number of countries. Measures supporting ICT were introduced in Spain, the UK and France. In addition the Merseyside programme added a further fisheries measures and the programme for La Reunion created a measure for supporting secondary colleges. In Italy the Sicilian programme created measures supporting a highway and urban recovery. In part these were a reflection of experience gained over the programming period. With regard to new programmes, Italy experienced the greatest change with several new OPs and a support programme for areas affected by the 1997 earthquake. Similarly in Portugal a new special programme was created for the Alqueva region, drawing out and complementing measures which had previously been incorporated in other OPs. Table 2.4: CSF/SPD Adjustments 1994-1999 Financial

Adjustments New measures New programmes

A Y N N B Y N N D Y N N E Y Y N EL Y N N F Y Y N I Y Y Y IR Y N N NL Y N N P Y Y Y UK Y Y N Source: Adapted from National Evaluation Reports Within the reprogramming activities it is useful to highlight the automatic reprogramming that occurred in the Italian CSF between different OPs. From 1996 the Italian Treasury proposed the automatic reprogramming of Structural Fund expenditures if agreed commitment or payment targets failed to be met. The impetus for this was the need to reduce public expenditure whilst guaranteeing the absorption of available Structural Fund monies. The principle of reprogramming was agreed by



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all relevant national and regional partners within Italy and subsequently between the Commission and the Italian Government. The method adopted was technically straightforward, based upon achieving certain threshold levels by the end of each year, but highly complex in terms of partnership working. This has proved to be a relatively successful means of improving the absorption of available resources, although focusing on achieving spend targets rather than programme objectives. On the whole the pattern of actual expenditure has followed the planned profile fairly closely. Significant changes are not apparent between Priorities or between Regional Programmes. This is not to say that changes did not occur, merely that these were focused at the Measure level and so did not have a substantial effect on the overall strategy implemented. As illustrated in Tables 2.5 and 2.6 below. The principle area where actual expenditure differed from that planned was in the amount of private sector investment realised. In nearly all cases realised levels were significantly below that originally planned. The overall effect of this was to reduce overall expenditure levels (so increasing the effective intervention rate) rather than to be replaced by alternative non-EU finance. This is clearly illustrated in the detailed Tables set out in Annex 3. Table 2.5: Planned Expenditure (€m 1994)

Total ERDF ESF FIFG EAGGF Other public PrivateGermany 63,100.50 7,431.70 4,459.00 91 2,881.70 11,175.60 37,061.30Spain 48,903 15,944 6,047 995 3,314 12,751 9,853Italy 32,438.60 9,660.00 2,739.00 233 2,228.00 10,327.00 7,251.60Greece 28,209.61 9,907 2,773.30 141.661 2,184.39 7,250.13 5,953.15Portugal 26,678.20 8,723.10 3,148.10 213 1,894 6,056.10 6,641.10Ireland 10,253 2,523 1,953 47 1,058 2,244 2,428UK 5,670.75 1,331.82 747.2 34.92 245.88 1,733.22 1,577.71France 5,005 1,193 525 40 431 1,941 874Belgium 2,411.69 515.92 166.7 0.37 47.01 747.15 934.54Austria 1,039.97 115.298 34.987 0 26.438 277.907 661.113Netherlands 844.458 83.826 41.77 21.857 11.357 430.675 254.973Total 224,554.78 57,428.64 22,635.06 1,817.81 14,321.78 54,933.79 73,490.48 Source: Adapted from national evaluation reports The changes that did occur at a Measure level were partly a response to changing circumstances and partly driven by a desire to ensure full absorption of available resources. These reasons are explored more fully below. On the one hand all programme strategies were sufficiently flexible to incorporate changes to the adopted strategy when desired. On the other, however, there seems to have been little impetus to undertake such a strategic reviews. In Greece, for example, the national expert reports that “Under the (heavy) burden of implementing the budget of complicated and complex operational programmes, the decisions about policy retreated to the background, receiving little attention” (p.4-96).



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Table 2.6 Estimated Actual Expenditure (€m 1999) Total ERDF ESF FIFG EAGGF Other public Private

Germany 48,243.30 7,267.00 4,386.20 72.3 2,814.80 5,109.30 21365.4Spain 40,143.63 16,133.20 6,298.17 1,005.64 3,169.69 13,536.94 naItaly 30546.9 9514.8 2125.4 207.2 1924.7 21032.1 na2

Greece 27,725.73 11,193.86 2,887.04 137.059 1,917 7,547.96 4,042.46Portugal 24,389.60 8,813.90 3,224.90 10 1,797.00 6,125.50 4,417.60Ireland 10241.7 2607 2043.3 48.1 1086.5 2462 1994.9UK1 4,803.51 994.04 802.53 34.03 235.58 1,302.01 593.22France 4,019 779 481 12 309 1236 522Belgium 2,030.25 371.83 137.05 0.39 36.83 582.83 901.32Austria 1,039.97 115.298 34.987 0 26.438 277.907 661.113Netherlands 746.122 71.391 24.504 18.408 11.021 395.394 225.405Total 193,929.72 57,861.31 22,445.08 1,545.12 13,328.91 59,607.94 34,723.42

Source: Adapted from national evaluation reports 1 no data for Highlands and Islands 2 included in Other Public category The main area of difference between planned financial implementation and its realisation was in terms of private sector contributions. In most cases the amount of private sector support realised was significantly below initial expectations, although in a minority of cases (Belgium and Holland) the realised amounts were higher. There is no evidence that this had a significant impact on the strategic approaches adopted in any case. With regard to public funding, there was significant reduction in public expenditure following the election of a new Italian government in 1996 leading to some changes to ensure optimal absorption of European monies.

2.4 Forces for change

The forces driving reprogramming between 1994 and 1999 can be broadly split into two types. Those that were reactions to changes in the external environment and those that were reacting to issues internal to the programming and implementation process.

2.4.1 External forces

External forces can be grouped under three key headings: natural disasters; changes in the social or economic context; and changes in the wider policy environment. Natural disasters: Following the severe weather conditions suffered in the autumn of 1997 in both mainland Portugal and the Azores, Portugal made changes to its CSF in order to accommodate needed support for the affected agricultural sector, with monies largely transferred from the OP for Economic Fabric Modernisation. Furthermore it was decided to draw out those elements of the OP for the Promotion of Regional Development Potential to create a Special Programme for the Integrated Development of the Alqueva region. In Italy, a special re-programming of around €100m was



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focused on areas outside of the eligible Objective 1 region to address the damage resulting from the earthquake suffered in 1997. Changing social and economic context: Various changes were made as a result of evolving social and economic conditions. The Netherlands reduced its education and training focus in response to a significant fall in unemployment levels. The adjustment resulted in a new combination of training and working interventions for specific unemployed groups. Similarly the OPs for employment and training in Spain underwent significant reprogramming as a result of improvements in the economic performance of the areas it targeted, in particular a reduction in unemployment. Significant Inward Investment - There are a small number of cases where changes were made to Objective 1 programmes as result of significant inward investment opportunities within the region. Toyota’s decision to locate itself within the French Hainaut region contributed to changes to the programme strategy, increasing expenditure for a range of supporting interventions. Likewise in the UK’s Merseyside programme the introduction of a new ICT measure was partly due to by a major bid for funding from IBM which later fell through. New domestic policy environment: New measures were introduced in a series of programmes, at least partly in response to a changing policy environment. This included the promotion of ICT in the UK, Spain and France; and an additional fisheries measure in the UK. The increasing importance attached to social inclusion was also reflected in some strategy changes. Following the greater importance attributed to equal opportunities by Spanish national and regional governments, measures were also added to programmes Spain in order to increase the emphasis of equal opportunities, particularly for women. Italy introduced a series of new Operational Programmes within its CSF during the 1994-1999 programming period. These included programmes addressing security infrastructure, territorial employment pacts and project stocks Evolving European agenda – The changing European policy context contributed to various changes within programmes. This was particularly true of the increasing emphasis on ICT, as evidenced by the introduction of new measures addressing this issue in the UK, Ireland and France, and an increased emphasis on this field in Greece in the latter stages of the programming period. Another area of increasing strategic importance was the human resources agenda, with various CSF/OPs putting a greater emphasis on ESF-funded activities as the programming period progressed. This was seen in Portugal, with an increase in spending for human resources and employment activities; in Ireland, with a re-allocation of funding for initiatives targeting early-school leavers and the long-term unemployed; in France’s introduction of support for the building of education colleges in Reunion; in the UK’s increased focus on social inclusion; and in Italy with a new Operational Programme for the Territorial Employment Pacts.



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To an extent the environmental agenda was also increasingly recognised by the Objective 1 programmes, with for example a reallocation of funding towards activities in this field in Ireland and Portugal. The impact of changing regulations and agreements within the fisheries and agricultural sector was also recognised as the cause for changes to the relevant OP within Spain.

2.4.2 Internal Forces

Internal factors were most commonly the reason for reprogramming of resources during the implementation of the programmes. These factors ranged from issues concerning financial absorptions and poor levels of demand, to unexpected delays in implementation and a changing European policy agenda. Financial absorption – The most common cause of reprogramming has been the difficulties in absorbing the resources available in certain priorities or measures. This has resulted in changes in the balance of measures or priorities in order to assure the full commitment of available funds. This was recognised as the justification for transfers of monies between priorities in the Netherlands from commercial infrastructure to business development activities. Similarly the capacity to absorb resources led to budget adjustments, mostly between measures, in Greece. In Italy the system of automatic re-programming has already been described above. Similarly in Belgium resources were moved to those areas of the programme considered to be more successful. Significant re-programming of resources took place in a series of programmes, reallocating underspend monies to areas of greater demand and/or areas where other public or private contributions had not been as high as originally planned. This was the case in Spain; in Ireland, where around €163m was reallocated primarily to measures addressing farmyard pollution, roads, the long-term unemployed and early school leavers; and in Greece where the OP for Combating Exclusion from the Labour Market the OP for Road Axes and Accessibility were reduced by 43 and 21 % respectively. Over-estimation of available co-financing – related to the absorption problems highlighted above, reprogramming was also required as programme managers realised that initial co-financing assumptions were not realistic. It was recognised in a series of cases that the financial allocations originally adopted were poor estimates of supply and/or demand. This was frequently the case with regard to the contributions from the private sector, as was noted in the case of Portugal. In Northern Ireland the heavy reliance on mainstream public funding meant some parts of the programme were forced to be adapted in a response to changes, for example in the block grant awarded to the region from UK central government. Various other programmes suffered problems as a result of specific Ministry delays and procedures. In Austria ESF activities were delayed in 1996 due to difficulties in mobilising co-financing from the Labour Market Service. Equally in the Netherlands agricultural measures suffered co-financing difficulties with the Ministry of Agriculture, Nature Conservation and Fisheries and relatively poor co-financing opportunities for SME advisory support and R&D initiatives.



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Indexation - The indexation of financial allocations contributed strongly to the re-programming of Objective 1 programmes. As described above, the additional funds were rarely used to compensate for inflation but were used to create new fields of intervention or to support successful programme areas. Reprogramming of this nature was usually reinforced with decommitted and/or underspent monies from other areas of the programme. Examples of this use of indexation monies was evident in Italy, where they contributed to the creation of four new Operational Programmes and additional elements and resources in existing programmes. Poor take-up of activities – Related to poor financial absorption, some programmes were found to be inappropriately targeted during the course of implementation, leading to poor take-up of activities. Little appears to have been done to pro-actively support project development in under-subscribed measures, with capacity issues within the Programme Secretariats cited as being an obstacle for such activities. Examples of this situation include the measure supporting agricultural diversification in Northern Ireland and the lack of project proposals for the fisheries measures within Flevoland. The latter region’s culture and a lack of diversification opportunities resulted in low levels of interest in this measure and a subsequent transfer of monies to other measures with a greater demand. Likewise, in France the funding allocated to measures promoting social and health activities was partly re-programmed due to a lack of suitable project holders; and in Ireland there was low demand for some measures under the OP for agriculture, rural development and forestry, and the OP for industrial development. Long lead-times/programme delays – Initial delays to the implementation of programmes and the long lead-times of large-scale projects was instrumental in prompting changes, especially with regards to the expenditure plans of programmes. This was particularly evident in the UK where SPDs were subject to late negotiations, and ERDF spending was very low in the first two years. The Irish CSF suffered significant delays in large-scale projects such as Dublin port tunnel, the Dublin light rail project and the national conference centre. This resulted in various revisions of the spending plans to account for unspent monies, often with significant ‘end-loading’ of financial allocations in the latter years of the programmes. Delays were also, in some countries, the result of delays in securing co-financing. The focus of the Austrian programme around ‘lead projects’ which were expected to draw in additional investment was questioned both during the programming period and the ex-post evaluation. The risks involved in such an approach were increasingly recognised and the emphasis on this form of economic development was altered slightly during the programme. Strategic push for more successful activities – In several counties changes made to their CSF/OPs during the programming period, were an effort to move away from areas which had suffered delivery problems, and towards reinforcing those parts of the programme which have already proved successful. In Belgium financial allocations were diverted to the programme’s AIDE (Aides à l'investissement en faveur des



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extensions d'entreprises et créations de petites entreprises) and INVEST: (Fonds de capital à risque) measures, due to their relative success. This was also the case in France where poor planning and a lack of dynamism within the farming sector resulted in a transfer of funding from the EAGGF to the ERDF. Likewise in France the success of measures supporting mixed housing development zones, business sites and urban renewal saw a significantly increase in their funding allocated.

2.5 Factors restraining reprogramming

Whilst various programmes adapted to evolving policy agendas and social and economic conditions, there were 6 countries which made very few changes, or relied on changes to the financial balances within the programmes rather than introducing new measures and/or programmes (Austria, Belgium, Germany, Greece, Ireland and the Netherlands). In some cases this lack of adjustment was in spite of evolving circumstances which would have rendered a strategic change appropriate. Several reasons for this inflexibility were highlighted by the evaluation. • Delivery problems – Difficulties in implementing certain elements of a

programme dissuaded those responsible from changes which would have implied a greater concentration on ‘troublesome’ activities. This was the case in Ireland where it was believed that an increased financial allocation for transport measures would have been appropriate, but difficulties in delivering these elements of the programme dissuaded programme managers from making such adjustments.

• Limited management resources – The limited time and resources available to the

programme secretariats and programme monitoring committees restrained the opportunities for adapting strategies significantly for many programmes. It was felt in Greece, as in other countries, that these administrative structures had to focus primarily on the financial spend of the programmes and on problem-solving within the existing strategy, subsequently leaving little time and opportunity for pursuing considerable changes to the strategies adopted. This limited capacity was found to be accentuated with regards to innovative projects/measures, a problem noted in Italy and Greece.

• Short programming period – Although increased from the previous programmes,

some programme managers have argued that the relatively short programming period for the 1994-1999 Objective 1 programme provided only a small window of opportunity for considerable changes to the strategies adopted. Once the programmes had been adopted and implementation properly started, there was in many cases not much time remaining to respond to changing circumstances effectively before the end of the financing period. Such an obstacle to change was recognised in Greece.



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2.6 Conclusions

On the whole the strategies adopted under the 1994-1999 Objective 1 programming period were appropriate and relevant to the circumstances in which they were set. There were a limited number of cases where the balance of activity in particular strategies, or the detailed approach adopted, was questioned but this was not a significant concern. The factors influencing the choices made in drawing up strategies primarily focused on prevailing socio-economic conditions, although a desire to continue actions previously supported under Structural Fund programmes and, to a certain extent, consider potential future changes to the Structural Funds also played a part. In the latter case, actions which were clearly European policy priorities were strongly favoured in many programmes, occasionally with only a limited understanding of their relevance and role in the context of that particular strategy. In overall terms, there has been a concentration of Structural Fund investment towards the Cohesion countries. However, total levels of spending per head on the structural interventions were actually higher in Germany, Austria and the Netherlands because of the greater mobilisation of national and/or private sector resources. Within individual countries and regions the allocation of resources also often sought to reflect needs but other factors – such as strategic priorities, efficiency considerations and/or capacity to absorb resources – also exerted an influence in particular cases. Reduction in internal disparities tended not to be an important explicit objective, with priority implicitly given to the achievement of overall improvements in national or regional performance. The interventions were comprehensive given the framework set by the relevant regulations – in some cases perhaps overly so – and they are judged to have been broadly appropriate. They reflected the particular needs of the individual regions – being typically based on extensive prior analysis, closely aligned with established national and regional strategies and involving a high level of continuity with the structural interventions of the preceding programme period. Interventions were typically based around addressing identified market failures and a range of constraints on growth. Compared with the previous programming period they involved a greater strategic emphasis on the stimulation of indigenous potential rather than outside investment. Nevertheless, they mostly lacked a clearly articulated underlying ‘model’ of how the particular region could best develop. Along with the excessive number of separate measures in some programmes and other factors, this probably worked against the achievement of a truly integrated approach. Infrastructure has been a high strategic priority in the Cohesion countries and Objective 1 regions in the Netherlands, UK and France, accounting for at least



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€24,401m (11%) in planned spending and €34,656m in actual spend8. In most cases, at least, this emphasis is judged to have been justified. Support for business development has been a strong focus of actions across all Objective 1 regions – particularly in East Germany and the micro-regions - correcting an under-emphasis in the previous programming period. Such interventions accounted for at least €95,249m (45%) of planned spend and for €73,653 (34%) of actual spend, with the lower than expected levels of private sector investment largely responsible for this shortfall. There was an under-emphasis in the Objective 1 strategies on R and D at the start of the planning period, especially in the Cohesion countries. Stronger strategies are evident in relation to the micro regions and Eastern Germany. The growing spend on R and D in the EU’s leading regions, and the lack of a clear focus in the Objective 1 interventions on stimulating activities involving the private sector, limited the extent to which disparities could be addressed. Human resources were an important priority across all regions, particularly in Ireland and the UK. Nevertheless, there was a potential case for a greater emphasis on this aspect, especially in Austria. Total planned spend on such interventions amounted to at least €30,491m (14%), with actual spend of €40,099 (18%). Whilst rural development was an explicit focus in some regions it is difficult to separate spending on agriculture from that on wider development actions. Some programmes involved significant new elements, such as village renewal, but – in common with fisheries – interventions in relation to agriculture itself tended to be driven, or at least constrained, by wider Community policies rather than the particular objectives or priorities of the region concerned. The strategies as implemented were in large measure those planned at the outset, at least in terms of the balance between identified Priorities. There were changes in most Member States but these were primarily at Measure level and were not large enough to change the fundamental strategies adopted. In some instances these changes do influence the relative balance of expenditure between particular types of activity, such as business support or transport infrastructure, but the data is not sufficiently strong to draw general robust conclusions in this area. On the whole the programme process proved to be sufficiently flexible to accommodate the issues arising. Changes to strategies were largely driven by considerations of financial absorption rather than changing strategic needs, although particular ‘events’, emerging policy priorities such as ICT and evidence of the success, or otherwise, of particular actions also drove a range of changes. In this respect reprogramming decisions were usually finance-led rather than objectives-led. 8 The figures will be something of an understatement because of the exclusion of such spend within regional programmes which have not been included within the case study work, as well as other specific issues identified in the analysis.



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Programme mangers were positive about the multi-annual planning approach. The six-year programming period was viewed as a good opportunity to adopt appropriate medium-term development programmes. This approach was particularly welcomed in countries which usually rely on annual planning, although delays did result from them accustoming themselves with this approach. Despite capacity issues within many of the programmes administrative bodies, the on-going monitoring of the programmes, and in particular the mid-term evaluation process were viewed as valuable tools for ensuring the continued appropriateness of the programme strategies. In Ireland these procedures were recognised as important mechanisms for taking on board continuing debate and recommendations concerning the programmes, and an opportunity to make re-programming adjustments. The available structural fund and national co-financing resources were in large measure absorbed – estimated absorption rates are put at 99% and 100% respectively. The private sector contribution was only around 54% of the planned figure which was clearly aspirational rather than effectively committed at the planning stage.



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3.0 EFFECTIVENESS

3.1 Introduction

An assessment of the effectiveness of Objective 1 is based on the extent to which expected effects have been obtained and objectives have been achieved. Effectiveness is usually calculated by relating an output, result or impact indicator to a quantified objective. It implies an assessment of performance against the anticipated outputs and results. Ideally one would be able to identify a hierarchy of targets in the following sequence:

[CSF/SPD action] Direct output achieved

Intermediate target attained Final target attained.

This sequence of targets can be illustrated by means of the important transport programmes of the ERDF element of the CSF:

[Road construction undertaken] Roads completed (km)

Travel times reduced (minutes) Activity boost (GDP, productivity, etc.)

However, such a rigorous assessment of Objective 1 for the 1994-1999 programming period has been largely constrained by a lack of quantified objectives, the limited initial targets – which mostly focus just on outputs - and a diverse, often substantially out-of-date and non-comparable information base for the outputs and results which have been obtained. Very often the available indicators are programme specific and nationally specific. This makes robust comparisons difficult. Consequently the assessment of effectiveness is heavily reliant on qualitative findings drawn from the national evaluation reports and based upon programme level interviews undertaken. The assessment has been based upon the analysis of a sample of selected programmes (see Section 1). Whilst this covers some 70% of the value of Objective 1 it does not allow the aggregation of outputs and results to provide a figure for the total achievements of Objective 1. Outputs and results are thus likely to be understated. The evaluation focuses on the effectiveness of the interventions in addressing a number of thematic topics, rather than calculating the overall outputs produced, or results achieved, against particular indicators. Five key priorities were identified in the Terms of Reference for analysis. These are:

• Transport • SMEs



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• Research and Development • Education and Training • Rural Development

They are dealt with sequentially. Not all aspects of Objective 1 are dealt with by these themes and the evaluation also considers the effectiveness of actions supported by the individual Funds, which are not captured by the specified themes. This is considered in the sub-section that deals with Fund level objectives. Finally we address the effectiveness of the interventions in addressing horizontal themes such as the environment and equal opportunities.

3.2 Effectiveness by identified theme

3.2.1 Transport

Transport interventions supported through Objective 1 were primarily focused upon three broad objectives:

• Improving the external accessibility of eligible areas • Improving the internal accessibility of regions • Overcoming problems of urban congestion

A strong geographical dimension can be observed in the distribution of transport investments between, and within, Member States. Transport interventions featured most strongly in the more peripheral Objective 1 programmes of Portugal, Greece, Spain and Ireland. It was in these areas that the interventions were most strongly directed towards all three objectives identified above. In Italy there were also significant investments made but the focus here was primarily on improving internal accessibility difficulties. In the remaining Member States the interventions were of a more modest nature and largely focused on improving internal accessibility. Transport-related interventions in these cases were designed rather to fill gaps in the existing transport networks. Exceptions to this occurred in both the UK and France Objective 1 programmes where improvements to external accessibility were a feature of regional programmes targeted on peripheral areas (Northern Ireland and the DOMs). The predominant trend has been to concentrate transport-related interventions on those areas with the greatest deficiencies in their transport infrastructure. This is particularly true for Spain, Italy and Portugal, where large-scale transport infrastructure has been constructed in those areas in greatest need9. For example, in Italy, the incidence of road-building interventions varied strongly across the regions. They occurred most commonly in Basilicata and in Sardinia, where particularly pronounced needs were identified. Of the 260km of new roads constructed in Italy 9 See Spanish report, p. 34; Italian report, p. 41; Portuguese report, p. 45



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with support from the ERDF, half were in Sardinia.10 A similar picture emerges in Germany: while the ROP for Saxony-Anhalt did not contain a specific priority related to transport, Mecklenburg-Pomerania supported 92 transport-related projects, of which 52 were concerned with port-related infrastructure in Rostock, Wismar and Sassnitz-Mukran. Only in Greece is there evidence that the programme was geographically focused in a way that did not necessarily correspond to the needs of less developed and/or isolated areas.11 Greater emphasis was placed on the eastern mainland north-south axis rather than on the western mainland north –south axis. On the whole the focus of expenditure has been strongly directed towards the construction and upgrading of motorways and other roads. For example in Spain this is estimated at some 19% of all Structural Fund expenditure. Overall the balance has been identified in the Thematic Evaluation of Impact of Structural Funds on Transport Infrastructures as two-thirds road investment, one-fifth rail and the remainder on other activities. The one exception to the focus on road investments is in Italy where more than half of expenditure on transport was focused on improving the rail infrastructure. i) Investment in road transport Developing the road infrastructure has been a significant element of Objective 1. This can include the construction of new motorways, new or improved national road networks or local roads. On the whole, where comparable information is available on targets and outputs, Objective 1 has proved an effective means of developing road infrastructure. Based upon the sample of programmes analysed it seems that at least 4,104 km of motorway have been constructed or upgraded and some 31,844 km of other roads. Targets were generally met or exceeded, when they had been established. Tables 3.1-3.3 illustrate the respective targets and achievement, where data is available. Table 3.1 Motorway constructed or upgraded (km) Country Target Output Portugal 43Netherlands 18.5 18.5Greece 316Belgium 2 22Spain 1753.3* 3650.5Source: Adapted from National Evaluation Reports *Targets not established for all programmes assessed 10 Ex-post Evaluation of the Objective 1 1994-1999 Community Support Framework. National report: Italy, p. 65 11 Greek report, p. 1-11



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Table 3.2 Other roads constructed (km) Country Target Output France 5 3UK 18.55 18.55Italy 253.6Source: Adapted from National Evaluation Reports Table 3.3 Other roads improved (km) Country Target Output Ireland 2130 2211France 21.5 21.5Greece 615Belgium* 43 33Germany* 3500Portugal* 23237Spain 482Italy 493.6Source: Adapted from National Evaluation Reports * Covers both constructed and improved Whilst significant amounts of new road infrastructure have clearly been put in place and overall performance has been strong there is some evidence that there has been under-performance in some Member States. This is particularly the case for Spain, where underperformance is calculated at around 10% of planned outputs. In other cases targets were met but the completed projects were not those originally envisaged. In Belgium motorway construction replaced other roads and in Italy the delivery of planned targets masks the significant shift away from planned projects to those that were actually delivered in practice. Other evaluation work, particularly the Thematic Evaluation of the Impact of Structural Funds of Transport Infrastructures, has found that, in general, road expenditure has been higher than initially planned. This, it is argued, may be because road allocations were easier to spend, partly because Objective 1 money was used to complete projects which had already been planned and designed but were not fundable through national programmes. There is also more experience and capacity among National ministries and contractors to implement road projects than other transport actions. Commenting on the Portuguese context, Viegas and Gomes extend the argument, stating that the development of roads is more politically expedient because the impacts on beneficiaries are much more direct – there is no intermediary organisation to absorb benefits. 12

12 Multi-level Impact Indicators for Evaluation of Structural Funds Interventions: Lessons from the Transport Sector intervention in Portugal. Jose M Viegas and Faustino G. Gomes 1996



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ii) Investment in rail transport Very limited evidence is available as to the outputs achieved through investment in rail infrastructure and in even fewer cases is information available on initial targets. In part this reflects the mix of programmes analysed but it is also strongly reflective of the limited initial target setting. The absolute amount of rail construction is set out in Table 3.4. Some 757 km of rail are known to have been constructed but this is likely to be a significant underestimation. It is anticipated that planned outputs, where established, will be delivered although there is evidence of delays and underperformance (see Section 4). For example, available evidence suggests that the Italian CSF had not achieved the targets set for the construction/upgrading of high-speed and normal railway lines by the time of this evaluation. Internal projections for 2001 do though suggest that the planned outputs will be achieved by the time the programme is eventually closed. One reason for the delivery of planned outputs is that the projects supported were generally already planned as part of wider strategic investment priorities. Table 3.4 Mainline rail constructed or upgraded (km) Country Target Output Portugal 188.7Greece 441UK 127.2 127.2Source: Adapted from National Evaluation Reports Table 3.5 Other public transport lines (km) Country Target Output Netherlands 10 2 Source: Adapted from National Evaluation Reports Objective 1 has proved generally ineffective in delivering urban metro and light rail projects, although with at least one notable exception. Major planned projects in Dublin and Thessaloniki, for example, have failed to be delivered as planned. This is reportedly due to the greater physical difficulties of planning, design and construction in an urban environment, particularly to secure the appropriation of land. The exception is the Athens Metro, which has been completed, albeit with some delay, and is delivering strong benefits (discussed below). iii) Other transport investments Other transport investments supported by Objective 1 include investment in airports and in seaports. Planned port expenditure was largely completed, with actual spends in the range 81% to 104 %, apart from Greece, where the actual spend was 46%. A success story here was the Port of Gioia Tauro project in Italy that was funded in 1996/7 and completed by 1999.



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iv) The result of transport investments Investment in new or modernised infrastructure tends to be directed towards a longer-term improvement in the economic performance of the region concerned. These benefits materialise through:

1 The opening up of new economic corridors, such as the Belfast-Dublin corridor for Northern Ireland, which has provided Dublin and Belfast with extra economic opportunities.

2 Overcoming accessibility constraints. These can be trans-regional and

involve improving connections to the rest of the EU e.g. the Portuguese island of Madeira13, or locally. In Germany, transport-related investment has been focussed on the construction, extension or rehabilitation of small-scale transport infrastructure, mainly to improve the attractiveness of specific business zones.14 In the German Bundesland of Saxony, roads have been built to connect relatively rural areas (medium-sized towns) with larger centres in an effort to reduce their peripherality, and so increase their accessibility. This was intended to improve their attractiveness as business locations and stimulate tourism. New roads also help to address bottlenecks in the region by improving labour-market mobility, such as has occurred in Germany15, and can stimulate tourism.

3 A reduction in distribution costs. For example, in Ireland the target of a

15% reduction in port and shipping costs was achieved by 2000. In Greece, Portugal and Spain significant time savings translate directly into reduced distribution costs for operators.

The effectiveness of the above in supporting regional convergence is only weakly demonstrated by available evidence however. On the whole there is little information available relating to the effectiveness of the investments supported in the form of the results achieved. Monitoring data is sparse and largely ad hoc. The ability to clearly demonstrate related economic or social benefits related to transport investment is not addressed in most Structural Fund strategies, though some strong qualitative messages can be drawn. These effects contribute to the overall impact of the Structural Fund interventions and are tackled more fully later. It has been beyond the remit of this study to undertake a detailed evaluation of the effectiveness of the pool of individual projects supported in this field. However, some broad assessments are possible. On the whole transport interventions have proved effective at improving internal accessibility. Objective 1 has been successful in terms of reducing journey times by road, and improving journey time reliability. For example in Ireland, time savings of between 13 Ex-post Evaluation of Objective 1 Programmes 1994-1999. National Report: Portugal, p. 75 14 Ibid., p. 34 15 Ex-post Evaluation of Objective 1 Interventions (1994-1999). National Report: Germany, p. 56



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40 and 70 minutes have been achieved with an overall saving of 189 minutes compared to the 204 initially planned. In Portugal, all road journey times have been decreased by an estimated 20% and in Spain, journey times on improved sections of roads have improved by between 12% and 20%. Much of the road network has been improved in terms of capacities (vehicles per hour and per day). Improved roads in Spain and Italy will have doubled the capacity of the roads they replace. Rail journey times have also seen some impressive improvements. For example, rail journey times between Athens-Thessaloniki-Kdomeni have fallen by 1hr.30mins (although this was significantly less than planned), and similar reductions have been achieved in Portugal on the Lisbon-Faro route (1hr.35mins savings) and on the Lisbon-Vila Formoso route (1hr 20mins saving). Urban transport projects also promote journey time reductions. In Athens, the metro has on the whole reduced travel time by 8%, and increased speeds within the city from an average of 7-18Kmph to 30-35Kmph.16 In Ireland, time savings of 20 minutes and 25 minutes between Larne-Dublin and Belfast-Derry respectively have been achieved, as planned. There have also been improvements to external accessibility. Improvements to airports such as in Athens, which resulted in an increase in international passenger numbers of some 3.6% over a one-year period, and the development of port facilities are strong examples of this. Improved road connections have also assisted external accessibility. In Portugal it is estimated that between 1993 and 1996 journey times to the border reduced by around 4% and by a further 17% between 1996 and 1999. The rail projects in Portugal are reported to have enabled rail freight times to Spain to be reduced by 70%, although the overall effect of this is more difficult to judge. Improved transborder connections with France are also reported between Castilla-y-Leon and Galicia, although the value of these is not quantified. In Ireland, the combined port and shipping costs to users have been reduced by 15% (as planned) and targets associated with the State Airports were all exceeded, despite significant revisions upwards during the programming period. The interventions are also reported to have been effective in overcoming problems of urban congestion, where projects have taken place. Strong examples include the Athens Metro (as reported above) and the Dublin Transport Initiative Public Transport measure. However, it is fair to say that it is in this field that the biggest problems appear to have been experienced in delivering successful project outputs and results.

3.2.2 SMEs

SMEs are a key priority of EU policy, especially in Objective 1 regions, due to their vital role in increasing competitiveness and job creation. Support for SME development has been provided by the ERDF, ESF and EAGGF. However, this assessment has had to focus on those programmes where SME development has formed an explicit element of the strategy, rather than where SMEs may have been a beneficiary of other support, such as training measures. This primarily relates to activities funded by the ERDF.

16 Source: Final Evaluation Report of Greek Urban Development OP.



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The assessment of the effectiveness of Objective 1 in supporting SME development is weakened by significant data limitations, both in terms of outputs and results but also regarding the initial target setting. The wide variations in reported performance illustrated in Table 3.6 below, demonstrate the difficulties of definitive reporting in this area. Some 214,188 SMEs are known to have been supported through Objective 1, although the actual number will be far higher. In contrast the Thematic Evaluation of the Impact of the Structural Funds on SMEs reported that over 500,000 firms (16% of the total in eligible regions) were assisted through direct aids by Objective 1. Table 3.6 Number of SMEs supported Country Target Output France 160 361Greece 1,263Belgium 2,512UK 10,568 10,657Germany 26,555Austria 263Portugal 5,008Netherlands 500 309Spain 681* 61,916Italy 105,344Source: Adapted from National Evaluation Reports * Targets not established for all programmes assessed Note: no comparable figures were available for Ireland from programmes assessed Objective 1 provides support for SMEs in a variety of ways, including: financial incentives for investment, investment finance schemes and the provision of business sites. We examine each in turn. i) Financial incentives for investment The most common form of support to SMEs has been in the provision of financial incentives for investment. This features in all Member States eligible under Objective 1. High demand and take up of incentives has been reported in Italy, as well as in Greece, Portugal and Spain. In East Germany some 20,000 projects, mainly concentrated on establishments with less than 50 employees, were provided support for productive investment and accompanying investments in production-related infrastructure. In Italy, 10,500 firms were supported though aids to investment, against an initial target of 5,235. In Spain, 30,500 businesses were supported in Castilla y Leon alone and in Andalucia the target for supporting SMEs was exceeded by 850%. However, in the absence of details as to the nature of these activities it is difficult to make a stronger judgement other than that the interventions were broadly effective in reaching the target group.



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In the context of Greece strong benefits have been identified. These include: support for 51 clusters of SMEs, comprising 475 firms; support for 195 SMEs in the field of e-commerce; support for 305 companies to achieve ISO9000 accreditation. And support promoting electronic data interchange involving 267 SMEs in 27 groups. Data on the results of these actions is not currently available. For those countries where data is available, the majority of jobs created or safeguarded have been attributed to the mechanism of direct investment support in different sectors. For example, in Austria, investment support to businesses was given to industry & crafts (safeguarding 5,384 jobs and planning to create 1,631), and tourism (683 secured, and 398.planned). Indeed, in this case 85% of the jobs created under Objective 1 are attributed to these 2 measures. The reported outputs do not of course take into account deadweight or substitution effects, both of which are reportedly high with respect to support for direct investment. A degree of caution should thus be exercised in interpreting gross effects. ii) Venture capital funds/other loan finance schemes A move that was strongly supported amongst some programme managers has been the development of venture capital funds and other forms of loan finance schemes for SMEs, co-financed through the Objective 1 programmes. Assistance of this kind has been given in France, Germany, the Netherlands, Portugal, Ireland, Belgium, Austria, Spain and Greece. Loans would be made available to existing SMEs or new start-ups, often on favourable terms. This was seen to be effective in circumstances where the existing capital markets were failing to serve the needs of small entrepreneurs. However, whilst the provision of risk or venture capital was considered to be a positive factor in SME development in the UK, France and Ireland, it was not considered a successful initiative in the Netherlands and Portugal. The Thematic Evaluation of the impact of Structural Funds on SMEs recommended a shift from grant expenditure to financial engineering measures such as seed and venture capital funds, loans, interest rate subsidies in the future, arguing that these methods are more sustainable in the long term. Whilst this would seem a logical recommendation, the context in which it is applied emerges as an important consideration. iii) New or existing business sites Other support that has benefited the development of SMEs includes the development of new or existing business sites, a common intervention in the Netherlands, Spain, the UK, Portugal, Germany, France, and Greece. In Portugal, for example, the development of new spaces purpose-built for industry provided ‘good logistical conditions’ for economic activity.



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Available evidence (illustrated in Table 3.7) presents a positive performance with targets for Hectares developed significantly exceeding established targets. The results of all this activity are not known. Whilst the data suggests that Objective 1 is effective at delivering new or upgraded industrial sites the ‘fit’ with the established strategy must be questioned given the significant ‘over-performance’ often achieved. Table 3.7 Industrial areas constructed or upgraded Number of sites Hectares Country Target Output Target Output Portugal (Norte + Alentejo only)

c.19 62 60 276 (Alentejo only)

Netherlands 136 274France (Nord pas de Calais + Reunion only)

200 (Reunion) 2050 (Nord pas de

Calais = 2020)UK (Merseyside only)

320 246

Spain 10 24Italy* 73 992.81Source: Adapted from National Evaluation Reports *Indicator definition “areas with infrastructure” iv) Other support SMEs can also benefit from assistance that is available on a common basis. In Greece this included the establishment of 14 e-commerce centers, whilst in Extremadura in Spain 24 centres for the support of SMEs have been established. SMEs have also benefited from the provision of business advisory services, such as advice on business plans, financial management and tapping export markets. However, criticism has been made of the quality of the advice on offer and the fact that much of the support was too general and insufficiently targeted. This was particularly the case in the UK. SMEs in several Member States have also benefited from training provided to managers and employees. In the Netherlands, training to SME employees was rated as being particularly successful, but was also positively mentioned in France, Portugal, Ireland, and Greece. How effective this has been in terms of the results generated is not known. v) Overall results Arguably, Structural Fund interventions have had a relatively limited effect on the economic structure of the productive sector. Objective 1 often emphasised traditional strengths of the areas in which they were located. This pattern is strongly apparent in Germany, where the extent to which the CSF stimulated the growth of new hi-tech industries (for example) in the region was limited. This is also demonstrated in



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Greece, Portugal, Austria, France and Spain where Objective 1 funds were used to support existing tourism sectors. Similarly, Spain, Italy and Portugal devoted resources to assist small-scale crafts-oriented producers and artisans in an effort to boost their productivity. Nevertheless, there are examples of Objective 1 funds contributing to the emergence of new industries. On Corsica, for example, several businesses involved in more hi-tech sectors, like aeronautics and ICT, were able to invest and benefit from the island’s improved transport links, suggesting that there was some degree of integration between different parts of the SPD on Corsica. Sectorally targeted support has been available in a number of programmes. However in only one case has this been substantial and consistent across the Objective regions. Assistance to SMEs in the tourist sector featured in the Objective 1 programmes for all of the Member States except Belgium. This ensured that the individual firms were assisted as well as other firms that benefited from the increased tourist presence. For example, on La Réunion, 15 new hotels were built and 15 redeveloped with the assistance of Objective 1 funds. In addition, more general help was given to the tourism industry through the development of tourist attractions, such as a tropical garden, an aquatic leisure park and a crocodile park. However, whilst some specific differences appear in the nature of the support offered (and the types of company benefiting) the broad nature of services on offer often remained the same. In contrast, the degree to which SMEs have benefited from measures designed to promote R&D is debateable. In Austria, the effect of such measures was judged to be marginal owing to poor take-up on the part of SMEs. This accords with a generally poor picture of R&D links to private companies, an aspect that is drawn out further in the following sub-section. The vast majority of the interventions financed through Objective 1 can be characterized as traditional support mechanisms. There has been some criticism of this from some stakeholders as overly supply-driven. This focus is perhaps not surprising in that these mechanisms represent the most direct type of support available and one where outputs are most easily registered. Other forms of support such as financing technology transfer and innovation or improving access to the capital market are measures of an indirect nature and have a greater financial risk attached to them. They also require a different set of skills and expertise. Unfortunately, the relative effectiveness of different measures is impossible to assess from the data that is presently available. The choices of using certain measures were taken mainly for strategic reasons, given the objectives of individual CSFs, OPs and SPDs. In Belgium the measure adopted was productive (direct) investment due to previous good experience of using that measure. This is almost the same case for Germany too, where productive investment measures were linked to both stimulating economic growth, through helping SMEs in particular, but also indirectly creating and safeguarding jobs. Direct support to SMEs



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in Germany was implemented in the context of the Federal GRW17 programme although the Lander were empowered to launch their own support measures during the programming period. This led to a more flexible approach and different priorities being addressed in different regions. The qualitative evidence from stakeholder interviews conducted for the national evaluations suggests that the most effective programmes have resulted from a complementary mix of policies based on the encouragement of investment (the establishment or development of SMEs) and on the provision of specific services to SMEs (such as providing better infrastructure and various ‘soft measures’). The French national evaluation finds that the most effective mix of activities is one combining more general forms of investment in the area, investment in equipment, and staff training. Immediate evidence suggests that the most effective support in terms of job creation is that which is concentrated on smaller SMEs. This is a positive message in the context of Objective 1 regions where the average firm size tends to be small or micro-enterprises. In Germany, for example, the most effective use of public support in relation to employment generation – measured in the creation of new jobs and the protection of existing jobs – was achieved in SMEs employing between 20 and 99 people. Similarly, in Italy actions were concentrated on SMEs with fewer than 10 employees. In relation to the so-called ‘crisis areas’ identified in the Italian CSF as being most vulnerable to unemployment, it was noted that the largest enterprises had a tendency to shed rather than take on labour, emphasising the particular importance of SMEs generating new jobs. However, once again this does not take into account deadweight or substitution effects and care must be taken when interpreting such headline figures. The Thematic Evaluation of the Impact of Structural Funds on SMEs has estimated that, in the absence of Community support, 70% of investment projects would have either not taken place at all, or been smaller in scale or postponed. It further estimates that such assistance contributed to creating more than 300,000 additional jobs, even after taking account of 'deadweight' and substitution effects. The ex-post evaluation of Objective 1 is not able to replicate these figures owing to the lack of comparable and robust data on which to build such estimates.

3.2.3 Research and Development

Objective 1 regions tend to be characterized by a low intensity of RTD expenditure, shortages of suitably qualified human capital and weak patterns of technology transfer. Overcoming these weaknesses in order to stimulate a 'virtuous circle' of growth, competitiveness and employment was a small but important element of most Objective 1 strategies.

17 Gemeinschaftaufgabe Verbesserung der regionalen Wirtschaftsstruktur



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The focus of the RTD interventions varied from supporting the development of scientific research infrastructure through to improving the take-up of new technologies and stimulating innovation in companies. On balance, the southern European states of Spain, Portugal, Greece and Italy adopted an approach that was more heavily focused on strengthening the scientific base, whilst Austria and the Netherlands orientated their actions much more strongly towards strengthening R&D activities within enterprises. Within the UK, Belgium and France the approach was towards commercial applications but generally remained rooted in a scientific research environment. The nature of the actions also varied between supporting the development of infrastructure for R&D activities, such as the construction of new university facilities in Spain or science parks in the Netherlands, and softer measures. The range of softer measures was great and can be divided into those aimed at supporting the science base, particularly the training of R&D personnel, generally with a focus on university researchers, and those focused on supporting innovation and research in enterprises. For example in Spain the CDTI (Centre for Industrial Technological Development), which supports technological development by providing firms with grants which are reimbursable if projects are successful, is held up as a model of an effective action (see later), whilst in Saxony, East Germany a programme of Innovation Assistants was funded. It is apparent that the interventions in the 1994-1999 period begin to mark a shift towards softer measures and a stronger focus on the demand elements, particularly the link to enterprises, compared to the preceding programme period. This accords with other research which has reported an increased focus on improving innovation performance and the receptiveness of business to research and technology18. It is difficult to come to a definitive conclusion on the effectiveness of the actions supported across the Objective 1 regions between 1994 and 1999 owing to a paucity of consistent monitoring data. Few targets were set at the outset of the programmes, data collection has been limited and there is no consistency across Member States as to what constitute appropriate indicators. Two areas where some consistency of reporting is available are in terms of the number of firms supported (Table 3.8) and the development of science parks (Table 3.9). In the latter initial targets have been exceeded in the two cases where data is available. In the former the strong variation between countries is most notable. Owing to the lack of comparable and robust data, the effectiveness of the Objective 1 has to be judged on a more qualitative basis, based upon the research undertaken in each of the Member States. 18 Thematic evaluation of the impacts of Structural Funds (1994/9) on Research, Technology Development and Innovation (RTDI) in Objective 1 and 6 Regions. European Commission Final Synthesis Report July 1999



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Table 3.8 Firms supported for RTD projects Country Target Output Austria 15Germany 1,900Belgium 106 103Greece 70Spain 3* 25Source: Adapted from National Evaluation Reports *Targets not established for all programmes assessed Table 3.9 Number of science parks Country Target Output Netherlands 2 3Portugal 2 3Source: Adapted from National Evaluation Reports Overall, Objective 1 appears to have been an important influence in supporting the development of a physical R&D infrastructure base. This tends to be in the form of support for research centres, business or science parks and university research facilities. The development of a technology centre in Eisenstadt, Austria, has been a significant success, whilst in Netherlands three, rather than the planned two, business parks were established. In Spain and Italy Objective 1 was also effective in promoting the development of university based infrastructure. Objective 1 has also supported a strengthening the traditional supply-base of research and development, which is often dominated by the university and public sectors. In Spain three-quarters of all projects were led by universities. Support for university researchers, the development of human capital, though degree and diploma programmes and support for R&D projects based in universities and research centres have all proved very positive with a strong take-up and effective delivery. In part this focus has been emphasized though a focus on the ‘technology gap’ that exists between objective 1 regions and others parts of the EU, implicitly promoted by the indicators used to measure this gap and a traditional view of technological innovation. The emphasis on the traditional academic and public sector actors stems from different but related causes. On the one hand many programmes have been project-driven, responding to demands for funding rather than stimulating demand in areas where project proposals have been less forthcoming. For example in Italy the emphasis on the traditional supply base was not planned but a response to strong demand from the public sector and the application of broad selection criteria. The emphasis on absorbing available funds and achieving results has supported this emphasis. It also reflects the weak R&D tradition outside of the academic and public sector base within many regions, limiting the potential market for such actions. Developing an enterprise-focused approach has proved difficult in many Member States and this is an area where Objective 1 appears to have been less effective. There



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is very little evidence on which to base any assessment of the growth of R&D activity within companies. In Ireland, the Industrial Development OP was intended to increase business expenditure on R&D to 0.82% of GDP. Although this was exceeded (0.88% achieved) there is no strong evidence as to the contribution of Objective 1. Indeed, the increase in gross expenditure on R&D as a whole failed to achieve the target set, amounting to 1.22% of GDP rather than 1.3% as planned (although the substantial increase in GDP recorded in Ireland during this period raised the absolute figures required). The perceived lack of effectiveness in this area is as much a reflection of the nature of the activities supported through Objective 1 as any failure of the interventions themselves. This is borne out in cases where differential approaches were tried. For example, in most of the regional programmes in East Germany a traditional approach was adopted which complemented that of the GRW. This did not prove to be very effective in the judgement of the national evaluation study. In Saxony, a more innovative series of measures was adopted, focused more strongly on softer measures, such as the support for Innovation Assistants, which were more enterprise focused. This is reported to have been a more effective approach. A common difficulty has been in making the link from research centres and other R&D institutions to the enterprise base. Whilst most programmes identify technology transfer and innovation as important aims, few seem to have success in achieving these aims. In La Réunion for example the Scientific and Technological Centre for Enterprises (ESTER) was established to ease the access of local companies to new technologies, but the results to date have been poor. In part this may be a consequence of the enterprise base within eligible regions. The prevalence of small firms, which tend to be innovation-averse, provides a challenging environment. Where large firms are present they do not tend to be strongly research orientated. In these circumstances it is understandable that a public-sector orientation prevails. However, there are examples of where firm-orientated policies have proved successful. Increased industrial awareness has helped to strengthen the relationship between public research and the private sector in Objective 1 regions. However, the Thematic Evaluation on RTD argues that too much emphasis has been placed on encouraging RTD inputs (based on perceived ‘Technology gaps’), when the focus of activities would be better directed at developing region-specific innovation strategies to exploit existing RTD capacity. Those public sector research programmes that have effectively supported the development of local economies highlight the importance of setting R&D activities within a local production context. This was the case in Corsica where, after initially weak results, the programme was refocused on research into Mediterranean crops. This has proved to be far more successful, focusing as it does on local production strengths. In Portugal, co-operation has been promoted between research centres,



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such as the Technological Centre to the Footwear Industry, and enterprises. Programmes characterised as “demand-driven” (ie that projects that stimulate demand for R&D have been the focus rather than simply expanding the supply of R&D activity), have been the most effective at promoting this link. Activities in the new German Länder, and the North of Portugal were identified by the national evaluators as positive examples in this respect. Repayable funds have proved to be another effective mechanism for stimulating innovation in enterprises. In Spain the National Centre for Technological Industrial Development (CDTI) has proved particularly effective in this respect. In the Netherlands the SME Fund and Techno Fund successfully assisted firms that invested in R&D and were viewed positively by local entrepreneurs. Objective 1 has proved effective in strengthening the human capital base for R&D in eligible areas. In many cases there have been formidable advances made in the numbers of R&D personnel and the numbers of scientific publications produced. Again support has proved most effective when directed towards the traditional R&D sectors although some positive measures can be identified in the enterprise sector. In Saxony resources were devoted to training of SME employees involved in R&D and in Austria, vocational training courses complement the development of the technology centre at Eisenstadt. The strong emphasis on higher-level research may have unexpected effects. In Spain many Universities have a strong dependency on Objective 1 to support research programmes, with one University receiving some 65% of all its research funding from Objective 1 supported actions. This raises a number of questions about the durability of research activity in some regions. Significantly, Objective 1 has also proved effective at promoting R&D policies, particularly amongst regional authorities. In Italy the Objective 1 represented the first occasion that there had been a dedicated approach to R&D stimulation for the Mezzogiorno. It also signalled a move away from the earlier capital-dependent approaches. In Spain, Objective 1 is credited with raising the awareness of regional authorities to the matter of R&D. Starting from a low base significant progress has been made, particularly in developing regional innovation strategies and assessing the technological needs of companies in the region.

3.2.4 Education and Training

Objective 1 primarily supported education and training through the ESF with the bulk of resources channelled though dedicated human resource programmes or priorities. However, the ERDF also made an important contribution to improving the education and training infrastructure in eligible areas and the EAGGF co-financed rural training measures. In this way, support for education and training has also been spread across a range of programmes or priorities including tourism, R&D, rural development and the productive system. .



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The range of actions funded by Objective 1 in the field of education and training was very wide and typically included a mix of actions, designed to increase uptake, widen participation and improve the quality of the labour supply, such as: • targeting disadvantaged groups • adjusting training to the needs of the labour market • adopting a 'customer-oriented' approach • improving the quality of training • support for qualification and accreditation systems • developing technical teaching in upper secondary and higher education • improving infrastructure • continuing training to teachers and trainers • reducing the rate of school drop-out • widening the range of educational and training paths The focus of support varied slightly by Member State, although the primary focus in all 11 Member States has been support for vocational and continuing education and training. In comparison to other Member States Portugal and Greece both placed an important emphasis on strengthening their educational system, with Italy, Ireland and Spain also addressing this issue. In Germany education is the responsibility of the Lander and so Objective 1 has not been able to address this. Broadly, the focus of educational measures was on young people, whilst support in the field of training was focused on the unemployed, excluded groups and those at risk of losing their jobs. The Mid-term Review of the Structural Objectives 1 and 6 (1994-1999) describes how the mid-term Structural Fund evaluations led to an alteration in the focus of education and training programmes. After three years of focusing on young people, there was a shift towards a greater focus on the unemployed. However, no clear evidence for this has been identified in this evaluation. i) Participation in education and training Overall the education and training interventions of Objective 1 appear to have been effective in securing a high level of participation and strong output figures. Targets, where set, have generally been exceeded, often by impressive amounts. Total numbers of participants range from around 12,000 up to 1.3 million (Table 3.10). Unfortunately, whilst there is some, albeit limited, data on the outputs of Objective 1, the results of this support are more difficult to discern. There is a lack of information on actual results and what is available tends to be very disparate. The work for this evaluation study could not explore individual issues in depth but it has enabled a qualitative assessment of the effectiveness of different types of actions, based upon programme level analysis.



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Table 3.10 Human resource development: number of beneficiaries Country Target Output France 230,695Greece 521,691Belgium 154,364 142,525UK* 14,918 10,500Austria 3,536 12,369Netherlands 8,090 25,683Portugal 1,071,376 1,374,506Spain 636,463** 4,453,444Italy 1,378,182Source: Adapted from National Evaluation Reports *Number of persons trained (Northern Ireland only) **Targets not established for all programmes assessed Note: Relevant programmes were not assessed in Ireland The ESF has certainly proved effective in supporting the delivery of mainstream education and training measures. This will have had a notable effect on improving the overall stock of human capital within the Objective 1 regions, although the strength of this result cannot be known. As a broad indicator though, the improvement in the level of qualifications is the one area related to human resource development where Objective 1 regions in Spain have outstripped the national average. The most actively supported forms of intervention in this field have involved increasing the numbers of participants engaged in education and training. This has involved offering a larger number of courses and expanding the number of participants in formal training and education. The interventions devised by the regions were typically “translated into the creation of a very high number of courses with an equally high number of participants.”19 However, whether these add up to more than the sum of their parts is a moot point. The lack of a clear training strategy is one of the chief criticisms of education and training measures in Italy and is implied in a number of other Member States. The provision of support for training courses was often driven more by demand from course providers rather than any objective assessment of need. There are exceptions to this and good practice has been identified in Austria and France where an audit of skills needs has been undertaken before training courses are established, or courses are established in collaboration with local employers. The level at which the training has been pitched is also not apparent from the data available. One criticism of the ESF interventions in some areas, such as the UK, has been that it has focused too readily on support for the provision of low-level qualifications. In the UK the Merseyside programme developed following a labour market survey in 1996 which broadened the focus of support beyond low level National Vocational Qualifications.

19 Ex-post Evaluation of Objective 1 Interventions (1994-1999). National Report: Italy, p. 100



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In addition, a question has been raised as to whether the courses offered and the qualifications gained are the most relevant to regional circumstances. In both Italy and Spain it has been suggested that the qualifications offered do not always meet the requirements of local employers. In this case it is suggested that the lack of any initial needs assessment, or strong market intelligence, acted to reduce the effectiveness of the training offered. In the case of Italy the matter has been complicated by confusion over whether the actions supported should meet local needs or more national considerations. Unfortunately a strong assessment of the relevance and value of the support provided has proved beyond the resources of this evaluation owing to a lack of data in this regard and a consequent reliance on qualitative findings. It is clear though that an over-emphasis on simple training outcomes presents the danger that a mismatch between labour supply and demand may occur over time. Training has also been a key aspect of other Objective 1 objectives. Training measures have, for example, supported rural development. There has been an increase of knowledge in both on-farm and off farm skills, complemented by counselling, especially in Ireland. These have, to a certain extent, been aimed at different age groups. On-farm knowledge has been focused more towards the younger generations in order to attract them to the industry, and show that farming is a viable career. Although this knowledge is also complemented by off-farm knowledge, especially business, marketing and management skills, it is likely that the majority of this type of support has been given to the older farming generation to complement their strong farming skills. The Burgenland Chamber (Austria) of agriculture considers the business orientated training and counselling as one of the most effective contributions in the programme. In Ireland and Austria the training measures implemented were also used as a way to support and disseminate R&D information in the agricultural sector. These gains, however, will only appear in the long run, but are thought by regional respondents to have strong positive repercussions on the efficiency of production. ii) Targeting exclusion Interventions related to education and training had a strong focus on seeking to reduce the problems of social exclusion. This occurred largely through measures that focused on the groups most prone to social exclusion, such as the long-term unemployed and younger people lacking qualifications. Interventions of this kind were more common in Germany, the UK, France and Belgium. In these Member States, the problems of social exclusion are not so much linked to a lack of capacity on the part of existing educational institutions as a need to integrate these social groups into mainstream provision of education and training. In the case of the Netherlands an increasing focus on the hard to place was almost inevitable as the strong labour market conditions meant that the programme was in danger of running



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out of people to train. However, a focus on the unemployed was also a feature of Objective 1 in other countries, such as Portugal and Greece (Table 3.11). Table 3.11 Number of unemployed trained through ESF. Country Indicator Target Actual Portugal Number of unemployed to date in

vocational training 45,691 74,839

Greece Number of unemployed beneficiaries in training:

No targets set 100,394

Spain Number of beneficiaries unemployed 15,360* 217,240 Source: Adapted from National Evaluation Reports *Targets not established for all programmes assessed Effective interventions focused closely on the particular needs of disadvantaged and socially excluded groups, many of whom lack qualifications of any kind. Interventions of this kind explicitly took account of the fact that education and training provision has to be tailored to the needs of the individual, thereby avoiding an indiscriminate blanket approach. In Ireland, the most successful interventions in this field adopted an approach focused on the needs of the individual beneficiaries.20 The difficulty of doing this, in Greece for example, is regarded by the national evaluation as a significant constraint on effectively tackling the needs of the target population. The more programmes were tailored to individual needs, the greater tendency they had to be effective. For instance within the Human Resources OP in Ireland training measures were defined into sub programmes by groups, e.g. SP1- for Initial training and education, SP2- for continuing education for the unemployed, SP 3 for the re-integration of the socially excluded. In Greece training was tailored to the needs of different excluded groups, for instance physically and mentally handicapped, Immigrants, refugees and former expatriates. On top of training, social support was also on offer, including assistance with daily basic requirements such as accommodation, access to health care services and administrative matters, and special lessons in Greek. Increasingly, effective actions were recognised to be those that were able to respond to the needs of the individual beneficiary. iii) Managing the link to employment The least effective element of actions supported under education and training is making the link to employment. Whilst this is not strictly a topic for this theme it is dealt with here as it is the natural result of actions in this field. This was felt to be an important concern in more than half of the eligible Member States, including 6 out of the 7 largest beneficiary States. Support for integration into employment was available in a number of ways. In some cases this was through direct employment support, such as wage subsidies, in others through assistance into self-employment, or simply through advice and guidance. In Germany direct employment support had mixed fortunes. Offered at the Federal level there was a relatively low take-up by

20 Ex-post Evaluation of Objective 1 Programmes 1994-1999. National report: Republic of Ireland, p. 58



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employers. Competition with similar ESF-funded schemes offered in each Lander must also be seen as a factor, as some 10,000 people benefited from this. There are no overall figures for the results of this support. In Spain an evaluation of training measures identified that employment workshops and schools proved to be the most effective measures at assisting job entry, followed by vocational training and then guidance and advice. Perhaps surprisingly, wage subsidy schemes and payments for permanent contracts did not prove very successful labour market measures in Germany and Spain respectively. In part this was felt to reflect on wider labour market concerns of prospective employers suggesting that the development of training and employment measures need to take account of wider social and economic contexts. In the case of Germany, Objective 1 also competed with existing programmes. The effectiveness of training actions is reduced when there is no real demand for the qualified labour produced. This can be a significant issue in closed economies, and has been a particular issue for La Réunion. However, it can also be an issue in more open economies. In both Italy and East Germany it is reported that employment growth has been insufficient to meet the supply of qualified labour. This has reduced the overall effectiveness of the training actions supported, although anecdotal evidence suggests that some of those with increased skills and qualifications will leave the area in search of work, as reportedly happened in Hainault, Belgium. Whilst this is beneficial to the individual it counters the initial objective of the training actions, namely to improve the levels of skills and qualifications available in the local labour market. A means of supporting individuals into employment that proved effective was through the development of individualized assistance for job seekers. An evaluation carried out in Portugal suggested that the development of Individual Employment Plans for new job seekers had succeeded in doubling employability amongst young job seekers and of older job seekers by 4 times. In Greece, the inability to adopt such measures owing to delayed institutional reforms was seen as hindering the effectiveness of the ESF actions in this area. In part the difficult linkage between training and employment owes much to the nature of the labour market in which interventions are offered. Where there is an excess of labour supply then simply increasing the qualifications of the potential workforce is unlikely to increase real labour demand, and may even reduce it, in the short-term. ESF interventions, targeted on the unemployed and those at risk of losing their jobs, have thus been more successful in the context of stronger labour markets. Equally, economic structure can have a limiting influence. In Portugal for example, some observers have pointed out that the small average size of enterprises, low technology base and low qualifications of owners and managers all limit their ability to absorb more highly qualified workers.



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The effectiveness of the training and education interventions is contingent on the context in which they operate. In Portugal there was a weak link between the education sector and the vocational training sector, and the ESF was successfully used to strengthen this link. In Greece labour market reforms were also implemented during the programming period which improved labour market operations, although delays in reforming public employment services have hindered the implementation of active and individualized labour market policies argues the national evaluation. In Italy implementation difficulties delayed or prevented full take-up of many planned activities, particularly around training for SME employees and incentives for employment creation. This was largely due to administrative difficulties, although central programming did not always reflect local needs. iv) Institutional capacity An important aspect of Objective 1 has also been to support the development of educational infrastructure and capacity. As a consequence of Objective 1 there has been a broad expansion in the provision of education and training across Member States, particularly Ireland, Portugal, Greece and Spain, with an emphasis placed on equipping institutions to accommodate larger numbers of students. Data on the outputs achieved are often lacking, although the effectiveness of Objective 1 in this regard can be illustrated through the case of Portugal (Table 3.12). In Portugal some 325,395 teachers were trained, significantly in excess of the original target (163% of target). In addition, some 360 schools were built or rehabilitated through the programmes analysed. Again, this was significantly above the comparable target of 184. Table 3.12 New schools built or rehabilitated Portugal Target Output Economic fabric OP c.166 286Norte OP c.18 71Alentejo OP 3Source: Adapted from Portuguese National Evaluation Report In other Member States, university sites have been expanded and student numbers receiving a university education have increased (France). In Portugal, the provision of vocational training has been increased and improved through accrediting appropriate institutions.

3.2.5 Rural development

Objective 1 has supported a vast array of actions in rural areas, such as infrastructure investment, productive investments and training interventions, through programmes that operated across a region. However, it is impossible to separate these out from the general effects of the wider programmes through which they were funded. Consequently the following assessment has to restrict itself to consideration of



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agricultural and rural development programmes. The principle source of funding for these actions was the EAGGF. Rural development was introduced as an explicit consideration to the Structural Funds for the first time in the 1994-1999 programming period. Emanating from the 1992 McSharry reforms rural development was considered in different ways across the Objective 1 regions. It should be noted that within the EAGGF a very specific set of measures are associated with rural development. These are primarily focused on agricultural development and are not significantly targeted on supporting the development of more general economic functions in service or manufacturing sectors that are located in rural areas. The degree to which Objective 1 programmes focused on rural development varied. In the UK and France a mixed approach was visible, with agricultural areas taking a strong agricultural development approach (regarded as a ‘missed opportunity’ to promote diversification in Northern Ireland) and non-agricultural areas not focusing very strongly on rural development. In Germany an extensive programme of village renewal activities complemented a strong agricultural focus. Where agricultural activity was a less significant element of rural economies, for example in Belgium and the Netherlands, rural development priorities were interpreted relatively widely. Austria also took an approach that was closer in style to Objective 5b type activities than what have been considered more ‘traditional’ agricultural development activities. Elsewhere Objective 1 was heavily focused on support for agricultural production and diversification. The emphasis was on stimulating the economic, social and ecological revitalisation of rural areas through restructuring and improving agricultural quality, improving the rural infrastructure, economic diversification and the protection and conservation of natural resources. Across the Objective 1 areas the rural development interventions were fully utilized with allocated funds being drawn down. On the whole this resulted in initial targets being achieved and often exceeded, particularly those related to agricultural development. The availability of comparable data is limited in this area, as in others. However, some strong outputs can be identified. Data on the number of farm holdings modernised is set out in Table 3.13 below. In the absence of targets this is difficult to interpret as the significance of the levels of support provided is unclear. Table 3.13 Farm holdings modernized Country Target Output France 100 (Reunion) 2,348 (of which 1,500

in Nord pas de Calais)Greece 31,868Germany 4,000Source: Adapted from National Evaluation Reports



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There is consensus between national experts that the efficiency of production has increased. Targets for amount of land irrigated and investments in farm holdings tend to have been exceeded providing yield increases. In La Réunion, investment in irrigation allowed a three-fold increase in the yield of sugar cane.21 Modernised machinery and production techniques have resulted in a lower cost base and increased quality standards, leading to better quality produce, and thus higher prices. Reparcelling of land has also exceeded targets in most cases. Growing seasons have been extended through on-farm investments and in Germany strong investments had positive gains for those involved in animal husbandry. Improvements in agricultural productivity levels tend to result from one or more of the following: a strong reduction in the agricultural labour force, abandonment of holdings, effective improvement of productive efficiency associated with technological changes and scale improvements. Objective 1 interventions are primarily targeted towards supporting the latter two elements, although there is evidence that in some instances, such as in Ireland, a reduction in the abandonment of holdings has been a policy objective. One of the areas where Objective 1 has been most effective is in supporting the establishment of young farmers, where targets were exceeded in Spain, Ireland, Greece and East Germany. This action was particularly supportive in East Germany owing to the changing agricultural structures following reunification with West Germany. In Ireland, the sub-measure for ‘Installation Aid for Young Farmers’ has helped to ensure the continued viability of agricultural holdings. Only in Portugal, where outputs are currently 18% below target levels, does this measure appear to have been less effective than anticipated, however final output figures are still to be collated and so the final picture may improve. Available output figures are set out in Table 3.14. Support to this cohort is justified on the grounds of supporting a balanced age structure in rural areas. It is also because younger farmers tend to be more dynamic. Certainly in Portugal 44% of investment supported under the measure “Improvement of the agricultural holding” has been taken-up by young farmers. Table 3.14 Young farmers supported Country Output France (Reunion) 421Greece 18,649Germany 63Spain 29,231Source: Adapted from National Evaluation Reports Objective 1 has also effectively supported Less Favoured Areas, enabling producers in these areas to compete more strongly in the market, by, in effect, lowering the cost base through subsidies. This was mainly done through higher grant rates in these areas, rather than special new grants. In Ireland however, the compensatory Headage

21 Ex-post Evaluation of Objective 1 Programmes (1994-1999). National Report: France, p. 44.



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scheme operated specifically in the Less Favoured Areas. According to the German Report, the available support has had a direct impact on stabilising personal incomes, and thus indirectly supported the continued existence of agricultural holdings. However, in Portugal the compensation payments were not applied in the most effective manner, reducing the overall effectiveness of this intervention. A similar effect has resulted from higher grant rates for holdings in less favoured areas under schemes such as the ‘Farm Improvement Programme’ in Ireland, which encouraged greater investment levels and improved the viability of farms that may otherwise have been abandoned.22 Objective 1 has supported a shift in the composition of agricultural production towards higher value-added products, ensuring market sustainability of production and adequate incomes for some farmers. This has often been related to improving agricultural R&D, and the most effective interventions in this respect have been those targeted at traditional crops rather than in encouraging diversification. This was certainly the case in Corsica where early diversification attempts proved to be non-viable and greater success was achieved through promoting products with a higher value added in traditional crops such as olives and almonds. How widescale this effect has been though is very difficult to ascertain from the information available. Objective 1 has also promoted the diversification of the agricultural base into other economic activities. Again, the effectiveness of this is unclear owing to a lack of comparable data. Supporting tourism initiatives has been a common theme in this area but the results across different programmes are mixed. In Italy there has been strong take-up of schemes promoting agri-tourism but in Ireland activity has been less than initially planned. Similarly the reported effectiveness in Greece is weak. In the Netherlands targets have been met for the amount of accommodation developed.

3.3 Supporting wider objectives

Objective 1 is comprised of three Structural Funds and one Financial Instrument. Each of these has different objectives, which contribute to the overall Objective of assisting the development of lagging regions. In addition, the Structural Funds are intended to support some broader, horizontal, objectives. The latter element was introduced during the 1994-1999 period and covered support for equal opportunities and environmental objectives. Whilst we have covered many of the elements of the different Funds in the assessment above this has not reviewed the broader objectives established for these Funds. The following assessment focuses on the key objectives set out for each Fund the General and Fund specific Regulations. These provide the framework within which Objective 1 is set. This is followed by a more detailed assessment of the contribution of Objective 1 to horizontal objectives.

22 Ex-post Evaluation of Objective 1 Programmes (1994-1999). National Report: the Republic of Ireland, p. 59.



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3.3.1 The European Development Fund (ERDF)

For the ERDF six key objectives were established:

• To provide support for productive investment to permit the creation or maintenance of permanent jobs

• To provide support for the creation or modernisation of infrastructure which contributes to the development or convergence of the regions concerned, supporting the establishment or development of TENs in transport, telecommunications or energy

• To provide support for measures to exploit the potential for internally generated development of the regions concerned, encouraging local development initiatives and the activities of SMEs

• To provide support for investment in the field of education and health • Productive investment and investment in infrastructure aimed at

environmental protection • To support regional development, particularly in the field of research and

technological development From the previous analysis it is apparent that Objective 1 has supported interventions addressing all of the identified objectives. The one area that has not been considered in detail is in the field of energy and telecommunications investments and we report on this now. Weak comparative data has forced a qualitative assessment rather than a detailed project based assessment. In terms of energy, the few large projects that were undertaken have concentrated on updating existing infrastructure thus increasing energy balances and security of supply. These projects were mainly undertaken in Ireland, Greece, Spain and Portugal. Monitoring data suggests that targets set at the beginning of programmes have been met and in most cases surpassed. On top of the improvements in traditional energy resources in these and other Objective 1 areas, smaller energy projects focused on the diversification of energy supplies to new forms of energy. The effectiveness of these projects, due to their small size has been difficult to measure, due to a lack of data. The effects of communications infrastructure funding has also concentrated in updating and modernising the existing network to bring it closer to the EU average, especially in Macro Objective 1 regions. Like targets set for energy infrastructure, most of the programmes have met, if not surpassed, their initial targets.

3.3.2 The European Social Fund (ESF)

Eight principle objectives have governed the nature of ESF interventions.

• To contribute to facilitating access to the labour market • To contribute to promoting equal opportunities in the labour market • To contribute to developing skills, abilities and professional qualifications • To contribute to encouraging job creation • Support employment growth and stability through continuous training and

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• Boost human potential in research, science and technology • Strengthen and improve education and training systems • Contribute to development through the training of public officials

Objective 1 has successfully delivered actions that contribute to each of these objectives. The evidence is presented in the thematic assessment on education and training. This suggests that Objective 1 has been particularly effective in terms of promoting participation in training courses and strengthening the number of people with qualifications. Improvements in education and training systems were also noted, although only a broad qualitative assessment has been feasible in this instance. The advances made in the human capital base for research, science and technology was one of the more effective actions identified under the R&D theme.

3.3.3 The European Agricultural Guarantee and Guidance Fund – Guidance element (EAGGF)

Five principle objectives have guided interventions supported by the Guidance element of the EAGGF. These are set out below. Principle objectives of the EAGGF – Guidance element

• Strengthening and reorganising agricultural (and forestry) structures, including the marketing and processing of agricultural products

• Ensuring the conversion of agricultural production and fostering the development of supplementary activities for farmers of either sex

• Helping to ensure a fair standard of living for farmers of either sex • Helping to develop the social fabric of rural areas, to safeguard the

environment and to preserve the countryside • Promoting rural development and the structural adjustment of regions whose

development is lagging behind The promotion of rural development measures and the structural adjustment of regions lagging behind is focused primarily on agricultural interventions or support promoting the diversification of economic activity by farmers, together with more general support for the rural fabric including the renovation and development of villages and the protection and conservation of the rural heritage. The assessment of the effectiveness of the EAGGF in the thematic assessment of rural development demonstrates that Objective 1 contributed, to a greater or lesser extent, to all of the identified objectives, although quantitative assessments were hampered by weak comparable data sets. The focus of activity on supporting agricultural activity has, understandably, limited the effectiveness of Objective 1 in promoting wider rural development.

3.3.4 The Financial Instrument of Fisheries Guidance (FIFG)

Interventions supported under the FIFG were intended to support three main objectives during the 1994-1999 period:



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• To contribute to achieving a sustainable balance between resources and their exploitation

• To strengthen the competitiveness of structures and the development of economically viable enterprises in the sector

• To improve market supply and the value added to fisheries and aquaculture products

The effectiveness of the supported interventions against these objectives has been difficult to assess, both due to the effects of wider market conditions and the Common Fisheries Policy in this period and the limited monitoring data collected by programme authorities. On the whole, the Objective 1 interventions have proved effective in meeting the targets established through the initial programming documents. In a number of cases this success has been despite initial implementation difficulties. The introduction of the FIFG into Objective 1 and the lack of previous strategic planning for this sector in many countries and regions meant that there was a period of settling in for many programmes, with reprogramming often undertaken as experience was gained in practical implementation issues. Both Spain and Italy for example found that this was necessary. The following section examines the effectiveness of the FIFG in promoting:

• The renewal and modernization of the fishing fleet • The development of alternative fish and aquaculture products • The development of processing and marketing arrangements

i) The renewal and modernization of the fishing fleet

The Objective 1 interventions proved to be effective in supporting the renewal and modernization of the fishing fleet. Targets for modernisation and renewal have been met or exceeded in Greece, Italy, the UK and Portugal. Although in the last case the new capacity created has exceeded established targets and whilst the number of boats withdrawn has met the target set, the amount of tonnage withdrawn has been less than planned. In Spain some 1,900 vessels have been modernized, but the related target is unknown. In East Germany levels of modernization have been less than expected owing to the poor economic circumstances of the industry. In Ireland, the renewal and modernization of the fishing fleet measure (within the Fisheries OP) was not very effective in achieving modernization of the fishing fleet. However, the introduction of the Whitefish Renewal scheme in 1998 has since proved more effective. Available data is reported in Table 3.15.



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Table 3.15 Number of vessels modernised Country Target Output Portugal c.325 434Netherlands 22France (Reunion) 75Greece 603Spain 1,493 1,908Source: Adapted from National Evaluation Reports In fewer cases is data available on the number of vessels withdrawn, and in only one case can this be compared to initial targets. (Table 3.16) In that case Objective 1 met its target. Table 3.16 Number of vessels withdrawn Country Target Output Portugal c.470 465Greece 1357Source: Adapted from National Evaluation Reports How effective the actions have been in supporting a sustainable balance between resources and their exploitation is not known. However, the effect of modernization of the fleet has been to improve productivity and efficiency and there are indications that the total catch has increased as a consequence. The Italian evaluation also makes the pertinent point that actions in support of reorganizing the fleet have predominated when compared to potential actions such as the designation of protected areas. This would appear true across all relevant programmes.

ii) Development of acquaculture

Objective 1 interventions have had a mixed effectiveness in supporting the development of acqualculture. In both Portugal and East Germany targets were not achieved, partly because of weak private investment demand and, in East Germany, uncertainty in a changing regulatory context. However success was reported in Thuringen and Saxony suggesting that the potential existed. Elsewhere interventions have been more effective. Italy and Greece both achieved the targets established. In Spain some 1141 projects were supported but it is not known how this compares to the established targets and in Ireland a positive effect has also been reported.

iii) Support for processing and marketing

The FIFG interventions have also proved effective in supporting the development of processing facilities and marketing activities, supporting greater value added in the sector. Effective interventions of this nature were reported in Italy, Greece, Spain and the Netherlands. These actions appear to have been less effective in Portugal, although the reasons for this are not known. The effectiveness of these interventions can, again, only be judged in terms of achieving established output targets. The



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results of these investments are not known. In Italy, however, it is reported that the value of output from the total fisheries sector over the programme period was greater than the increase in volume of output. Whilst one cannot state that this was due to the Objective 1 interventions it does demonstrate the effectiveness of pursuing this type of activities.

3.3.5 Effectiveness in supporting wider environmental objectives

Strong positive environmental effects can be identified as a consequence of the Objective 1 interventions. This has partly been through active support for environmental projects and partly though minimizing the environmental impact of major development works. Where the strategy has explicitly been linked to national policy it is expected that the interventions will be more effective, as in Greece, where the CSF has contributed to the implementation of the National Environmental Policy. Environmental awareness has developed during the programming period 1994-1999 and the concept of sustainable development has gained currency. However, during the period under consideration this concept did not greatly influence the implementation of the programmes and, as such, is not considered further. Positive environmental effects mainly occurred in the areas of water infrastructure and waste treatment. Basic environmental infrastructure projects had the greatest effects in areas where the need for such provisions was greatest, which was the case mainly in the Southern European member states, particularly Spain, Portugal and Greece. This can be evidenced through the positive movement in a number of indicators, for example the percentage of inhabitants with sewerage, with sewage treated, with waste treated and/or recycled. However, there are also weaknesses, for example with regard to environmental monitoring. The exception to this is Italy, where the positive effects on the environment are viewed by the national evaluation as insufficient. This may be because environmental issues seem to have been given relatively little attention, at least when compared to other countries/regions. In East Germany, Community support was actively used under various priorities of the CSF to tackle the considerable negative "heritage" stemming from the former GDR and to further improve environmental and natural assets in the new German Länder. In Belgium, the main environmental issues addressed under Objective 1 were the pollution of various industrial sites and the treatment of waste. The success of the measures that addressed these problems were however limited. Several industrial sites were severely polluted. The owners of the sites had declared themselves insolvent so that they would not have to bear the cost of the cleaning, but since they remained the owner of the grounds, it was extremely difficult to obtain the necessary permits for the works. The administrative burden had clearly been underestimated. Supported interventions have complied with European or domestic environmental standards, which has ensured that negative environmental implications of development have been minimized. In Spain, for example, the infrastructure



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projects have complied with the conditions laid down by the regional, national and European environmental authorities. In Germany, the Funds-interventions (especially ERDF and EAGGF interventions) were strongly obliged to comply with legal environmental standards in Germany. In Belgium, each project description had to contain information about the impact on the environment. However, the contribution to compliance with environmental standards was weaker that expected, due to judicial problems. In France, the programmes respected sustainable development principles and objectives, and it also respected the Community rules in terms of environment. Environmental issues were regarded as an important aspect of all programmes however. In the UK, no special attention was paid to this as a horizontal theme during the preparation of the UK programmes, except in general terms. The interviews with programme partners did not generate any insight into whether these horizontal objectives were incorporated into the programmes during implementation. The general perception is that the impact of developing European environmental policies on this generation of Objective 1 programmes was marginal. In Austria, environment and sustainable development had not been an explicit priority in the initial Objective 1 programme, mainly due to the significant time pressure in elaborating the Structural Funds planning document and the rather new nature of environmental issues in the context of regional development. The whole aspect was mainly taken into consideration according to the formal requirements that had been defined by the European Commission. Some negative effects on the environment can be observed, mainly in connection with infrastructure development projects, for example the construction of new roads and the consequent increase in traffic. Where such construction has encouraged modal shifts to less sustainable modes of transport, as has occurred in Portugal, the environmental implications are exacerbated. In contrast, where shifts to more sustainable modes of transport are encouraged then the environmental effects can be significant, as in the development of the Athens Metro (see Table 3.17). Table 3.17: Environmental Impact of the Athens Metro project.

Measurement units Before construction of the Athens Metro

After construction of the Athens Metro

Reduction

Fog Tones of particles/year 3.670 2.719 25% Sulphur dioxide Tones of particles/year 1.410 1.042 26% Nitrogen dioxide Tones of particles/year 18.510 15.789 15% Carbon monoxide Tonnes of particles/year 38 31 19% Hydrogen carbon Tonnes of particles/year 54.700 45.010 18% Decrease of energy consumption

Diesel tones per year 9.340

Source: Adapted from Greek National Evaluation Report Environmental effects have also been felt in the area of rural development. Generalised effects can be identified for the following, although detailed information on actual effects are not widely available:



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• Energy efficiency, due to new and refurbished buildings (for people and animals);

• Waste levels and efficiency, due to the increased capacity (e.g. increases in slurry storage in Saxony Anhalt in Germany);

• Natural resource management leading to efficiency, especially of water and soil, for example soil erosion and anti-desertification projects in Reunion and Spain

• Increases in environmental standards in both crops (through decreases in pesticide and fertilisers usage) and animal farming (better conditions for the animals). For example the natural rural villages scheme in Mecklenburg in Germany supported various activities at preserving better natural living conditions for all animals and plants.

In the Netherlands, agri-business industrial zones were created to bring supply chains closer together. This may lead to decreases in CO2 emissions due to decreases in transportation distances, however the effectiveness is unclear, due to lack of information. Not all positive potentials were realised though. In Ireland, the Control of Farmyard Pollution sub-measure should have had a positive effect on various environmental aspects such as scenery, ecosystems, fishlife and the greenhouse effect. However, the scheme was suspended and applications were not received between 1996 and 1999. Increases in stocking levels and the increased use of pesticides and fertilizers will have also occurred through Objective 1 interventions with a negative effect on environment conditions. In this area, the effectiveness of the Structural Funds remains uncertain and rests on the nature of the projects undertaken. On the whole, it is clear that where environmental considerations were a strong priority, either for a programme or particular projects, then the Objective 1 interventions were effective in delivering these. However, in other matters, where environmental concerns were secondary to other priorities the interventions were not so effective in promoting a stronger environmental consideration.

3.3.6 Effectiveness in supporting wider objectives in the area of equal opportunities

The promotion of equal opportunities between men and women is an important element of Community policy. Whilst it was not a requirement of the Structural Funds between 1994-1999 the supported interventions have had some influence in this area. Making an assessment of the effectiveness of Objective 1 interventions in the area of equal opportunities is significantly hindered by data limitations. In very few cases has monitoring data been disaggregated by gender. On the whole the promotion of equal opportunities was not regarded as an explicit priority in any CSF or SPD, although most recognise the issue and some even state their coherence with European and domestic policies in this area. In Belgium, equal opportunities were not a clear priority in the Objective 1 programme 1994-1999. In the ex-ante evaluation, the suggestion was made to focus more on the entry of women on the labour market, but this focus got lost in the final programme. In Italy, "The attention of official bodies on the subject of equal opportunities has been very poor, if



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not non-existent”. In the UK, no special attention was paid to equal opportunities during the preparation of the UK programmes and stakeholders interviewed during the evaluation generally regarded domestic policies as further developed than required by the Commission. In Germany, the promotion of equal opportunities between men and women in Objective 1 regions was more explicit than most and was one of the key tasks of the ESF. In the CSF strategy, one priority highlighted the reintegration of women into the labour market, as they had been strongly affected by the massive offsetting of labour force during the transition and transformation phase. In Austria, gender mainstreaming was not an important or specified target within the strategy. During the life cycle of the programme, one can observe significant progress towards a growing awareness of issues related to gender mainstreaming. Actors are more conscious about this issue at the end of the programme and a political willingness has developed in Burgenland to address this issue. Increasing awareness has also led to programming changes, and in Spain, equal opportunities has been given greater importance by national and regional authorities over time. This led to an overall increase in the resources targeting women. In the case of the Castilla y Leon regional Operational Programme, for instance, new ESF measures were introduced in 1997 aimed at facilitating labour market access for women. Although strategic consideration of equal opportunities has been limited, in practice, interventions have addressed this issue: sometimes explicitly so. This has primarily been through the ESF although other funds have also been used effectively. In Portugal, the ESF gave support to projects that directed their action towards a population with difficulties of insertion in the labour market, namely women. Some of these projects supported activities of child support in order to allow the mothers to attend the training actions. Women supported by the employment measures (ESF) had more benefits then men and this contributed to a large participation in active measures. In Spain women were also more likely to benefit from interventions aimed at promoting permanent, rather than temporary, contracts. All Objective 1 ESF-interventions in Germany have generally observed a respect for the gender mainstreaming approach and in all ESF-programmes specific projects for women had been supported. In Italy, the reverse is the case and only one specific measure appears to have been adopted through the ESF - where actions have been implemented aimed at the creation of businesses by women. Initially in Germany, the issue of equal opportunities was considered an important aspect in the framework of ERDF-interventions. In order to better take into consideration the principle of equal opportunities between men and women on the labour market, different Länder such as Brandenburg, Saxony and Saxony-Anhalt had introduced specific support-preferences for the creation of women jobs in their related ERDF-investment support schemes. In Brandenburg, for example, the basic support



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threshold can be raised to the maximum level if the investment project creates more than 50% of women jobs. A similar procedure is practised in Saxony. In Berlin, a specific working group of on women and economy had been established in order to support women engaging themselves in founding new start-up of enterprises or to support already established female entrepreneurs. In practice, female participation in ESF-funded projects was often above the share of women in unemployment, especially in training measures. Women would often tend to be in the majority on these courses. However, whilst this may positively assist the promotion of equal opportunities it may not be a consequence of the Structural Funds themselves. External evidence suggests that training courses are often more attractive to women, than men and that other social and economic factors prevail in determining the gender balance of training courses. Unfortunately there is no data available on how participants fared in making the transition from training to work, nor on how effective the Objective 1 interventions have been in overcoming identified barriers to employment. The effectiveness of the Objective 1 interventions in supporting equal opportunities during the 1994-1999 programming period is at best unknown. Some positive actions can be identified in practice but, on the whole, the issue has not been a strong priority within programme actions.

3.4 Overall analysis

An assessment of the overall effectiveness of Objective 1 is difficult owing to the array of diverse targets, both qualitative and quantitative, adopted by programmes. One of the key measures of effectiveness that has not yet been considered is the ability to promote gross job creation. All programme evaluations agree that substantial numbers of new jobs have been created and also significant numbers of jobs maintained, mainly through the ERDF. In common with all other aspects of this assessment of effectiveness actual figures are limited and definitional issues limit comparability. From the evidence available it appears that Objective 1 supported the development of some 798,000 jobs. This is in terms of gross jobs and does not take into account substitution, deadweight or multiplier effects. The overall effectiveness in terms of net effects is unknowable. The most effective mechanism for the creation and maintenance of jobs is argued to be direct support for productive investment, although as this takes no account of deadweight and substitution effects, its overall effectiveness cannot be judged. In Italy the Industry Operational Programme supported 10,595 firms and created 73,727 jobs against a target of supporting 5,232 firms and creating 76,071 jobs. In the Merseyside programme the target of 21,100 jobs created is expected to be surpassed as available figures suggest that 17,036 have been created to date. In Ireland a target of 20,000 gross jobs created per annum was established in the Industrial Development



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Operational Programme. This was later revised upwards to 22,000 per annum and by 1999 the actual output was some 36,479 gross jobs created per annum. In other cases targets are not available against which to assess effectiveness and a relative performance measure is not readily available. However, the absolute figures remain substantial (Table 3.18). Table 3.18 Employment created Country Target Output Ireland 132,000 212,874 Greece 390,000 Portugal 1 6656 Germany 57214 Netherlands 8865 7342 France 2 5200 Belgium 8530 17035 Merseyside (UK) 3 28,850 22,249 Austria 4 7300 5387 Italy 76,071 73,727 Source: Adapted from National Evaluation Reports 1 only specified for commerce sector and Alentejo region (no differentiation between safeguarded and created). 2 estimation 3 direct permanent jobs. Results are known results only, forecast not included. 4 does not include 6067 jobs secured, but does include 3000 jobs via EAGGF which are not specified as created. In order to assess the overall effectiveness of Objective 1 a qualitative assessment was undertaken by the national experts of the relative effectiveness of the Objective 1 interventions against various broad aims (Figure 3.1). This captures the main fields of activity undertaken through Objective 1. The assessment is based upon the extent to which analysed programmes met established targets, coupled with the results of stakeholder consultations and wider analysis. Not all programmes will have had an explicit focus on each and every field. The interventions supporting skills development, to improve transport infrastructure and support SMEs are generally judged to have been effective across nearly all programmes. Approaches to modernizing the fishing sector and rural diversification were broadly judged to have been adequate. A word of caution should be sounded on the latter aspect though. As we have seen, agricultural development measures were effective in most cases and there is the possibility that the qualitative research that these results are based upon has been influenced by the developing agenda in this field, which now considers the rural economy in a more rounded manner. Few distinctive patterns emerge between different types of Objective 1 region. Urban regeneration was only really tackled in two of the programmes, reflecting both the generally rural nature of Objective 1 regions and the regional development perspective that was adopted. Environmental infrastructure was regarded as more



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effective in the Cohesion Countries presumably due to the higher concentration of such activities undertaken in these countries. The least effective aspect of Objective 1 appears to be in the area of overcoming territorial imbalances. This is regarded as the case both within Member States and within the regions themselves. Whilst this might be regarded as an impact of the support offered it is included here as some 1994-1999 programmes did reflect on this issue, but the implementation of the strategies was unable to significantly tackle the concern. The results of this exercise demonstrate the general effectiveness of the Structural Fund interventions in Objective 1 regions; in terms of the outputs achieved against targets established. The effectiveness of the actions in delivering anticipated results cannot be assessed owing to an almost total lack of relevant data. We thus have to jump to a more general assessment of the impact of supported actions, set out in the following section.

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3.5 Conclusions

The analysis of effectiveness has had to rest to a substantial extent on qualitative judgements rather than quantified comparisons of results with targets. This reflects a combination of: the lack of a proper framework of targets in many programmes - with those which are available largely relating to outputs (and thus primarily to efficiency) rather to results (and thus effectiveness); and, the fact that the currently available monitoring data is often either out-of-date or of questionable reliability, or both. At a general level many of the apparently most effective actions have been those of a largely ‘mainstream’ character. However, funding has largely tended to reinforce existing patterns of economic development related activity, rather than providing a basis for developing new activities to meet identified objectives, or stimulating more innovative approaches. The desire to demonstrate ‘quick’ returns and ensure absorption of resources also influenced this approach. Overall, interventions appear to have been most effective when they have complemented existing national or regional programmes. This helps to increase awareness of available funds and facilitates applications to schemes by dint of familiarity. The positive aspects of this have been highlighted in Germany, whilst the negative aspects of weak complementarity have been highlighted in other cases, including Italy. In Belgium, SMEs were less able to benefit from the funding available as they were not always familiar with the opportunities for obtaining grants and subsidies. In other cases both large and small companies have reported concerns with the administrative burdens required by the ERDF which has cooled enthusiasm for available interventions. In the transport sector the focus of activity has been on roads, with at least 4,104km of motorway and 31,844 km of other roads constructed or upgraded. In the cases for which targets and output data are both available, targets have mostly been met. Transport investment has produced significant benefits in terms of improving both internal and external accessibility and, to a lesser extent, in helping to tackle problems of urban congestion – reducing journey times and/or distribution costs in the process. Clear instances of resulting economic development benefits emerge but evidence to quantify such impacts on a more systematic basis is lacking. Interventions focussed on SMEs have supported at least 214,188 firms, provided at least 3839 hectares of industrial sites and supported the creation of at least 723,957 gross jobs. Where targets and data are available, targets for SMEs supported and hectares of industrial sites provided have mostly been exceeded, in the latter case substantially so. Good evidence on the results of those interventions is again limited. Often interventions have focussed on established sectors, particularly tourism, rather than



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supporting diversification. Deadweight and displacement have probably been substantial. Interventions combining investment incentives and support services seem to have been most effective and, in some contexts at least, venture capital and loan schemes have been relatively effective. Interventions focussed on smaller SMEs seem to have been the most effective in terms of job creation. In relation to Research and Development the interventions have achieved a range of positive results, particularly in terms of developing the physical infrastructure base. Where the evidence is available, targets have been achieved, and – perhaps more important for the longer term – R & D activity now has much greater policy prominence. However, at this stage at least, translating academic and public sector research into commercial spin-offs has generally proved difficult, although more enterprise – focussed, ‘softer’ measures have produced positive results. The interventions have supported the education and training of at least 8,149,595 people. Targets, where set, have generally been exceeded, often by impressive margins – although this clearly raises questions about the quality of the underlying analysis. Objective 1 support has also helped substantially in developing the educational infrastructure and capacity of the poorest member states. Again, good evidence on the effects of the resultant improvements on the stock of human capital is limited. It is clear that interventions have tended to be more effective where – as has not always been the case – they have been based on a proper assessment of the needs of the labour market and the economic and institutional contexts have been favourable. In the case of interventions in favour of socially excluded people, actions tailored to individual needs have proved the most effective. Most of the EAGGF resource provided through Objective 1 has focussed on support for the agricultural sector and its structural adjustment rather than the wider process of rural development. This only became an explicit focus of the Structural Funds for the first time in the 1994-1999 programming period. Most of the available evidence on effectiveness relates to the agricultural sector itself where targets – such as those for farm holdings modernised, land irrigated, land reparcelled and young farmers installed – have been exceeded. This has had a range of positive effects in increasing productivity, reducing costs, improving quality and extending growing seasons. Specific subsidies to producers in the Less Favoured Areas have had important effects in underpinning incomes and helping to maintain agricultural activity in these areas. More generally, Objective 1 resources have benefited significant – but unknown – numbers producers by supporting the shift to higher value – added products and assisting diversification into non-agricultural activities. Although systematic data is lacking, at a fund level the ERDF has brought about very large scale job creation, most importantly – or at least most directly – through support for productive investment. The ESF has greatly strengthened the human capital base of the Objective 1 regions, although the full benefits of this have not yet been realised.



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The major effects of the EAGGF have been in supporting and encouraging the restructuring of the agricultural sector, whilst the FIFG has been most effective in supporting the renewal and modernisation of the fishing fleet and the development of processing facilities and marketing. In total at least 798,000 gross jobs have been created across the Objective 1 area. A range of the interventions supported through Objective 1 – particularly in the areas of water infrastructure and waste treatment – are having substantial positive environmental effects, whilst the emphasis on ensuring that projects more generally comply with relevant EU and/or national standards has helped to minimise adverse effects. Some negative effects will, of course, have resulted from the development process, especially road traffic growth. However, the emphasis on sustainable development per se only emerged as a general European policy priority after this generation of programmes was put in place. Some of the Objective 1 programmes – particularly in Germany – have been characterised by a strong emphasis on equal opportunities, whilst a number of other regions developed particular actions to address the labour market needs of women. However, the development of this area as a major EU policy priority again post-dated the preparation and approval of these interventions. Nonetheless, in practice ESF supported projects have tended to include higher proportions of women than the groups on which they have been targeted, indicating that the interventions have been making positive contributions in this area.

Reflecting its lack of focus as a policy priority, there is little evidence that the interventions have significantly reduced spatial disparities within the Objective 1 regions. In some cases at least they have contributed to the concentration of growth within capital city and other relatively strongly performing regions.



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4.0 EFFICIENCY

4.1 The approach

The evaluation study has examined the efficiency of the implementation of large projects supported in Objective 1 regions, financed by the Structural Funds and Cohesion Funds. Efficiency usually reflects the fact that the effects were obtained at reasonable cost. An efficiency indicator is usually obtained by dividing the budgetary inputs by the quantity of effects obtained. This has proved difficult in the present case, not least because of the lack of any comparable benchmarks against which to compare performance. Identifying such benchmarks is fraught with difficulties; as this analysis goes on to demonstrate. For the purposes of the present study efficiency is assessed with respect to delivery to cost and timetable as required by the Terms of Reference. Where feasible an examination of comparative costs has been made. No reference is made to, what might be termed ‘undesirable’ side-effects of projects, such as deadweight, displacement or other distortions. These effects are examined more generally through the impact analysis undertaken later. This efficiency analysis has been undertaken through the examination of 60 large projects. The assessment criteria have been previously referred to in Section 1 of this report. Table 4.1 shows the distribution of the 60 projects. They are broken down both by theme (transport, environment and industry) and by Member States. Table 4.1: Project sample by Member State and Theme

Transport Environment Member State Road Rail Air Port Water Other

Industry Total

D 0 0 0 1 1 0 5 7

F 1 0 0 0 0 0 3 4 1 EL 4 0 1 0 5 0 0 10 E 2 1 0 1 6 1 1 12 I 1 3 0 0 1 0 2 7 IRL 4 0 0 0 3 1 0 8 P 2 2 0 0 2 1 3 10 UK 0 1 1 0 0 1 0 3 Total 14 7 2 2 18 4 14 611 Source: Adapted from National Evaluation Reports 1An additional industrial project was analysed owing to limited information available for one project of original sample.

4.2 Implementation Aspects

The following assessment is based upon the case study projects themselves and offers an insight into the absolute efficiency with which large projects have been



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implemented. It has not been possible to make a strong comparative assessment of the efficiency with which projects co-financed under the Structural and Cohesion Funds have been implemented. Benchmarks against which to measure performance tend not to be available owing to the unique nature of many large investment projects. This was recognised by a study published by the European Commission as a "Users Guide on Understanding and Monitoring the cost-Determining Factors of Infrastructure Projects". A key aspect of that work was the recognition that the degree to which costs can be specified depends very much upon the stage in project development reached, a finding that is heavily supported by the analysis undertaken for this study.

4.2.1 Project Timetables

About a third of the co-financed projects were completed within the originally planned timescales. 21 (35.0%) projects were completed within their forecast timetable, with 7 of these being completed earlier than envisaged (Table 4.2). In contrast 39 (65.0%) projects surpassed their expected duration, with 22 (38.3%) being over a year late in delivery. Overall environmental projects appear to be the most susceptible to delays, particularly those related to water treatment. Just under half of all transport projects were completed on time, although this varies by type of activity. Rail projects were more likely to be subject to delays whilst, in comparison, it appears that the air and port projects were more successful in achieving their original deadlines, although this is partly due to the smaller number of these projects within the sample. Around half of all major industrial projects were completed to their planned schedule. Perhaps more significantly, the proportion of projects being completed more than 12 months late is very high in the case of environmental schemes with more than half falling into this category, but significant proportions also registered in the case of transport projects. Table 4.2: Delivery to project timetable by project type

Completed

Early On time < 6m late 6-12m late > 12 late Project Type No. % No. % No. % No. % No. %

Transport Project Road 1 7.1 5 35.7 1 7.1 3 21.4 4 28.6Rail 0 0.0 1 14.3 3 42.9 0 0.0 3 42.9Air 1 50.0 1 50.0 0 0.0 0 0.0 0 0.0 Port* 0 0.0 1 100 0 0.0 0 0.0 0 0.0 Environment Project Water 1 5.5 2 11.1 2 11.1 2 11.1 11 61.1Other 0 0.0 1 25.0 1 25.0 0 0.0 2 50.0Industrial Project 4 28.6 3 21.4 4 28.6 0 0.0 3 21.4Total 7 11.7 14 23.3 11 18.3 5 8.3 23 38.3 Source: Adapted from National Evaluation Reports



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Beyond project ‘type’ it is also possible to identify differences between the delivery of projects in different Member States. Table 4.3 shows the success of each Member State in achieving their initial timetables for the projects considered by this evaluation. It shows that the completion of projects was most punctual in France and the UK, whilst the greatest proportion of projects suffering extensive delays were evident in Italy and Greece. In Italy none of the projects were completed within their planned timetable. Table 4.3: Delivery to project timetable by Member State

Completed Early On time < 6m late 6-12m late > 12 late Member

State No. % No. % No. % No. % No. %

D 2 33.3 1 16.7 2 33.3 0 0.0 1 16.7 F 1 25.0 2 50.0 0 0.0 0 0.0 1 25.0 E 3 25.0 3 25.0 1 8.3 0 0.0 5 41.7

EL 1 10.0 0 0.0 0 0.0 4 40.0 5 50.0 I 0 0.0 0 0.0 2 28.6 0 0.0 5 71.4

IRL 0 0.0 4 50.0 1 12.5 1 12.5 2 25.0 P 0 0.0 3 30.0 3 30.0 0 0.0 4 40.0

UK 0 0.0 1 33.6 2 66.6 0 0.0 0 0.0 Total 7 11.7 14 23.3 11 18.3 5 8.3 23 38.3

Source: Adapted from National Evaluation Reports There are some identifiable trends in the delivery of these large-scale with regards to the meeting of their planned timetables, as highlighted below. Factors supporting successful timetable delivery: The greatest success in meeting project deadlines was evident where there was a

strong political commitment, at the national and/or regional level. Most frequently this commitment was drawn from the recognition of the need for a specific project for future development and often modernisation of a region or country. Examples of such a commitment to the completion of a project included the completion of the rail deck on the Ponte 25 de Abril and the Alqueva dam in Portugal, both considered to be essential for the modernisation of their respective areas; and the construction of the Centre d'Essais Ferroviaires in French Hainault that was seen as crucial for safeguarding around 5000 jobs in the region.

Projects which would have had to have been completed with or without Structural

Funds assistance were also more likely to be completed to timetable. Again this reflects the pre-existing commitment of involved parties to completing the project. Such cases included the introduction of an integrated billing system by Portugal Telecom; the refurbishment of the Marques de Valle Flor Palace Hotel in Lisbon; the completion of a waste water treatment plan in Vallavoid; and the installation of a aluminium hot-rolling system in Italy.



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Externally imposed deadlines also proved strong incentives for project

completion. In the case of Portugal, the EXPO98 event in Lisbon was a key driver in the completion of four projects as they were viewed as key elements in supporting the event’s success. Likewise another Portuguese project, introducing an integrated billing system for its national telephone network, was prompted towards completion by a commitment to market liberalisation in 2000.

Strong project management and monitoring throughout the completion of these

large-scale projects and the agreement of contracts including penalties for delays also proved to be important tools in ensuring initial timetables were honoured. Projects using delay penalties included the new bridge the River Tagus and the refurbishment of the in Marques de Valle Flor Palace Hotel in Portugal. The clear definition in the project’s terms of reference, of roles and responsibilities for actors involved in the extension of the Valencian subway, was cited as a means of avoiding misunderstandings and/or delays and additional costs. Equally strong a project management was also praised as a factor influencing the success of the Conway Station project in the UK and the sewerage and drainage project in Patras. In contrast a number of the Greek projects were reported as having suffered from weak management.

Of the above factors the strength of project management is clearly the most amenable to influence within the context of the implementation of the Structural Funds themselves. Factors underlying failure to meet project timetables: The efficiency assessment has also highlighted some common factors which underlie the failure of many projects to be delivered to the originally proposed timetable. We highlight these below. A common cause of extended project timetables was inadequate planning in

advance of the project commencing. Greater recognition of the length of time needed for studies and administrative groundwork, and improved risk management for any resulting outcomes could have significantly reduced the delay of various projects. The underestimation of time needed for environmental, geological and archaeological studies was identified as a cause of project delays in Portugal, Greece and Ireland

Land ownership issues can be a factor in causing project delay. This was

identified as a key causal factor in the delay of three projects in Spain. The acquisition of a large number of relatively small areas of land in Galicia set back the region’s motorway project, whilst delays in the expropriation of land in Andalucía, caused delays for a project concerning land sealing and waste treatment plants. By contrast the immediate availability of land, through English Partnerships, was a key factor in the success of the UK’s Speke Garston Development project.



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An unavoidable cause of delay for a series of projects was bad weather conditions. Most notable was the unusually persistent rain in the winter of 1996/1997, which caused problems for various water treatment and irrigation projects in Portugal and Spain.

4.2.2 Project Budgets

As with the projects’ timetables, there were significant differences between the success of these projects in maintaining their planned budgets. Table 4.4 shows the accordance of these projects to their planned expenditure. Three projects have been excluded from this table since they were not complete at the time of this evaluation, and therefore their final project expenditure could not be identified. Around two thirds (63.2%) of the large-scale projects completed to date were over budget. Just 21 projects were completed within their planned budgets. Furthermore, the final spending of a fifth of those projects examined was over 30% higher than was originally planned. Environmental projects appear to have been particularly susceptible to increased expenditure, with 70.0% of them being over budget, and almost half of them being over 10% more costly than envisaged. Road projects also demonstrate a strong tendency to significantly exceed their planned budget, with more than a third costing more then 30% more than originally envisaged. Table 4.4: Delivery against budget by project type

Completed Under budget

To budget <10% over

10-30% over

>30% over Project Type

No. % No. % No. % No. % No. % Transport Project Road1 4 30.7 2 15.4 1 7.7 1 7.7 5 38.5Rail 1 14.3 2 28.6 1 14.3 3 42.9 0 0.0 Air 0 0.0 0 0.0 2 100 0 0.0 0 0.0 Port 0 0.0 0 0.0 0 0.0 0 0.0 1 100 Environment Project Water 2 3 18.8 3 18.8 4 25.0 4 25.0 2 12.5Other 0 0.0 0 0.0 1 25.0 1 25.0 2 50.0Industrial Project 3 21.4 3 21.4 4 28.6 3 21.4 1 7.1

Total 11 19.3 10 17.5 13 22.8 12 21.1 11 19.3

Source: Adapted from National Evaluation Reports 1 Final expenditure details for one road project not available because the project was not completed at the time of this evaluation. 2 Final expenditure details for two water projects not available at the time of this evaluation. As with project timetables, there were also differences between Member States with regards to meeting budget allocations (Table 4.5). Ireland, France and Greece had projects that had not been completed at the time of this evaluation, these are not



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included in Table 4.5. Overspends are particularly apparent in Ireland and the UK, ant, to a lesser extent, Spain. In contrast Portugal, France, and Germany appear to have been noticeably successful in completing their projects within budget. Table 4.5: Delivery against budget by Member State

Completed Under budget

To budget <10% over 10-30% over

>30% over Member State

No. % No. % No. % No. % No. % D 3 50.0 0 0.0 2 33.3 1 16.7 0 0.0 F1 1 33.3 1 33.3 0 0.0 0 0.0 1 33.3 E 1 8.3 2 16.7 3 25.0 2 16.7 4 33.3

EL1 2 22.2 2 22.2 3 33.3 1 11.1 1 11.1 I 1 14.3 3 42.9 1 14.3 2 28.6 0 0.0

IRL1 0 0.0 0 0.0 0 0.0 4 57.1 3 42.9 P 3 30.0 2 20.0 3 30.0 1 10.0 1 10.0

UK 0 0.0 0 0.0 1 33.3 1 33.3 1 33.3 Total 11 19.3 10 17.5 13 22.8 12 21.1 11 19.3

Source: Adapted from National Evaluation Reports 1 Has project(s) which were not completed at the time of this evaluation, for which there is no final expenditure details. Factors contributing to exceeding initial budgets: Reasons for projects exceeding their planned budgets are invariably unique to the particular project. However, a number of common factors can be identified and these are summarised below. Various projects underwent modifications during their completion, often at the

request of appointed contractors, resulting in a changed expenditure for eight projects Moreover, in some cases complementary works were deemed necessary or of additional benefit, despite not being included in the original project planning and expenditure. Almost inevitably these changes resulted in increased project costs and, in many cases, an extended timetable for their completion. Examples of projects undergoing such adjustments included, the refurbishment of the Marques de Valle Flor Palace Hotel; the waste water treatment plants in Donana, Vallavoid and the Tinto River; the Bailen-Alborote Motorway; Valencia’s subway extension; and the River Liffey catchment plan.

Various projects suffered additional costs resulting from unexpected

environmental, geological and archaeological issues highlighted by studies in the early stages of the project development. Six projects were forced to incorporate additional costs of this type, often accompanied with a need to change the project’s timetable, including the new bridge over the River Tagus; Lisbon’s wholesale market; the railway line between Messina-Villafranca and Terme Vigliatore in Italy; and the N11 Arklow By-pass in Ireland.



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The delays caused by works not initially planned into the project timetable, often resulted in knock-on effects for later stages of project development. In many cases these reinforced already increasing project expenditure.

Inadequate estimations of project costs have led to various discrepancies between

planned and final expenditure for three projects. This was a particular issue for the cost of land acquisition in countries including Spain and Ireland, where projects faced difficulties in acquiring a large number of small areas of land. In some cases the discrepancies between planned and actual expenditure is not immediately evident since the underestimation of some elements of projects have been counterbalanced by the overestimation of other parts, as was the case with the Alqueva dam project in Portugal.

The prioritisation of meeting a project’s planned timetable has in some cases led

to increased costs. The need to meet project deadlines has resulted in project changes and, on occasion, a less efficient use of resources. This was considered to be the case with Portugal’s multifunction pavilion, where completion was necessary for the EXPO98 event.

Factors contributing to delivery below budget In some cases the underspending of projects was not by design, but rather the

result of external circumstances. In the case of Portugal’s rail deck on the Ponte 25 de Abril, the closure of the programme meant that some Structural Fund expenditure could not be claimed. Likewise a Land Sealing project in Spain was limited in its expenditure due to the unavailability of land needed for the project.

4.3 Unit Costs

The terms of reference for the evaluation require the analysis of unit costs across Objective 1 regions. The intention was to identify significant differences in unit costs and a range of appropriate costs that might be used as the basis for a benchmarking exercise in the future. The methodological, and practical, difficulties of such an exercise are substantial, as has been recognised in work previously undertaken for the European Commission. Not only are large scale investment projects often unique in terms of their context and specification they can also be multifunctional in construct, hampering the simple allocation of costs to any particular unit of measurement. In practice, the identification of unit costs has been limited within all of the projects considered by this evaluation. No project has been able to provide a comprehensive breakdown of expenditure and outputs to allow for the calculation of unit costs for the wide range of activities generally involved. Many of the projects, such as the completion of an events complex or an industrial park, encompassed a broad range of



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inter-linked activities from which it was virtually impossible for project managers to determine individual units and subsequently unit costs. The greatest reliability is attached to the unit costs identified in the construction of different road projects in terms of cost per kilometre constructed. However, even here significant differences will occur depending upon the nature of the terrain, the prevailing soil conditions and the design specification of the road itself. Construction costs, particularly labour costs, also have an influence on the final outcome costs. Table 4.6 identifies the variation in costs associated with the relevant projects analysed. It is noticeable that in the small selection of projects selected the costs of projects within Member States are largely comparable. Table 4.6: Unit Costs for road construction in different Member States Road Country

Unit Cost per km constructed (€)

Messina-Palermo Road Italy 19.23m Dunleer-Dundalk Motorway Stage II Ireland 8.57m Dunkettle – Carrigtwohill Road Ireland 6.35m N11 Arklow by-Pass Ireland 6.10m Balbriggan By-Pass Ireland 4.77m Pathe Motorway - Skotina-Katerini Greece 4.56m Highway A12 - Montijo - Setubal Portugal 4.05m Pathe Motorway - Ag. Theodoroi - Larisa Greece 3.62m Via Egnatia Motorway - Alexandroupoli-Kipoi Greece 3.40m Coruna-Carballo Motorway Spain 3.35m Via Egnatia Motorway - Grevena - Kozani Greece 2.93m Bailen-Alborote Motorway Spain 2.61m Source: Adapted from National Evaluation Reports Whilst it is difficult to offer robust benchmarks across the EU, based upon the assessment undertaken in this evaluation pointers towards relative costs can be made. Table 4.7 demonstrates the unit costs incurred in environmental projects in Spain. It is clear that comparisons cannot be made across categories, but there is some broad comparability within each type of activity. Table 4.7: Unit costs of analysed environmental projects in Spain (€) Urban Solid Waste Treatment Plant per ton treated/year Cordoba Spain 3,988 Alhendin Spain 2,531 Land Sealing per m2/year Granada Spain 0.485 Jaen Spain 0.309 Cordoba Spain 0.277 Sevilla Spain 0.251 Motril Spain 0.205 Waste Water Treatment per m3 treated/year1 Donana Spain 0.0211 Basin of Tinto River Spain 0.0134 Source: Adapted from Spanish National Evaluation Report 1Maximum flows



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The difficulty associated with identifying comparable unit costs for major industrial investment projects is well demonstrated in Table 4.8. These set out the typical unit costs based upon the number of jobs directly created. Table 4.8 Cost per job created (€) – Industrial Investment Projects Project € Centre d'Essais Ferroviaires France 2,600,000 Hasseröder Brauerei GmbH Germany 688,040 MKM Mansfelder Kupfer- und Messing GmbH Germany 277,800 Schäfers Brot und Kuchen Spezialitäten GmbH Germany 207,450 REGE Motorenteile GmbH Germany 156,570 OGURA SAS France 128,000 Maubeuge Construction Automobile France 44,700 Source: Adapted from National Evaluation Reports For those projects compared with other benchmarks, unit costs tended to be higher for activities supported by the Objective 1 programme. These projects included the Marques de Valle Flor Palace Hotel, the Donana and Tinto River waste water treatment plant; and the Valencian Subway extension.

4.4 The Efficiency of Projects Co-Financed by the Cohesion Fund

In this section, we briefly analyse the comparative efficiency of the projects co-financed by the Cohesion Fund (CF) relative to non-Cohesion Fund (NCF) projects in terms of meeting their timetable and budget as well as in terms of their unit cost. This is intended to provide an simple assessment of whether particular aspects of the implementation procedures might lead to different levels of efficiency performance.

4.4.1 Project Distribution in the Cohesion Countries

Table 4.9 shows the distribution of the 40 efficiency projects in Greece, Spain, Ireland and Portugal broken down by theme and by whether they were financed by the Cohesion Fund. On average, 52.5% were co-financed by the Cohesion Fund, primarily water and road projects. Table 4.9: Project sample in the Cohesion Countries by Theme and Fund

CF NCF CF NCF CF NCF CF NCF CF NCF CF NCFEL 3 1 0 0 1 0 0 0 5 0 0 0 0 9 10 90ES 0 2 0 1 0 0 0 1 3 3 0 1 1 3 12 25IRL 4 0 0 0 0 0 0 0 3 0 0 1 0 7 8 87.5P 0 2 0 2 0 0 0 0 2 0 0 1 3 2 10 20Total 7 5 0 3 1 0 0 1 13 3 0 3 4 21 40 52.5

Total CF

Member State

Total (CF+NCF)

CF/ (CF+NCF)

%IndustryWaterPortAirRailRoad Other

Transport Environment

Source: Adapted from National Evaluation Reports



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4.4.2 Project Timetables

Projects co-financed by the Cohesion Fund tend to have been less successful in meeting their timetable than those financed by the Structural Funds (Table 4.10). 16 (76.1% of) CF projects surpassed their expected duration, with 11 (52.4%) being over a year late in delivery. By contrast, 21 (56.8%) of Structural Fund projects failed to meet their original deadline, with 11 (29.7%) taking longer than one year to complete. Analysis of the figures by project type suggests that the delays to completion are most pronounced for water treatment projects financed by the Cohesion Fund. Table 4.10: Accordance to Project Timetable by Fund

No. % No. % N o. % No. % N o. %CF 2 9.5 3 14.3 1 4.8 4 19 11 52.4NC F 5 13.5 11 29.7 9 24.3 1 2.7 11 29.7Total 7 12.1 14 24.1 10 17.2 5 8.6 22 37.9

> 12 lateCom pleted

Fund Early O n T im e < 6m late 6-12m late


4.4.3 Project Budgets

Table 4.11 indicates that the efficiency of CF and NCF projects in terms of meeting their planned expenditure is roughly equal. 63% of CF projects completed to date exceeded their planned budget, whilst just 7 projects (36.8%) were completed within their planned expenditure. Similarly, 24 (66.6% of) NCF projects exceeded their planned budget, 4 NCF projects (11%) were completed to budget and 8 (22%) underspent. At the time of this evaluation, final expenditure details were not available for all case study projects in France, Greece and Ireland. Therefore only 55 projects are included in the table below. Table 4.11: Accordance to Budget by Fund

No. % No. % No. % No. % No. %CF 3 15.8 4 21 4 21 4 21 4 21NCF 8 22 4 11 9 25 8 22 7 19.4Total 11 20 8 14.5 13 23.6 12 21.8 11 20

Com pleted

Fund Under Budget To Budget < 10% over 10-30% over > 30% over


4.5 Conclusions

There have been major problems in delivering large projects to time and budget. This underlines the need for better project planning and appraisal and a strengthening of implementation procedures. Only 1/3 of the 60 projects reviewed were completed within the originally planned timescale, with 1/3 over a year late. Environmental, and particularly water treatment, projects were the most susceptible to delay. Factors promoting timely delivery were:



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strong political commitment, externally imposed deadlines and strong project management and monitoring. Factors underlying delays included: inadequate planning, land ownership issues and weather conditions. Approximately two-thirds of the projects examined ran over budget, with 20% costing over 30% more than originally planned. Again environmental projects emerge as a particular problem area, along with roads. Factors underlying overruns included: modifications to projects; emerging environmental, geological and archaeological issues; delays; inadequate cost estimates; and, imperatives to meet particular deadlines. The assessment revealed wide variations in unit costs, often because of the multi-faceted nature of the projects concerned – and the effects of factors such as topography and geology. This limits the scope to establish ‘benchmark’ unit cost figures for particular types of project.



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5.0 IMPACTS OF CSF/SPD STRATEGY

5.1 Introduction

The term “impact” is used in this section in a very specific sense. In previous sections we examined the appropriateness of the CSF/SPD interventions, i.e., the extent that the programme designs were intended to address clearly identified underlying causes of the pervasive type of lagging behaviour that serves to define Objective 1 status. We then examined the CSF/SPD programmes from the point of view of their effectiveness, i.e., their performance against anticipated outputs. At that stage we set out a hierarchy of targets in the following sequence:

[CSP/SPD action] Direct output achieved

Intermediate target attained Final target attained.

This sequence of targets can be illustrated by means of the important transport programmes of the ERDF element of the CSF, where some analytical research data are available at all levels of the target hierarchy:

[Road construction undertaken] Roads completed (km)

Travel times reduced (minutes) Activity boost (GDP, productivity, etc.)

As previously discussed in Section 3, two factors constrained our ability to evaluate the effectiveness of the CSF/SPD interventions: limitations of the available data on direct output achieved by the programmes, and very limited prior research on the relationship between direct outputs and the achievement of intermediate targets. In this section we attempt to quantify the role of the CSF/SPD interventions in promoting the attainment of targets. In the case of macroeconomic targets (GDP, unemployment, productivity, etc.), logic would appear to require that such an evaluation be built from a “bottom-up” analysis, linking the CSF/SPD programme actions to direct measures of programme outputs, to the achievement of intermediate targets, and finally to the achievement of final macroeconomic targets. However, the material on the previous sections shows that any such “bottom-up” evaluation would founder on the rocks of missing data and inadequate micro or cost-benefit research. Consequently, in the case of macroeconomic targeting, we are forced to adopt a “top-down” approach, where macroeconomic research is used to construct models of some of the economies of the Objective 1 states and regions, and by means of a series of simplifications described previously in Section 2, we establish a stylised link between



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the CSF/SPD programme actions or expenditures and a series of final macroeconomic targets (e.g., level of GDP, numbers unemployed, labour productivity, public and private sector financial balances, etc.). In an ideal world, where data and micro research were plentiful, we would carry out both a “bottom-up” and a “top-down” impact analysis, and compare and contrast the results obtained in order to check the consistency of both approaches.23 The macroeconomic evaluation is feasible only for regions where there are suitable macroeconomic models available. This availability is restricted for various reasons. First, it is not appropriate to construct macromodels of very small regions, whose economies are unlikely to display the usual macroeconomic relationships and where the full range of national or regional accounting data are unlikely to be available. This eliminates the following Objective 1 regions: Belgium (Hainaut), France (Nord Pas de Calais, Corse, and the overseas territories), Austria (Burgenland), the Netherlands (Flevoland), and the British regions (Merseyside and the Scottish Highlands and Islands). In the case of these micro-regions, a bottom-up assessment has been undertaken as far as the limited availability of data and research permit. In the case of the East German regions, the Mezzogiorno regions, and the UK regional economy of Northern Ireland, sufficient accounting data are available to construct a regional macromodel. HERMIN models have been constructed for the aggregate of the East German regions as well as for the economy of Northern Ireland, and these models were used to carry out a macro-impact analysis. However, no suitable model was available for the Mezzogiorno region, and it did not prove possible to construct one within the terms and time-scale of this project. In this case a brief and pragmatic non-model approach was adopted, based upon an assessment of available information presented in the Italian national report. In the case of Greece, Ireland, Portugal and Spain, HERMIN models were available for these national economies. Three of them – Greece, Ireland and Portugal – were designated as Objective 1 in their entirety. The national HERMIN models for Greece, Ireland and Portugal were used in the macro-impact analysis. In the case of Spain, a national HERMIN model was also used to evaluate the impacts of the CSF interventions, even though only 11 Spanish regions were designated at Objective 1.

5.2 The model-based methodology

The HERMIN modelling approach was introduced previously in Section 2 (Methodology). In this section we merely repeat the description of the sequence of simulations that were carried out in those CSF/SPD evaluations where HERMIN models were available for use.

23 An example of a case where both “bottom-up” and “top-down” analyses were carried out is the so-called Cecchini Report of 1986 on the evaluation of the likely impacts of implementing the Single European Market. A crucial factor that facilitated this dual approach was the massive research initiative promoted by the European Commission, and published as Cecchini, 1986 and Emerson et al., 1988. Monti, 1996 was a follow-up research programme that looked at ex-post issues.



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Simulation sequence

i. We first carry out a model simulation starting in the year 1993 (the year before CSF 94-99 was implemented), and continue the simulation out to the year 2010, i.e., eleven years after the termination of CSF 94-99. This simulation acts as a “with-CSF” baseline, and attempts to describe the likely evolution of the economy in the presence of the CSF;

ii. For the purposes of isolating the separate impacts of CSF 94-99, we ignore the

carry-over impacts of CSF 89-93, as well as the continuation of CSF aid under the current CSF 2000-2006. Any examination of the actual outturn for the period 1994-2001 will show the results of a “with-CSF” policy framework. Thus, this outturn included the carry-over from CSF 89-93, the implementation of CSF 94-99, and the initial year of CSF 2000-2006 (when available). Consequently, a simple examination of the actual macroeconomic outturn will present a misleading impression of the likely role played by CSF 94-99 in isolation from other CSFs.

iii. The inclusion of the CSF investment expenditures triggers a build up of the

stock of physical infrastructure and human capital. As explained in Section 2 (Methodology), this boosts output directly and also raises the level of productivity to an extent that is determined by the externality elasticities.

iv. In the “with CSF” simulation, we set the externality elasticities to a standard

set of values for all four models. These are in the mid-range found in the international literature, and both the output and factor productivity elasticities are set at 0.20 (i.e., a one per cent rise in the stock of physical infrastructure or of human capital will increase the level of output and the level of factor productivity in the medium term by 0.2 per cent). We relax this assumption later when we carry out a sensitivity analysis.

v. We then “extract” the CSF 94-99 public policy shocks (i.e., EU and domestic

public expenditures) from the above simulation, i.e., we set the CSF 94-99 expenditures at zero and re-simulate the model. No other changes are made., and no attempt is made to design a “substitute” domestically funded public investment programme that would have replaced a “missing” CSF 94-99. This is a very artificial assumption, since in the absence of CSF 94-99 there almost certainly would have been substitute domestically funded public investment programme, albeit smaller in magnitude.

vi. Ideally we should use the actual ex-post realised CSF expenditures. But these

were not available for every country or region, disaggregated by priority and on an annual basis.24 In the interests of uniformity, we have used the planned CSF expenditure data as contained in the CSF 94-99 treaty documents. While these give a fairly accurate total for the expenditures, they do not always give an accurate picture of the ex-post scheduling of the expenditures. However, this is only an important issue in the case of Greece, where the planned even

24 Complete ex-post CSF 1994-99 data were only available for Northern Ireland , Portugal and Ireland.



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spread of expenditures over the six years 1994-99 was actually implemented in a revised fashion that involved “back loading” by re-programming. However, the totals are similar to the planned expenditures. Consequently, the medium-term macro impacts will be the same as for the “actual” expenditure pattern.

vii. The “without-CSF” simulation results are subtracted from the “with-CSF”

simulation results, and this is used as a measure of the contribution of the CSF to a range of macroeconomic targets.

While the model-based macro-economic analysis holds out the promise of quantification of CSF impacts, it is important not to exaggerate the potential of this methodology. Anyone expecting a simple, single, easily derived “correct” answer to a question such as “what was the impact of CSF 94-99 on GDP?”, is likely to be disappointed. Indeed, such a question is conceptually vague and ill-posed for a number of reasons. • The exclusive focus on the causal impacts of the CSF policies (in isolation) on

economic activity tends to neglect the fact that economic activity in any country or region is affected by a wide range of other policy shocks (e.g., fiscal, monetary, industrial, social, labour market etc) and other external shocks (developments in world growth, oil shocks, wars, etc). The beneficial impacts of the CSF 94-99 are likely to operate in conjunction with other policy shocks and it may be difficult, or impossible, to disentangle the isolated impacts of the CSF in a completely satisfactory way. The HERMIN models attempt to disentangle the separate CSF impacts, using the methodology described in the MEANS handbooks.

• The manner of incorporating the CSF mechanism into the HERMIN model draws

on very recent economic research that itself has only just begun to address the questions of the relationship between increased public investment and the consequences for improved levels of economic activity and development

• The HERMIN models themselves are not above criticism, and other models could

be used and would be likely to give different answers. For example the Commission’s own QUEST model – which incorporates strong “crowding-out” mechanisms due to the inclusion of model-consistent expectations mechanisms – tends to give lower CSF impacts. A recent survey of cohesion policy analysis by researchers at the Dutch CPB suggests that simpler single-equation econometric techniques should be used, and this approach also suggests much smaller policy impacts (Ederveen et al 2002 a and 2002b). So, the methodology based on the HERMIN models is just one of many possible alternatives.



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5.3 Assessment for the Member State regions (Greece, Ireland, Portugal and Spain)

The following provides a summary of the overall impact of the CSF 94-99 in the four Member States: Greece, Ireland, Portugal and Spain. A more comprehensive analysis is set out in the accompanying ESRI report (ESRI, 2002). It should be strongly re-emphasised that the numbers in all tables that follow show only the impacts of the public expenditure elements of the CSF/SPD, i.e., the EU contribution plus the national public co-financing element. All national private co-financing has been excluded. This means, that the impact results could be taken as representing a lower bound, since not all elements of private co-finance are included as multiplier benefits of purely public sector actions. Indeed, there were cases described in earlier sections where the private co-finance elements came in far below their targeted levels. To assist in the interpretation of the subsequent CSF simulation results, it is useful to keep some summary measures in mind. The total size of the (public) CSF in each country relative to its GDP (GECSFRAT) is shown in Table 5.1. In Table 5.1, the historical GDP outturn is used to calculate the percentage share, GECSFRAT, i.e., the CSF public expenditures expressed as a percentage of GDP. As a share of total GDP, the largest CSFs were those of Greece and Portugal, where the CSF expenditures constituted about 3 percent of GDP per annum. The next largest was that of Ireland, between 1.4 and 1.8 percent of GDP. Spain was the smallest, at about 1.2 percent of GDP.25 Table 5.1: Total CSF expenditure as percentage of GDP (GECSFRAT)

Greece Ireland Portugal Spain 1993 0 0 0 0 1994 3.19 1.68 3.17 1.16 1995 3.05 1.75 3.03 1.15 1996 2.99 1.67 3.00 1.17 1997 2.89 1.56 2.95 1.19 1998 2.90 1.50 2.96 1.22 1999 2.95 1.39 3.00 1.24

A measure of the increase in the “stock” of physical infrastructure (denoted by KGINFR) and human capital (KTRNR), relative to the case where there had been no CSF, is shown in Table 5.2. An explanation of how the “stock” of each of these is calculated has been given previously in Annex 2. Clearly, these two proxies for the CSF-induced increase in the stock of physical infrastructure and human capital are very imperfect. For example, in the case of human capital, the Greek system of education – where a high fraction of the work force is educated at tertiary level, and the cycle lasts for up to 11 years, will result in a high “no-CSF” baseline measure of

25 In the case of Spain, only certain regions were designated Objective 1. But our Spanish HERMIN model is for the entire economy, and we treat the CSF “as if” Spain was an Objective 1 country.



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human capital. Hence, the CSF-induced increases will appear correspondingly smaller. The opposite is the case for Portugal, whilst Ireland and Spain are intermediate cases. Since we lack any detailed research comparing the effectiveness of education in these different countries, we are forced to make the simplifying assumption that one year of third-level education has the same effect on increasing the stock of human capital in all four countries. Table 5.2:Stock of physical infrastructure (KGINFR) and human capital (KTRNR) Percentage change relative to the no-CSF baseline (1993) Greece Ireland Portugal Spain KGINFR KTRNR KGINFR KTRNR KGINFR KTRNR KGINFR KTRNR 1993 0 0 0 0 0 0 0 0 1994 1.41 1.00 1.08 1.45 3.46 3.79 1.19 0.68 1995 2.70 1.88 2.25 2.85 6.33 7.16 2.26 1.35 1996 3.88 2.71 3.32 4.12 8.81 10.95 3.30 1.99 1997 4.94 3.50 4.27 5.45 11.01 14.21 4.32 2.63 1998 5.99 4.07 5.12 6.55 13.23 17.41 5.38 3.27 1999 6.98 4.80 5.78 7.55 15.33 20.51 6.50 3.95 2010 4.77 2.76 2.51 4.11 8.70 11.52 4.58 2.06 Although the magnitudes of the CSF impacts will differ from model to model, the characteristic pattern is similar for all models, and merits some explanation. The planned CSF expenditures in each case tended to follow a similar pattern. This pattern involved a subdivision into the three main economic categories (physical infrastructure, e.g. roads, buildings etc., human resources, e.g. training and skills development, and aid to the productive sectors, e.g. investment support and subsidies). Within these categories, the published planned financial expenditure data in the CSF/SPD treaties showed that an approximately equal amount of expenditure was envisaged for each of the six years (1994-1999). In terms of its demand-side (or Keynesian) impacts, this will result in a sharp increase in activity in the first year, and the increase will be sustained for the six years 1994-1999, inclusive. However, after the year 1999 the artificial assumption is made that the CSF 1994-99 expenditures cease abruptly, or are quickly wound down, and the demand-side (or Keynesian) impacts return to zero. There is therefore a public expenditure contraction, and the only longer term benefits are those that stem from the externalities (or indirect supply-side) impacts associated with the sustained increase in the stock of physical infrastructure and human capital. In reality, the ex post (or actual) CSF/SPD expenditure tended to follow a slightly different pattern. As the new CSF 1994-99 was implemented, the construction and training programmes were likely to be phased in more gradually, even if the actual financial expenditures were batched as in the CSF financial tables. In the case of the Greek CSF, the planned expenditures were radically altered, and phased so as to be “back-loaded” towards the middle and end of the period of operation of CSF 94-99. In the absence of detailed information on the actual phasing of CSF activities on an annual basis and for all programmes, we were obliged to use the published financial data that are available for Greece. Consequently, while the actual patterns of CSF impacts are a little artificial, the smoothed average effect is probably fairly realistic.



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This suggests that, in the case of the Greek CSF, the model results should not be used to explore dynamic impacts within the period 1994-99, but should be used to gauge medium and long-term impacts. In the cases of Ireland, Portugal and Spain, the planned and actual CSF 94-99 expenditures did not differ greatly from each other.

5.4 CSF 1994-99 impacts on GDP and unemployment

In Table 5.3 the impact of the CSF on aggregate real GDP at market prices (as a percentage change relative to the no-CSF baseline-1993), and on the unemployment rate (as a difference relative to the no-CSF baseline-1993) are shown. Table 5.3: CSF 94-99 impacts on GDP (GDPE) and unemployment (UR)

Greece Ireland Portugal Spain GDPE UR GDPE UR GDPE UR GDPE UR

1993 0 0 0 0 0 0 0 0 1994 2.01 -1.38 1.61 -0.96 2.72 -2.21 1.10 -0.98 1995 1.94 -1.19 2.02 -1.07 2.78 -1.76 1.18 -0.83 1996 1.95 -0.97 2.17 -0.92 2.87 -1.31 1.25 -0.57 1997 1.90 -0.68 2.34 -0.73 3.30 -0.73 1.32 -0.19 1998 2.03 -0.40 2.76 -0.51 4.04 -0.16 1.39 +0.30 1999 2.16 -0.31 2.83 -0.35 4.66 -0.05 1.39 +0.60 2000 0.44 +1.00 1.56 +0.53 2.20 +1.93 0.18 +1.78 2005 0.71 +0.68 1.20 +0.49 2.40 +1.09 0.63 +0.38 2010 0.66 +0.58 1.00 +0.40 2.06 +0.82 0.58 +0.35 The CSF raises the level of Greek GDP (measured at constant market prices) by about 2 percent over the “no-CSF” baseline during the period 1994-1999. This impact falls to below 0.5 percent in 2000, but increases gradually to just under 0.7 percent by the year 2010. In the early years, the CSF reduces the unemployment rate by about 1.4 percentage points (in the initial year), but this declines to a reduction of only 0.3 percentage points by 1999. After the demand-side stimulus is removed, the unemployment rate rises again, mainly because productivity is now higher than in the “no-CSF” case. But of course in practice one would never observe this “pure” impact, since in the post-CSF 94-99 era, many other external and policy variables would also be changing (e.g., the implementation of CSF 2000-06). 26 Turning to Ireland, it is seen that the impact on the level of GDP in Ireland peaks at just under 3 percent in the year 1999, and in the longer term the impact is just over 1 percent. During the operation of CSF 94-99 the effect is to reduce the rate of unemployment, and the pattern follows the Greek case: i.e., an initial one percentage point cut in the unemployment rate, followed by smaller impacts as the productivity impacts of the CSF build up, and a reversal of these cuts after the termination of the CSF beyond 1999.

26 Once again, it should be stressed that the CSF shock being analysed consists of CSF 94-99 in isolation. The impacts that the model simulates post-1999 would never be observed in practice because CSF 2000-06 will take over, or in the case of Ireland, the domestic funding of the Irish NDP 2000-06 (of which CSF 2000-06 is a small part) is very much larger than CSF 94-99.



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Turning to Portugal, the aggregate impacts on the level of GDP are quite large, and peak at just over 4.5 percent in 1999. The impact on the rate of unemployment follow the Greek and Irish patterns, with an initial strong negative impact, followed by smaller negative impacts, and a reversal of the sign of the impacts after the CSF is complete. In the case of Spain, it must be stressed that this country was divided into Objective 1 regions and non-Objective 1 regions. In the following tables what we show are the impacts on the entire Spanish economy, and not just on the Objective 1 regions. In the case of the aggregate GDP impacts, these appear small, but should be scaled in terms of the smaller size of the CSF relative to the national Spanish GDP (refer to Table 5.1). In comparing the sizes of the impacts on the level of GDP, the size (or scale) of the CSF injection (both EU and domestic public sector co-finance) must be borne in mind. A large CSF impact in terms of an increase in the level of GDP may simply arise because the CSF expenditures are large as a fraction of GDP. We need to normalise for this scale effect, and as a guide we can construct a type of “cumulative” CSF multiplier defined as follows:

Cumulative CSF multiplier:

Cumulative percentage increase in GDP / Cumulative CSF share in GDP

Table 4.4 shows the cumulative multiplier (defined as above) for GDP for the years 1994-1999, 1994-2002 and 1994-2010 for CSF 94-99. For Greece the cumulative CSF multiplier is seen to rise from the value 0.67 for 1994-1999, to 0.76 for 1994-2002, and rises further to 1.07 for 1994-2020. Thus, after all planned CSF 94-99 expenditures effectively cease after the year 1999, there are continuing supply-side benefits from the CSF in later periods due to the externality mechanisms described in the previous section. In the absence of such mechanisms, the cumulative CSF multiplier would remain at a value of about 0.7. What is striking in this table is that the cumulative CSF 94-99 multipliers are quite large for Ireland compared to Greece.27 Clearly the Irish economy responds to the CSF shock in a more growth-oriented way, and the greater degree of openness facilitates greater transitional growth. These structural features of the Irish economy have been captured by the HERMIN model. In Portugal, the cumulative CSF multipliers are seen to be at the higher end of the scale. However, although the increase in the level of GDP in Portugal is higher than

27 It should be recalled that the same externality elasticises are used in all the CSF.



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in Ireland, due to the fact that the CSF forms a higher percentage of GDP, the Portuguese cumulative multipliers are slightly lower than those for Ireland. This also reflects the openness of the Portuguese economy, which is in the range between that of Greece and Ireland. In Spain, the cumulative multipliers are bigger than the Greek case, but smaller than the Portuguese case. Surprisingly, the Spanish economy is more open than the Greek economy, even though one would have expected openness to decline as size increases. One is tempted to conclude that while the CSF investment programmes were relatively more effective for Ireland, Portugal and Spain than for Greece, their reduced effectiveness in the case of Greece has deep roots in the sectoral structure and properties of the Greek economy that have proved difficult to change since 1989. Table 5.4: Synthetic CSF cumulative “multiplier” on GDP

Ireland Portugal Spain Greece 1994-1999 1.44 1.12 1.07 0.67 1994-2002 1.88 1.53 1.23 0.76 1994-2010 2.83 2.55 1.77 1.07

5.5 CSF 1994-99 impacts on GDP by sector

In Tables 5.5a, b, c and d, the impact on the levels of sectoral GDP in terms of a percentage deviation from a “no-CSF” baseline is shown. In the Greek case, these are relatively low when compared to the other models. The most important explanatory factors of the low impact are the relatively closed nature of the Greek economy, the small scale of much manufacturing activity, and the limited links between the provision of business services to manufacturing. These structural features of the Greek economy are well documented, and are captured in the model’s behavioural equations through the econometric calibration of the Greek HERMIN.28 Table 5.5a: Greece: CSF impacts on sectoral GDP (% change over baseline)

OT ON OG GDPFC1993 0 0 0 0 1994 1.20 2.76 1.80 2.15 1995 1.27 2.59 1.83 2.09 1996 1.62 2.51 1.94 2.13 1997 2.16 2.35 1.69 2.06 1998 2.91 2.37 1.71 2.19 1999 3.38 2.45 1.72 2.30 2002 2.58 0.29 0.06 0.54 2010 2.04 0.32 0.06 0.49

OT denotes output in manufacturing; ON, market services; OG public services; GDPFC, total GDP;

28 The full technical details of the HERMIN model construction and calibration are not provided in this report, but are available in separate ESRI Technical Papers.



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The impact on Greek manufacturing peaks at 3.4 percent in 1999 (i.e., the CSF raises the level of GDP arising in manufacturing by 3.4 percent above the no-CSF 1993 baseline)29. The rise in GDP in market services (ON) is partially explained by the fact that the building and construction sector is included in this sector. The rise in the public sector output is mainly due to the state-operated training schemes. The overall impact on GDP at constant factor cost (GDPFC) is similar to the impact on GDP at constant market prices (Table 5.3). In Table 5.5b the impacts on sectoral output (real GDP) are shown for Ireland. Clearly the relatively high impacts on manufacturing (OT) are driving the overall impacts on the economy, together with the more transitory CSF implementation impacts on market services (which include all the building and construction activities). However, these latter effects largely vanish after the completion of CSF 94-99, while the manufacturing impacts continue beyond 1999, albeit at a lower (supply-side) level. Table 5.5b: Ireland: CSF impacts on sectoral GDP (% change over baseline)

OT ON OG GDPFC 1993 0 0 0 0 1994 1.41 2.15 1.35 1.67 1995 1.78 2.66 1.45 2.04 1996 2.50 2.59 1.54 2.22 1997 3.36 2.51 1.52 2.45 1998 4.41 2.51 1.54 2.86 1999 4.71 2.37 1.58 2.96 2002 3.23 0.30 0.14 1.40 2010 2.00 0.29 0.14 1.06 OT denotes output in manufacturing; ON, market services;

OG public services; GDPFC, total GDP; The impacts on Portuguese sectoral output are shown in Table 5.5c. Here, the impacts on manufacturing are higher than in the case of Ireland, with knock-on consequences for the market services sector (i.e., in addition to the direct building and construction impacts). These impacts are being driven to a considerable extent by the very large increases in the stock of physical infrastructure and human capital that were shown previously in Table 5.2 (and as defined by the planned expenditure data used). It has to be admitted that we are not entirely happy with this situation. In particular, the calculation of the human capital proxy (explained in detail in Appendix 1 of the full ESRI report on the model-based CSF evaluations) implies that Portugal has the lowest pre-CSF level of human capital of the four cohesion countries. Consequently, the ESF-based schemes have a much larger impact on this initially low level of human capital than is the case for the other three countries. While we believe that there is 29 It needs to be strongly emphasised that the HERMIN model posits a relationship between the level of CSF expenditure and the level of economic activity. Other models of the “new growth” variety posit a relationship between the levels of CSF expenditures and the growth rate of economic activity. The empirical evidence tends to point towards level rather than growth impacts.



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some empirical evidence to support such a phenomenon, the methodology employed in the HERMIN model may exaggerate its magnitude. Table 5.5c: Portugal: CSF impacts on sectoral GDP (% change over baseline)

OT ON OG GDPFC 1993 0 0 0 0 1994 2.39 4.39 1.60 3.23 1995 2.70 4.27 1.43 3.27 1996 4.17 4.16 0.92 3.42 1997 6.20 4.16 0.94 3.97 1998 9.00 4.44 0.80 4.81 1999 10.65 4.82 0.85 5.47 2002 8.65 1.43 -0.63 2.77 2010 5.96 1.14 -0.63 2.09 OT denotes output in manufacturing; ON, market services;

OG public services; GDPFC, total GDP; The impacts on sectoral GDP for Spain are shown in Table 5.5d, where the impacts are similar in magnitude to the Greek case. However, due to the nature of the model as described above, the separate impacts on the Spanish Objective 1 regions cannot be extracted and thus the impacts shown merely present the overall impacts on the sectors of the entire Spanish economy. Table 5.5d: Spain: CSF impacts on sectoral GDP (% change over baseline)

OT ON OG GDPFC 1993 0 0 0 0 1994 1.17 1.32 0.56 1.16 1995 1.34 1.34 0.58 1.24 1996 1.74 1.38 0.56 1.32 1997 2.31 1.34 0.62 1.40 1998 3.11 1.30 0.64 1.49 1999 3.69 1.25 0.69 1.52 2002 2.78 0.00 0.21 0.21 2010 2.04 0.29 0.21 0.61 OT denotes output in manufacturing; ON, market services;

OG public services; GDPFC, total GDP;

5.6 CSF 1994-99 impacts on the manufacturing sector

In Table 5.6a, b, c and d we examine the impacts on the manufacturing in more detail. In a situation where productivity growth was unaffected by the CSF, the growth in output (OT) and employment (LT) would be identical, since the CES production function that is used in HERMIN assumes constant returns to scale. However, the factor productivity externality mechanisms can and does drive a “wedge” between output and employment growth. So, two polar possibilities can arise: an employment



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rise equal to the output rise, when the CSF has no impact on productivity; and a zero employment rise, when the rise in output equals the rise in productivity. In Greece, employment and productivity rise in 1995, but then the level of productivity rises steadily peaking, at 2.3 percent above the no-CSF base in 1999, and remains positive thereafter (Table 5.6a). Of course, after CSF 94-99 terminates in 1999, this rise in productivity tends to exacerbate the rise in unemployment, other things being equal. So, Greece experiences a kind of “jobless” CSF impact, although not quite the polar case outlined above. Table 5.6a: Greece: CSF impacts on manufacturing sector: Output, employment, productivity and investment (% change over baseline)

OT LT LPRT IT 1993 0 0 0 0 1994 1.20 1.05 0.16 17.47 1995 1.27 0.84 0.42 17.23 1996 1.62 0.80 0.82 16.46 1997 2.16 0.81 1.34 15.94 1998 2.91 0.89 2.00 17.37 1999 3.38 1.05 2.31 18.17 2002 2.58 0.58 1.99 2.27 2010 2.04 0.58 1.45 1.83

OT denotes output in manufacturing; LT denotes manufacturing employment; LPRT denotes labour productivity; IT denotes manufacturing investment.

In Ireland (Table 5.6b), the increase in the level of output is split fairly evenly between increases in the level of employment and productivity of roughly equal proportions. In contrast to the Greek case, this facilitates relatively strong employment growth, even in the presence of strong productivity growth. This phenomenon is very characteristic of the so-called “Celtic Tiger” phenomenon, and the virtuous circle process has been described in more detail in Bradley (2000). The detailed impacts on manufacturing in Portugal are shown in Table 5.6c, where the strong increase in the level of productivity induced by the CSF externality mechanisms is apparent. As suggested above, this effect may be overstated. Nevertheless, it examination of the historical data for Portugal shows that a very strong rate of productivity growth was actually experienced (see separate ESRI model-based study). Hence, the HERMIN decomposition has credibility, the impact of CSF 94-99 on Portuguese manufacturing output appears to have been very strong, and is known to have been accompanied by a large inflow of foreign direct investment (ESRI, 1997). This appears to have induced a radical transformation of the sector, rather like the impact on the Irish manufacturing sector in the 1980s. The traditional nature of much of Portuguese manufacturing (with many labour intensive low productivity firms) began to change under the impact of EU entry, and the first two CSFs. This pattern can still be seen in the table below where employment growth still plays a large part of the growth in manufacturing early in the implementation of CSF 94-99. However, as manufacturing investment increases thus bringing with it new



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technology, the growth in manufacturing becomes fuelled by increases in productivity rather than employment. Table 5.6b: Ireland: CSF impacts on manufacturing sector: Output, employment, productivity and investment (% change over baseline)

OT LT LPRT IT 1993 0 0 0 0 1994 1.41 1.25 0.16 12.04 1995 1.78 1.38 0.39 13.40 1996 2.50 1.63 0.86 11.58 1997 3.36 1.87 1.47 11.38 1998 4.41 2.29 2.07 10.79 1999 4.71 2.41 2.24 12.08 2002 3.23 1.26 1.95 2.80 2010 2.00 0.76 1.22 1.78


Table 5.6c: Portugal: CSF impacts on manufacturing sector: Output, employment, productivity and investment (% change over baseline)

OT LT LPRT IT 1993 0 0 0 0 1994 2.39 1.89 0.49 18.83 1995 2.70 1.49 1.19 20.36 1996 4.17 1.77 2.36 21.06 1997 6.20 2.26 3.85 20.38 1998 9.00 3.00 5.83 23.00 1999 10.65 3.74 6.65 24.76 2002 8.65 2.96 5.53 6.60 2010 5.96 2.10 3.77 4.71


Like the case for Portugal, the increase in the level of output in manufacturing in Spain (Table 5.6d) in the first 3 years of CSF 94-99 is fuelled by growth in employment within the sector. However, after the mid-term of the CSF, and as a result from higher investment growth, the growth in manufacturing becomes more evenly split between employment and productivity growth.



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Table 5.6d: Spain: CSF impacts on manufacturing sector: Output, employment, productivity and investment (% change over baseline)

OT LT LPRT IT 1993 0 0 0 0 1994 1.17 1.37 -0.20 6.60 1995 1.34 1.28 0.06 6.44 1996 1.74 1.24 0.49 6.97 1997 2.31 1.27 1.03 7.43 1998 3.11 1.36 1.73 8.19 1999 3.69 1.53 2.13 9.08 2002 2.78 1.04 1.73 2.41 2010 2.04 0.80 1.23 1.76


5.7 Robustness and sensitivity analysis in the HERMIN simulations

The core of the CSF interventions is designed to influence the supply-side of the Objective 1 economies. Earlier in Section 1 we described how output and factor productivity externalities are incorporated to the system of model equations, which serve to link the CSF interventions directly with the supply-side of the economy. If we could base our choice of externality elasticities firmly on local research then we could propose specific elasticity values that were appropriate for specific models. Unfortunately we do not have access to such research findings. Indeed, in our project research carried out as part of the wider ex-post evaluation of CSF 94-99, we were unable to access any research of a microeconomic nature that would help guide us in our selection of infrastructural and human capital elasticities. We were forced to fall back on the international literature, and make use of findings in a range of countries that have similarities with the Objective 1 economies. For example, research based on the individual States of the USA can be used to gain insight into the likely elasticity values for small open economies on the EU periphery. The international empirical literature, although vast, is somewhat ambiguous about the appropriate magnitude of the externalities. Different researchers use different methodologies, and arrive at different conclusions.30 Faced with this situation, there are two possible strategies. The first would be to wait until the research results are available in the cohesion countries and to stand aside from any attempt to quantify the likely macroeconomic impacts of the CSF. The second would be to carry out the macroeconomic evaluation exercises with a range of externality elasticities and to exercise judgement on the most appropriate values for each country based on a wide range of information about the situation in each country.

30 For example, in the case of research on the influence of human capital, see the recent Institute of Fiscal Studies review by Sianesi and Van Reenen (2002).



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For example, in the case of the Irish CSF, there is a body of evidence that suggests that the ESF training schemes – as implemented by the State Training Agency FAS, were reasonably well targeted, closely integrated with other economic development policies, and were reasonably effective (Honohan (ed.), 1997; Denny, Harmon and O’Connell (2000)). This might suggest that externality elasticities near the top of the international range might be appropriate. In the case of the Greek CSF, the limited information that we have on the extensive re-phasing (or “re-programming”) of CSF 94-99 might suggest that difficulties may have arisen at the design and implementation stages of many of the Operational Programmes. This might suggest that lower values for the externality elasticities should be used. In both extreme cases, a sensitivity analysis needs to be carried out to explore how the CSF impact changes as the two types of externalities – with respect to physical infrastructure and with respect to human capital - are varied from low to high values. For this exercise, the numbers shown in table 5.7 have been used. Table 5.7: Elasticities used in simulation runs

Factor productivity elasticities 0.00 0.20 0.40

Output 0.00 Zero – Zero elasticities 0.20 Medium – Medium

0.40 High - High It should be recalled that in the simulations reported in the previous section, the “medium-medium” combination was used throughout the analysis, and the differences between the outcomes was a result of the different underlying macroeconomic structures of the six economies, as captured in and mirrored by the national HERMIN models. In the case “zero - zero” elasticities we effectively only have the conventional Keynesian demand-side effect. Minor neoclassical effects (through shifting relative prices) can arise, but they are dominated by the straightforward Keynesian effects. It is relatively easy to anticipate what the model simulations will produce for this case. While the CSF is being implemented (i.e., while there are positive expenditure streams of CSF investment programmes relative to the case in the “no-CSF” baseline), there will be demand-side (or Keynesian) impacts. But in the complete absence of “stock” effects (through the improved infrastructure and human capital), these demand-side impacts will rapidly return to zero. In the case of the “high-high” combination, the supply-side effects become much more relevant, particularly over time as the stocks of physical infrastructure and human capital build up. Compared to the findings taken from the empirical literature, our high elasticities sometimes fall into the middle of the observed scale, but we deliberately adopted a conservative approach. Here we get the demand-side impacts while the CSF is being implemented, and this is accompanied by a gradual build up of supply-side impacts that continue even after the CSF is terminated. Eventually depreciation effects set in and the economy will start converging back towards the



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original no-CSF baseline level of activity. But this is a long drawn out process, and will continue long after the terminal year of our simulations, namely the year 2010. It would be possible to extend Table 5.7 to include many asymmetric options (e.g., of the “high-low” variety). But we have little indication from the literature that such options are very relevant. The optimum balance between investment in physical infrastructure and human resources is a topic that deserves detailed investigation, but we cannot pursue it further in this report. A balanced development of physical infrastructure appears to be the best option and has been adopted in most of the Objective 1 CSFs. The following set of four tables present the simulation results for the three stylised CSF scenarios, namely a “zero-zero” choice of externality elasticities for physical infrastructure and human capital; a “medium-medium” choice, where both elasticities are assumed to take the values 0.20; and a “high-high” option, where both elasticities are assumed to take the values 0.40, i.e., values that are towards the upper range of results found in the international literature. We have already commented on the rather low impacts of CSF 94-99 on the Greek economy. What Table 5.8 (a) suggests is that the outcome is relatively insensitive to the degree of “optimality” of the design of the CSF.31 The policy implication is a challenging one. Namely, that a series of structural and institutional changes may be necessary before CSF-type programmes are able to produce significant cohesion impacts of the type that occurred in Ireland and Portugal. The case of Ireland is illustrative of the type of rapid growth that can occur if the structure of the economy has been oriented towards competitive growth and active participation in the Single European Market (see ESRI, 1997 for background to this point). The “zero-zero” impacts are the multiplier impacts that tend to accompany investment shocks that are directed mainly at construction and training schemes, i.e., shocks that have rather low leakages out of the economy. Moving from “zero-zero” to “high-high” produces very significantly greater boosts to GDP, and suggests that the appropriate elasticities in the Irish case may be at the upper range of the international research findings. However, high human capital elasticities imply high productivity growth, and the “high-high” scenario has smaller cuts in unemployment than in the “low-low” case. Ireland experienced very high employment growth even in the presence of very high growth in labour productivity. To understand this we would need to move outside the narrow analysis of CSF impacts and consider a wider range of policy initiatives that accompanied the CSF, e.g., policy towards attracting foreign direct investment, the Social Partnership that served to moderate inter-sectoral 31 In our terminology, the design of a CSF is “optimal” when it is such as to have the maximum positive impact on the development of the economy. In large part, this means that the externality elasticities are at the highest possible values. A CSF is “sub-optimal” when the design and implementation produce a lower impact than possible alternatives. In the context of our present lack of microeconomic research on CSF impacts, the notion of CSF “optimality” is more of ex-post than of ex-ante use. We suggest that the concept is related to the issues of conditionality explored by Ederveen et al, 2002 (b).



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wage inflation (Nolan et al, eds., 2000), and the agglomeration effects that characterised the computer and pharmaceutical sectors (see Bradley, 2001). Table 5.8(a): Greece: zero, medium and high elasticities: Impacts on GDP and unemployment

ZERO-ZERO MEDIUM-MEDIUM HIGH-HIGH GDPE UR GDPE UR GDPE UR % dev from

base dev from

base % dev from

base dev from

base % dev from

base dev from

base 1993 0 0 0 0 0 0 1994 2.00 -1.42 2.01 -1.38 2.03 -1.34 1995 1.89 -1.35 1.94 -1.19 2.00 -1.03 1996 1.83 -1.31 1.95 -0.97 2.06 -0.64 1997 1.71 -1.27 1.90 -0.68 2.10 -0.09 1998 1.73 -1.25 2.03 -0.40 2.35 +0.44 1999 1.77 -1.31 2.16 -0.31 2.56 +0.68 2002 0.21 -0.09 0.50 +0.78 1.15 +1.65 2010 0.28 -0.14 0.66 +0.58 1.09 +1.39

Table 5.8(b): Ireland: zero, medium and high elasticities: Impacts on GDP and unemployment


base dev from

base % dev from

base dev from

base % dev from

base dev from

base 1993 0 0 0 0 0 0 1994 1.57 -0.98 1.61 -0.96 1.65 -0.93 1995 1.82 -1.16 2.02 -1.07 2.21 -0.97 1996 1.74 -1.12 2.17 -0.92 2.61 -0.71 1997 1.56 -1.09 2.34 -0.73 3.16 -0.38 1998 1.48 -1.05 2.76 -0.51 4.09 +0.01 1999 1.33 -0.99 2.83 -0.35 4.40 +0.29 2002 -0.08 +0.06 1.43 +0.531 2.77 +1.16 2010 -0.02 +0.02 1.00 +0.40 2.15 +0.82

The Portuguese case is shown in Table 5.8(c), and resembles the Irish case in most of its characteristics. However, the cuts in the unemployment rate that occur in the “zero-zero” scenario become significant rises in the unemployment rate in the “high-high” scenario. This suggests that there is a degree of risk in Portugal that the restructuring of the economy away from traditional, low productivity, traditional sectors towards higher productivity modern sectors (or even the modernisation of traditional sectors by adoption of new technologies) may produce periods of “jobless” growth.



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Table 5.8 (c): Portugal: zero, medium and high elasticities: Impacts on GDP and unemployment


base dev from

base % dev from

base dev from

base % dev from

base dev from

base 1993 0 0 0 0 0 0 1994 2.66 -2.32 2.72 -2.21 2.78 -2.09 1995 2.55 -2.18 2.78 -1.76 3.00 -1.35 1996 2.31 -2.21 2.87 -1.31 3.45 -0.43 1997 2.26 -2.17 3.30 -0.73 4.41 +0.67 1998 2.42 -2.29 4.04 -0.16 5.83 +1.92 1999 2.64 -2.40 4.66 -0.05 6.92 +2.26 2002 0.69 -0.53 2.30 +1.53 4.93 +3.18 2010 0.31 -0.27 2.06 +0.82 4.16 +2.11

Finally, Table 5.8(d) shows the Spanish case, where there is only modest improvement as one moves from “zero-zero” to “high-high”. However, we noted previously that in the Spanish case we are using a national HERMIN model to analyse a CSF that only applies to a subset of regions. A clearer picture may emerge if regional methodologies are developed to examine the Spanish case. With these caveats in mind, what our results suggest is that the Spanish CSF may be sub-optimal in the terminology used above. Table 5.8 (d): Spain: zero, medium and high elasticities: Impacts on GDP and unemployment


base dev from

base % dev from

base dev from

base % dev from

base dev from

base 1993 0 0 0 0 0 0 1994 1.10 -1.05 1.10 -0.98 1.11 -0.91 1995 1.16 -1.08 1.18 -0.83 1.20 -0.56 1996 1.21 -1.13 1.25 -0.57 1.29 0.00 1997 1.26 -1.16 1.32 -0.19 1.38 +0.84 1998 1.29 -1.21 1.39 +0.30 1.49 +1.96 1999 1.29 -1.24 1.39 +0.60 1.50 +2.74 2002 0.08 -0.02 0.40 +1.18 0.11 +1.75 2010 0.06 -0.05 0.58 +0.35 1.42 +1.30



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5.8 Impacts on the macro-regions (East Germany, Northern Ireland, and the Italian Mezzogiorno)

Two large macro-regions can be identified within the context of Objective 1 1994-1999: the east German Lander and the Mezzogiorno of Italy. A HERMIN modelling exercise has been undertaken for Eastern Germany and the result of this are reported below, in the same format adopted above. Unfortunately owing to circumstances outside of the control of this evaluation study, the planned HERMIN modelling exercise for the Mezzogiorno could not be conducted. In addition, although Northern Ireland is only one of the twelve standard economic regions of the United Kingdom, we include it as a macro-region, mainly because it has reasonably comprehensive regional accounts, is sufficiently large (with a population greater than that of Estonia or Slovenia), and has a range of devolved policy-making powers. The total size of the SPD in each region relative to its GDP (GECSFRAT) is shown in Table 5.9. The averaged about 2 per cent of GDP in the case of East Germany, but was considerably smaller in the case of Northern Ireland. Table 5.10 shows the increase in the stocks of physical infrastructure and human capital (for definitions, see Section 2) relative to a no-SPD baseline. In the case of Northern Ireland – a region of the United Kingdom – the level of physical infrastructure was already quite high even before CSF 94-99, so the induced change relative to the pre-CSF baseline is correspondingly low. The case of East Germany, with its post-Communist inheritance, is the opposite, and the CSF-induced increases in the stocks of physical infrastructure and human capital are large in the context of the relative sizes of the CSF expenditure injection. Table 5.9 Total CSF expenditure as percentage of GDP (GECSFRAT) East Germany and Northern Ireland

East Germany

Northern Ireland32

1993 0 0 1994 2.01 1.00 1995 1.78 1.12 1996 1.83 1.47 1997 1.92 1.19 1998 1.98 0.96 1999 1.94 0.90

32 The values of GECSFRAT for Northern Ireland in 2000 and 2001 are 0.65 and 0.34 respectively.



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Table 5.10 Percentage increase in “stock” of physical infrastructure (KGINFR) and stock of human capital (KTRNR) relative to the no-CSF baseline

East Germany Northern Ireland KGINFR KTRNR KGINFR KTRNR

1993 0 0 0 0 1994 0.92 0.44 0.08 0.31 1995 1.63 0.79 0.16 0.54 1996 2.27 1.15 0.38 0.80 1997 2.88 1.49 0.49 1.02 1998 3.46 1.82 0.57 1.20 1999 3.99 2.14 0.66 1.36 2010 2.04 1.21 0.62 0.84

5.8.1 East Germany

The East German economy started from a very low base after German unification, and it is not surprising that the HERMIN model suggests that – other things being equal – the East German economy is likely to grow rapidly.33 Table 5.11 suggests that the impact of CSF 94-99 on the level of aggregate GDP may be as high as 4 percent by the year 1999, and will continue into the post-CSF 94-99 period. Although there is a lowering of the impact on GDP after CSF 94-99 terminates, due to the externality impacts, the longer term impact endures. This impact is somewhat surprising, but is partially explained by the close links between East and West Germany, and the fact that the types of inflation and labour market pressures that arise in national economies tend not to be so severe in the case of regional economies. The HERMIN model incorporates these features. The impact on reducing the unemployment rate is also strong, although this is reversed in the period after the termination of CSF 94-99. Once again, it should be stressed that the CSF shock being analysed consists of CSF 94-99 in isolation. The impacts that the model simulates post-1999 would never be observed in practice because CSF 2000-06 will take over. The cumulative multiplier (defined previously) is shown in Table 5.12 for the years 1994-1999, 1994-2002 and 1994-2010 for CSF 94-99. These are among the highest cumulative multipliers of the six economies that we have modelled using HERMIN. This appears to fly in the face of the stalled convergence of East Germany that is apparent when aggregate data on macro-economic performance is examined for the period 1994-1999. The problem here is probably more associated with the poor performance of the economy of the former West Germany than with any failure in the East German CSF. Although the HERMIN analysis suggests that the CSF impacts on the East German regions were large and positive, the negative effects from the external economy (mainly West Germany) have probably dominated the positive CSF impacts and so the aggregate performance as observed in the historical data is quite weak. This serves to emphasise the fact that the CSF mechanisms are merely one factor in the decomposition of aggregate development performance.

33 The new growth theory suggests that the crucial driving force for convergence of a lagging economy is the initial state of the economy (Barro and Sala-y-Martin, 1995).



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Table 5.11 East Germany: CSF 94-99 impacts on GDP (GDPE) and unemployment (UR)

GDPE UR 1993 0 0 1994 2.75 -1.89 1995 2.85 -1.85 1996 2.92 -1.76 1997 3.24 -1.73 1998 3.71 -1.49 1999 3.95 -1.32 2000 1.51 +0.67 2005 2.76 +1.26 2010 4.68 +1.74

Table 5.12 East Germany: CSF cumulative “multiplier” on GDP

1994-1999 1.69 1994-2002 2.11 1994-2010 4.44

The sectoral impacts of GDP are shown in Table 5.13, with the detailed manufacturing impacts in Table 5.14. Here, the strongest impacts emanate from the market services sector (which includes building and construction activity). However, unlike the previous four national economies, the continued strong externality-driven growth of manufacturing induces further growth in the market services sector, even after the implementation stages of the CSF are complete. By the year 2010, the overall increase in the level of GDP (at constant factor cost) is almost 4 percent. Table 5.13 East Germany: CSF impacts on sectoral GDP (% change over baseline)

OT ON OG GDPFC 1993 0 0 0 0 1994 1.11 3.48 1.19 2.46 1995 1.34 3.49 1.05 2.51 1996 1.73 3.53 1.12 2.62 1997 2.24 3.82 1.20 2.92 1998 2.90 4.24 1.20 3.32 1999 3.24 4.45 1.20 3.54 2002 2.01 1.52 -0.06 1.43 2010 3.02 4.94 -0.06 3.70

OT denotes output in manufacturing; ON, market services; OG public services; GDPFC, total GDP;

Like the previous cases of Portugal and Spain, the growth in manufacturing is in the first 3 years fuelled by growth in employment within the sector. This is perhaps due



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to the time lag of the CSF on investment. As other investment enters the economy, from 1996/1997, bringing with it new technology, productivity increases, and the growth in employment eases off and declines in 2002. Table 5.14 East Germany: CSF impacts on manufacturing sector: Output, employment, productivity and investment (% change over baseline)

OT LT LPRT IT 1993 0 0 0 0 1994 1.11 1.09 0.02 5.31 1995 1.34 1.16 0.19 5.31 1996 1.73 1.30 0.43 6.15 1997 2.24 1.52 0.72 7.08 1998 2.90 1.81 1.07 7.67 1999 3.24 1.98 1.23 7.83 2002 2.01 1.00 1.00 1.21 2010 3.02 2.36 0.64 2.34


In the case of a region, public sector deficits and trade deficits are not of major concern, at least to policy-makers in the region. The financing implications are the responsibility of the national authorities and not of the regional authorities. Nevertheless, they give a measure of the success or otherwise of the regional economy. A regional deficit signals dependency on fiscal transfers from the nation. A regional trade deficit signals an inability to produce locally and a dependence on imports, which needs to be financed by private and public sector inflows. The simulation results are shown in Table 5.15. Table 5.15: East Germany: CSF impacts on regional deficits (GBORR) and trade surplus (NTSVR) (percentage of GDP, deviation from baseline)34

GBORR NTSVR 1993 0 0 1994 -1.96 0.60 1995 -1.71 0.60 1996 -1.74 0.53 1997 -1.69 0.29 1998 -1.59 0.17 1999 -1.43 0.00 2002 +0.56 -0.44 2010 +0.80 -0.28

What Table 5.15 suggests is that CSF 94-99 caused a reduction in the regional East German fiscal balance of between 1.5 and 2 percentage points of GDP. On the other

34 Note: A “+” sign indicates a deterioration (or rise) in the borrowing requirement (GBORR) but an improvement (or rise) in the net trade surplus (NTSVR), both expressed as a percentage of GDP.



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hand, the net trade surplus increased modestly. In both cases, there was a reversal of these effects in the post CSF 94-99 period, but of small size.

5.8.2 Northern Ireland

Northern Ireland is one of the least developed regions of the United Kingdom, but since the UK is at the average GDP per capita within the EU, it is clear that Northern Ireland is relatively better off than the countries of the Southern EU periphery. Nevertheless, it was designated Objective 1 for the purposes of CSF 94-99 and was the largest UK region to be so designated. Since we had full ex-post CSF financial data on Northern Ireland from an early stage, we use these data rather than the ex-ante planning data used in all the previous simulations. As was seen earlier from Table 6.9, the CSF/SPD expenditures continued beyond 1999 and were sizeable in the years 2000 and 2001. The results for Northern Ireland are presented in the same format as for East Germany. Table 5.16, shows the simulation results in relation to the impact of the CSF/SPD 1994-99 on the level of aggregate real GDP at market prices (as a percentage change relative to the no-CSF baseline), and on the unemployment rate (as a difference relative to the no-CSF baseline). In this case we had access to annual ex-post CSF/SPD expenditures, which continued beyond the year 1999 to a modest extent. Table 5.16: Northern Ireland Aggregate SPD 94-99 impacts on GDP and unemployment

GDPE UR 1993 0 0 1994 1.09 -0.41 1995 1.27 -0.51 1996 1.77 -0.71 1997 1.59 -0.57 1998 1.34 -0.43 1999 1.27 -0.39 2002 0.18 +0.04 2010 0.12 +0.04

* CSF 1994-1999 expenditures terminated after the year 2001. The Northern Ireland economy started from a moderately high base in 1993, but was only beginning to emerge from a period of over a quarter of a century of civil unrest and violence that had a severe negative impact on private sector activity.35 Table 5.16 suggests that the impact of SPD 94-99 on the level of aggregate GDP rose to just above 1.75 percent by the year 1996, but that the positive impact on the level of GDP

35 The first “cease fires” of the main paramilitary organisations were announced in 1994, subsequently broke down, and were reinstated. The Belfast Agreement that eventually led to devolved government only came at the end of the period of CSF/SPD 94-99. So the political context of CSF/SPD 94-99 in Northern Ireland continued to be one of uncertainty and evolution.



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declined almost to zero after 2001. The impact on reducing the unemployment rate was modest, peaking at a reduction of just over 0.7 percentage points in the year 1996, but declining to almost zero after 2001. The cumulative multiplier is shown in Table 5.17 for the years 1994-1999, 1994-2002 and 1994-2010 for SPD 94-99. These are among the lowest cumulative multipliers of the six cases that have been evaluated using HERMIN models. Subsequent tables suggest that much of the SPD funding was spent on construction and training activities, and that the manufacturing sector – where the enduring long-lasting impacts of the SPD tend to arise – was less affected. Thus, the long-run benefits were truncated and the cumulative multipliers were correspondingly smaller. Table 5.17: Northern Ireland: synthetic SPD cumulative “multiplier on GDP

1994-1999 1.24 1994-2002 1.33 1994-2010 1.48

The sectoral impacts of GDP are shown in Table 5.18, with the detailed manufacturing impacts in Table 5.19. Here, the strongest impacts emanate from the market services sector (which includes building and construction activity). However, the weak induced growth of manufacturing induces very little further growth in the market services sector after the termination of SPD 94-99. By the year 2010, the overall increase in the level of GDP (at constant factor cost) is merely 0.12 percent. Most of the growth comes in terms of higher labour productivity rather than in terms of higher output. The modest growth in manufacturing investment (IT) is very striking, and stems mainly from the fact that no funds appear to have been allocated in the Northern Ireland SPD to direct aid to manufacturing. This appears to have been funded directly through the block grant made to the Northern Ireland exchequer by London. The poor SPD impacts in Northern Ireland are due primarily to the disadvantageous sectoral structure of the region. Whereas in the case of Greece, the internal structure of the Greek manufacturing sector was a cause of low CSF impacts (small micro-sized firms tend to produce non-traded goods and lack entrepreneurial ability), in the case of Northern Ireland a root cause is the excessive size of the public (or non-market) sector as well as the dominance of traditional sub-sectors that are labour intensive and display low profitability.



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Table 5.18: Northern Ireland: SPD impacts on sectoral GDP (% change over baseline)

OT ON OG GDPFC 1993 0 0 0 0 1994 0.30 1.86 0.83 1.12 1995 0.25 2.44 0.62 1.31 1996 0.44 3.51 0.65 1.84 1997 0.39 2.90 0.83 1.65 1998 0.46 2.39 0.68 1.39 1999 0.57 2.20 0.67 1.32 2002 0.43 0.23 -0.03 0.19 2010 0.41 0.04 -0.03 0.12

Note: OT denotes output in manufacturing; ON, market services; OG public services; GDPFC, total GDP; Table 5.19: Northern Ireland: SPD impacts on manufacturing sector: Output, employment, productivity and investment (% change over baseline)

OT LT LPRT IT 1993 0 0 0 0 1994 0.30 0.30 0.00 0.52 1995 0.25 0.14 0.11 0.79 1996 0.44 0.22 0.22 1.22 1997 0.39 0.02 0.37 1.26 1998 0.46 0.00 0.46 1.23 1999 0.57 0.07 0.50 1.20 2002 0.43 0.00 0.44 0.55 2010 0.41 0.12 0.29 0.24


As in the case of East Germany, a regional public sector deficit and a regional trade deficit are not of major concern. The financing implications are the responsibility of the national authorities and not of the regional authorities. Nevertheless, they give a measure of the success or otherwise of the regional economy. A regional deficit signals dependency on fiscal transfers from the nation. A regional trade deficit signals an inability to produce locally and a dependence on imports, which needs to be financed by private and public sector inflows. What Table 5.20 suggests is that SPD 94-99 caused a reduction in the regional Northern Ireland fiscal balance - with a consequential reduction in the UK “subvention” to Northern Ireland - of about one half of one percentage points of GDP (NIDEFR). In Northern Ireland the effect of the SPD was that the net trade surplus fell modestly as a percent of GDP (NTSVR). In both cases, there was a reversal of these effects in the post CSF/SPD 94-99 period, but of small size.



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Table 5.20: Northern Ireland: SPD impacts on regional deficits (NIDEFR) and trade surplus (NTSVR) (percentage of GDP, deviation from baseline)36

NIDEFR NTSVR 1993 0 0 1994 -0.25 -0.32 1995 -0.27 -0.43 1996 -0.50 -0.43 1997 -0.43 -0.23 1998 -0.45 +0.02 1999 -0.50 +0.04 2002 -0.06 +0.15 2010 +0.03 0.00

5.8.3 The Italian Mezzogiorno

The HERMIN analysis intended for Italy was not undertaken owing to difficulties outside of the scope of this study. The following analysis is drawn from material contained in the Italian National Report, but is not a full statement of the impact of the Objective 1 interventions in the Mezzogiorno. A full analysis would require the use of an appropriate macro-model of the Mezzogiorno region. In particular, the effects of Objective 1 interventions compared to other accompanying effects, particularly the influences of the development of the European Single Market and the dismantling of regional policy in Italy, have not been possible to isolate with any degree of certainty. The evolution of employment and of the employment per sector of activity in the period 1994-2000 is moderately positive for Objective 1 Regions as shown by Table 5.21. However, the particular influence of Objective 1 interventions on this cannot be isolated. The Objective 1 regions created around 250.000 jobs during the period, mostly in the service sector (12%). Employment in manufacturing grew by 1.6% while employment in agriculture decreased by 24%. Unemployment remained high during the whole period and the decrease in recent years from above 20% to 19% does not allow the area to reach the pre 1994 crisis levels. In this sphere the difference with the Centre-North remains extreme: this area in fact reached 5% unemployment and during the period generated 1.1 million jobs, mostly in the market service sector. It has to be noticed that the Objective-1 activity rate remained lower than in the rest of the country especially for its female workforce, whereas the migratory component favours the Objective 1 employment performance as result of a resumption of the migration flows towards the north in recent years. The labour force structure by qualification has undergone a remarkable improvement over the period, as a result of the investments in training and education, partly financed through the ESF. During the period 1994-2000, a decrease of 10%, (later 14%), of the workforce with the lowest qualification and without qualifications was 36 Note: A “+” sign indicates a deterioration (or rise) in the borrowing requirement (GBORR) but an improvement (or rise) in the net trade surplus (NTSVR), both expressed as a percentage of GDP.



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registered. The same improvement is registered in the Centre-North (-9%), which however started from a lower relative weight of this category of worker. Table 5.21: Italian Mezzogiorno: employment in Objective 1 regions (thousands and %; absolute and relative variation in the 1994-2001 period)

Absolute change 1994-2001 1994-2001 variation (%)

Total Industrial

Transf. TOTAL Agriculture Industry Industrial Transf. Buildings Other

activities Of which

Commerce

Abruzzo 35,9 17,0 8,3 -28,1 9,1 18,3 -4,0 13,5 10,0 Molise 3,1 4,7 2,9 -46,2 21,5 30,5 13,3 11,8 12,3 Campania 15,0 -25,1 1,0 -34,3 -7,0 -9,9 0,4 10,2 7,9 Puglia 66,7 5,7 5,7 -13,8 3,1 3,0 10,4 11,7 16,1 Basilicata 4,3 14,0 2,4 -34,5 20,8 64,3 -11,6 4,0 4,2 Calabria -18,1 5,0 -3,1 -25,2 -6,7 14,2 -16,8 3,3 -8,0 Sardegna 42,6 -4,3 8,6 -22,3 -2,2 -7,2 4,8 18,9 1,9 Sicilia 102,7 -4,9 8,0 -18,1 -0,6 -4,4 3,7 15,7 6,6 Centre-North 1.107,9 -71,0 7,7 -16,1 -0,3 -1,7 8,0 14,9 4,5 Objective 1 252,3 12,1 4,3 -24,0 -0,1 1,6 0,6 11,9 7,2 ITALY 1.360,2 -58,9 6,7 -20,2 -0,3 -1,2 5,2 14,0 5,3 Source: ISMERI EUROPA processing on ISTAT data (Labour Force Survey) Gross fixed investments fell dramatically from 1990 and 1993 from 26% to 19% as a result of the crisis in public expenditure as well as of the privatisation process, which brought the activity of the main investor in the area, which were the public firms, to a halt. Due to these, and other, trends, income per head in the South over the decade has remained stationary in comparison to the Centre and North. Table 5.22: Italian Mezzogiorno GDP per capita in Objective 1 regions (EUR15=100, PPS)

Region 1990 1994 2001 Abruzzo 88.7 88.9 84.8 Molise 79.7 80.9 78.9 Campania 69.2 67.1 67.1 Puglia 68.2 68.6 67.0 Basilicata 66.3 69.2 75.0 Calabria 60.3 62.1 65.8 Sicilia 69.6 69.0 68.4 Sardegna 76.7 79.8 79.1 Mezzogiorno 70.1 70.0 69.7 Centre-North 120.5 122.0 120.2 Italy 102.3 103.1 102.0 Euro15 100.0 100.0 100.0 Source: Ismeri Europa elaborations of ISTAT, SVIMEZ e European Economy n.72-2001, data.



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Positive trends have been apparent, but these appear to have been insufficient to overcome the significant structural issues present within the Mezzogiorno in the short-term. Relative to the EU average, it is only Basilicata and Calabria where improvements relative to the EU average have been recorded.

5.9 Robustness and sensitivity analysis: East Germany and Northern Ireland

We now carry out a sensitivity analysis of the model-based results for East Germany and Northern Ireland. For initial explanatory material, please refer to the start of Section 5.7 previously. Table 5.23 (a) considers the case of East Germany. We have already drawn attention to the finding that the CSF impacts on East Germany are ranked first among the six economies in our study. From the table we see that as the elasticities increase, the GDP impacts rise. But the increased CSF impacts are quite modest. This is due to the fact that the East German HERMIN model characterises the economy are being very closely linked to, and dependent on the economy of the former West Germany. Consequently, most of the mechanisms that facilitate competitive growth in economies like Portugal and Ireland, are absent from East Germany. For example, all wages and prices in East Germany are determined by the overall German equivalent, which means in practice the wage and price level in the former West Germany. In such an institutional framework, the mechanisms of the CSF are blunted, and produce the impacts shown in Table 5.23(a). Starting from such a low base on quality physical infrastructure and human resources, the dominant long-run impacts probably come from German Unification in association with the CSF. Table 5.23 (a): East Germany: zero, medium and high elasticities: Impacts on GDP and unemployment


base dev from

base % dev from

base dev from

base % dev from

base dev from

base 1993 0 0 0 0 0 0 1994 2.75 -1.93 2.75 -1.89 2.75 -1.86 1995 2.76 -1.92 2.85 -1.85 2.94 -1.78 1996 2.85 -1.98 2.92 -1.76 2.98 -1.54 1997 2.91 -1.98 3.24 -1.73 3.58 -1.48 1998 3.18 -1.85 3.71 -1.49 4.25 -1.13 1999 3.41 -1.80 3.95 -1.32 4.50 -0.84 2002 1.42 +0.54 2.11 +1.01 2.15 +1.48 2010 4.43 +1.43 4.68 +1.74 4.93 +2.05

In Table 5.23(b) we turn to Northern Ireland. We have already commented on the fact that the Greek and Northern Ireland cases display a high degree of similarity. The SPD impacts are low. Increasing the externality elasticities produces only a small improvement. The long-run sustained SPD impacts are very small. The explanations are probably the same as those offered in the Greek case: namely, that a series of



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structural and institutional changes may be necessary before CSF-type programmes are able to produce significant cohesion impacts of the type that occurred in Ireland and Portugal. Table 5.23(b): Northern Ireland: zero, medium and high elasticities: Impacts on GDP and unemployment


base dev from

base % dev from

base dev from

base % dev from

base dev from

base 1993 0 0 0 0 0 0 1994 1.08 -0.42 1.09 -0.41 1.09 -0.41 1995 1.25 -0.52 1.27 -0.51 1.29 -0.50 1996 1.73 -0.73 1.77 -0.71 1.81 -0.69 1997 1.53 -0.61 1.59 -0.57 1.65 -0.53 1998 1.24 -0.50 1.34 -0.43 1.43 -0.37 1999 1.16 -0.46 1.27 -0.39 1.38 -0.31 2002 0.08 -0.03 0.18 +0.04 0.29 +0.13 2010 0.02 -0.01 0.12 +0.04 0.23 +0.11

5.10 The micro-regions

The final aspect of our assessment of the impact of the Objective 1 interventions between 1994-1999 is to examine the impacts on the micro-regions. The term “micro-region” refers to the Objective 1 regions in Austria, Belgium, France, Netherlands and the UK (excluding Northern Ireland, which is treated as a macro-region). In these regions it is argued that widespread social and economic convergence could not be an objective of the SPD (although it was explicitly so in most of the regions studied) owing to the limited scale of Structural Fund interventions. Rather, employment, increased productivity and upgrading product quality are the main issues, particularly in the view of Commission representatives. Separating out the impact of the Structural Fund interventions from background of the many other shocks and influences that condition micro-regional behaviour is even more complex than is the case for the Objective 1 Member States and the macro-regions, since one is generally without formal models of these regions. The methodology that was proposed was based around a “bottom-up” assessment of the results obtained in the case-study programmes (and other data provided from national monitoring systems), moderated by an assessment of deadweight, displacement and substitution effects and associated multiplier effects to move from gross results to net impacts. In practice, strong difficulties have been incurred in making an assessment of the impact of Structural Fund interventions across the micro-regions. Available data tends to be patchy and of questionable quality. Definitional issues reduce the ability



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to undertake consistent comparable analysis. Together these difficulties have hampered meaningful bottom-up analysis.

5.10.1 Micro-regional impacts on GDP

The view has been put forward by academic writers, Commission officials and some national consultees, that Structural Fund interventions in the micro-regions are insufficient to impact significantly upon GDP. However, only in the case of Burgenland, Austria, was improving regional GDP not a target in some form. The available evidence suggests that overall levels of GDP have increased in the assisted Objective 1 micro-regions, although in a number of cases this was not sufficient to improve the performance of the regions relative to European or national averages. In one of the two UK micro-regions – Merseyside - the ex-ante evaluation of the 2000-2006 Objective 1 programme concluded that whilst the differential in GDP per head between Merseyside and the UK had increased over the programme period, the Objective 1 programme had played a part in significantly slowing the continuing relative decline of Merseyside that would otherwise have taken place. The weight of opinion of those interviewed as part of the case study research supports the view that Objective 1 transfers and programmes have made a contribution to improving the basic conditions for growth in Merseyside. There is an assumption that the overall impact of the programme on GDP is likely to have been positive but the benefits will be realised in the long term. Other drivers of economic growth including overall growth in the UK economy assisted the impact of the programme. The extent to which the Structural Funds have contributed to the absolute improvement, or possibly prevented the relative worsening, of regional performance can be isolated where regional models are available. These were available for Hainault in Belgium, and research suggests that the French SPD has contributed to an estimated growth rate of 2.5% for the period 1997-2002 in the region, compared to a European average of 2.7%.

5.10.2 Employment

Strengthening the employment performance of the region is a key element underpinning most, if not all, of the regional programmes analysed for this study. The treatment of the potential impacts of different forms of interventions above suggests that employment growth is by no means guaranteed when productivity improvements are promoted by Structural Fund interventions. Assessing the employment impact of the micro-regional Structural Fund interventions in practice is complicated by a number of factors. Firstly there is a paucity of comparable data, with some programmes failing to capture end results in this field and others failing to distinguish between jobs created and those safeguarded. Equally, the real impact of the intervention can only truly be assessed by reference to the relative employment gain



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measured as a percentage of jobs already existing in a region. In the absence of such relative data the real impact is difficult to establish. It is also difficult to move from gross results to net impacts as there are only limited estimations made on the expected deadweight, displacement, substitution and multiplier effects. For these reasons we are unable to provide an overall employment impact. Rather we chose to highlight some key issues. In the Netherlands, the SPD aimed to increase overall levels of employment within Flevoland by 3% more than the Dutch average, culminating in a net employment increase of 15,000 jobs. Whilst this figure was more than realised based on an analysis of overall employment performance of the Flevoland economy – total employment increased by 42,000 jobs between 1994-2001: an average growth of 7.1% comfortably above the Dutch average of 2.6% - programme performance does not appear to have been strong. The total number of jobs recorded as created through the programme was 7,342 with an additional 6,600 potential new jobs created through the construction of business sites and business centres. Taking both of these together provides a gross effect of just under 14,000 jobs. Moving to the net effect is complicated as there are no recognised estimates available for deadweight or multiplier effects. Instead we have to use those derived for the Objective 2 areas of the Netherlands (Table 5.24). These are perhaps a reasonable approximation, although may bias the analysis owing to the unique commuting role of Flevoland. It is possible that some of these jobs may have been occupied by inward commuters, a factor potentially balanced by the likelihood that those trained through the ESF will have accessed jobs that would otherwise have been accessed by residents in neighbouring labour markets. Table 5.24 Job creation in the Flevoland Objective 1 micro-region of the Netherlands

ERDF Net Employment (Starting from a gross of 14,000)

Deadweight 50% -7,000 Displacement 15% -2250 Multiplier 1.2 +2800 Net jobs 1994-2001 (excl. Multiplier) 4,750 Net jobs 1994-2001 (incl. Multiplier) 7,550

Source: Source: Adapted from Dutch National Evaluation Report. Calculations ECOTEC Strong overall employment growth has also been identified in the French regions of Nord-pas-de-Calais and Corsica, although not in the overseas territories (DOM’s), except for Guyane. Although the available results do not suggest that the identified growth is directly related to the Objective 1 interventions, in Reunion this is less clear. In this case it is suggested that up to a third of all jobs created each year can be attributed to the Structural Fund interventions. Using deadweight effects derived from the Thematic evaluation of Structural Fund impacts on SMEs suggests the following net employment results, based upon available monitoring results (Table 5.25). It should be noted that these do not include any multiplier values as estimates



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for this were not available and so are on the lower bounds of the estimation. No displacement effects were identified in the course of the analysis. Table 5.25: French Objective 1 micro-regions Employment attributed to the SPDs (based on 3 areas selected for case study) Region Direct jobs

created Indirect jobs created

Deadweight Net Employment

NPC 3220 4508 23% 5951 Corsica 1030 1030 18% 1689 Reunion 2950 2065 6% 4714 Total 7200 7603 12354 Source: Adapted from French National Evaluation Report In the UK employment results are available for Merseyside. In Merseyside some 29,082 jobs are recorded as created by 1998. Using estimates developed by EKOS for the UK suggests that this accords to a net job creation figure of some 15,359 jobs. Evidence from stakeholder interviews suggests that this may underestimate actual deadweight and displacement effects (see Table 5.26). Table 5.26: UK Objective 1 micro-region: Deadweight Displacement and Multiplier effects in Merseyside.

Gross Employment effect 29, 082 Deadweight 0.35 -10,178 Displacement 0.35 -6616 Multiplier 1.25 3,071 Net job creation 15,359

An evaluation undertaken by ULB on the macro-economic impact of the Belgian SPD (Table 5.27) indicates that although there has been a significant impact of private capital investments, the added value of this type of measure is only temporary, and hence that in order to safeguard employment, additional measures (of a more structural nature) are necessary. On the basis of this model, the authors conclude that the additional effect of the SPD on total employment is equal to 14,300 jobs in the year 1999 and 24,400 by the year 2005. It is important to note that the specification of this model differs significantly from the HERMIN macro-models discussed earlier. In particular the rather different assumptions as to the magnitude of effects over time – with the cumulative effects increasing continuously over time in the Belgian example - should be noted. The first four columns of the table give the estimates for total and additional job creation (compared to the reference scenario) for two time horizons, 1999 and 2005. These estimates result from the econometric model. The final column indicates the actual job creation by the measures.



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Table 5.27: The macro-economic impact of the Belgian SPD. Measure type Total empl

1999 Total empl 2005

Add empl 1999

Add empl 2005

Actual empl

Private capital investment

18,824 14,001 7,588 8,949 10,395

Agric. capital investment 136 330 107 187 440 Public capital investment

563 2,971 265 1,519 142

Touristic capital investment

222 3,514 218 3,151 91

Human capital 12,825 15,480 5,480 6,809 n.a. Private knowledge investment

449 17,632 233 2,085 69

Public knowledge investment

0 282 19 849 1,342

Synergy effects 3,365 11,736 406 886 n.a. Global impact 36,433 65,946 14,315 24,434 12,479 Source: ULB-FUCAM Consequently, the Belgian SPD implies significant postponed effects. The SPD is hence believed to compensate for the expected reduction of 11.500 jobs in the manufacturing industry by 1999 and the loss of 14,300 jobs by 2005. The model estimates that in the reference scenario (without the SPD), employment in the manufacturing sector would decrease by 2.4% a year compared to a decrease of 0.5% a year when the SPD is carried out. In addition, the SPD would realise 8,100 jobs in the tradable services sector between 1994 and 2005. This would raise the annual employment growth from 1.1% in the reference scenario to 1.5% a year. Nevertheless, in 1999, the figures do not fully confirm this with expectations falling short by 1,500 jobs. In Austria overall employment did not change significantly in Burgenland during the period 1994-1999 and growth rates were below those of Austria as a whole. This is arguably due to the focus on supply-side activities in the programme which led to improvements in overall productivity (as set out below). Gross employment creation is also reportedly low at just 2,387 new jobs created. This though is believed to be an underestimation of the true position. Whilst evidence of significant net employment impacts is scarce there is a general consensus amongst stakeholders in the micro-regions suffering from industrial decline that important progress has been made in slowing down the rate this decline. The reason that the programme doesn’t have a large impact in the short term, they argue, is because a significant share of the measures/actions are of a structural type, which do not translate directly in job creation.



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5.10.3 Productivity

Evidence on productivity changes as a consequence of Structural Fund interventions is almost entirely lacking in the micro-regions analysed. This is unfortunate as it is likely to be one of the key – albeit often implicit - objectives of Structural Fund programme interventions in these areas. The national reports on the micro-regions have been forced to make use of regional level statistics in which Structural Fund effects are at best likely to be masked, and at the worst, completely dominated by other external factors. In the Netherlands, annual growth in the gross added value per employee (of 2% above the Dutch average) was an explicit objective of the programme. However, the only evidence available for this is based upon aggregate regional statistics. These statistics demonstrate that the target was not achieved and, indeed, GVA growth in Flevoland was below the Dutch average between 1995 to 1998. However, this is argued as being heavily influenced by changes to agrarian prices during this period, demonstrating the difficulty of drawing strong conclusions from such data sources. In Austria, GVA increased by 13.4% (Austria average: 12.3%) over the assessment period37. Arguably this is the underlying factor behind the improved regional performance recorded for Burgenland, as overall employment levels have not changed significantly. It is estimated that the Structural Funds have boosted GVA by around 5% per annum. One contribution to the improvement of productivity is in the levels of gross fixed capital investment. In Austria and France the contribution of the Structural Funds to this has been estimated at around 18% of total investments (source: national reports). A second is improvements in the levels of skills and qualifications within the labour force, although valuing this effect is difficult.

5.10.4 Unemployment

Jobless growth is an issue raised previously in this section in the context of the Objective 1 programmes for the Member States and the macro-regions. Persistent unemployment difficulties are also seen as a concern in the micro-regions benefiting from Objective 1 interventions. On the one hand productivity improvements may not have an overall effect on employment levels, as is posited in the Austrian case, whilst on the other, a flexible labour market may encourage those that achieve higher skills to leave the region. Overall unemployment rates may decline in this instance, but the relative performance of the region might not. This is presented as the case for example in Hainault, Belgium where high deadweight effects are associated with the jobs created and a negative displacement effect has occurred with training beneficiaries seeking work outside of Hainault. By 1999, the index of unemployment in Wallonia was 124.8, compared to the situation in 1993, where the index stood at 123.9 compared to the wider region.

37 See Austrian Report Page 84 and its statistical index.



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Overall, it is not possible to state with any degree of certainty what impact Objective 1 interventions have had on unemployment rates in micro-regions owing to the scale of the effect being dominated by other factors. However, there is stronger qualitative evidence suggesting that these interventions can have a positive impact on assisting certain sections of the labour force. In Merseyside, the Pathways approach led to concentrated investment in generating employment and improving access to the labour market for disadvantaged groups in the most deprived areas of the region. Although the impact cannot be measured in quantitative terms, there is a widely held perception amongst regional partners that the programme has made an important contribution to addressing inequalities in the labour market. However, deadweight and displacement effects tend to be high in these circumstances, reducing the net impact towards zero.

5.11 An overview of the impact of Objective 1 interventions

For those economies that have HERMIN models, how should we summarise the CSF impacts? Probably the best measure to use is the so-called “cumulative” multiplier. This is a modification of the usual idea of a multiplier calculated at a single point in time. We recall that the CSF cumulative multiplier is defined as follows:

Cumulative CSF multiplier:

Cumulative % increase in GDP / Cumulative CSF share in GDP

The cumulative multiplier has two properties that make it particularly relevant for CSF impact evaluation:

i. It recognises that the CSF programme implementation period is of finite duration;

ii. It also recognises that a well-designed CSF should generate long-lasting benefits

after the implementation phase is complete. These cumulative multipliers are summarised in a single table below for comparative purposes (Table 5.28).



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Table 5.28: CSF 94-99: Cumulative Objective 1 multipliers East

Germany

Ireland Portugal Spain Northern Ireland Greece

1994-1999 1.69 1.44 1.12 1.07 1.24 0.67 1994-2002 2.11 1.88 1.53 1.23 1.33 0.76 1994-2010 4.44 2.83 2.55 1.77 1.48 1.07 LR ranking 1 2 3 4 5 6 If we rank the economies in terms of the size of the cumulative multiplier for the extended period 1994-2010 (i.e., including eleven years after CSF 94-99 terminates), then East Germany comes first. However, this is an anomalous case since the initial situation of East Germany at the start of CSF 94-99 was very much less advantageous that the other five. Although the re-structuring of East German industry was well in hand by 1994, it was not complete. The state of the physical infrastructure was also poor, and this served to magnify the impacts of the CSF on building an improved stock of infrastructure. Nevertheless, the cumulative multipliers suggest that CSF 94-99 made a significant contribution to promoting cohesion in East Germany, even if this was dominated in the overall picture by the sluggish performance of the overall German economy. The second country in the ranking is Ireland, with Portugal a close third. Spain is an intermediate case. Northern Ireland and Greece come last in the rankings. In a sense this provides corroboration to the recent research of Ederveen et al (2002(b)), who suggest that the effectiveness of structural Funds depend on what they call “conditioning” variables, and the most important of these is “openness”. The Irish economy is the most open in the EU. Portugal is also quite open, relative to its size. Spain is less open, but Greece is the least open. The case of Northern Ireland is slightly anomalous, in that it has a very large public sector, and its manufacturing sector is weighted towards more traditional activities (clothing, textiles, traditional engineering) which are sold mainly locally or within the United Kingdom. Factors such as these partially explain the rankings in Table 6.28. The economic structure of the five “normal” Objective 1 economies has been encapsulated in the HERMIN models and serves to condition the effectiveness of the CSF impacts, as measured by the cumulative multipliers. Recently published work by Capellen et al (2002) supports the view put forward in the Second Cohesion Report that despite some progress towards national convergence, regional convergence within countries has not improved significantly over time despite Objective 1 interventions (Table 5.29). This same work, and that by others, suggests that overall convergence between Member States is progressing, but that this is not occurring to the same extent between regions across Europe.



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Table 5.29 : Dispersion of regional GDP per capita in Europe 1985-1997 1985 1990 1997 Actual sample Standard deviation (std.) 0.31 0.31 0.28 Std within countries 0.19 0.20 0.20 Actual sample less Greece, Portugal, Spain Standard deviation (std.) 0.22 0.23 0.24 Std within countries 0.20 0.20 0.21

Source: Adapted from Cappelen et al Whether the convergence is due to the Structural Funds, and more particularly Objective 1, is a debatable point. Our evidence suggest some positive impact but is unable to disaggregate this to the regional level. Work by Ederveen et al suggests that the Structural Funds do have a positive impact on regional convergence but only in those circumstances where regional convergence would not otherwise occur. This is an important caveat, as the authors state “the more optimistic one is about convergence, the more pessimistic one should be about the effectiveness of cohesion support, and vice versa” (p.17). Capellen et al argue that the positive impact of the Structural Funds on growth performance are stronger in more developed environments. They believe that growth in poorer regions is hampered by an unfavorable industrial structure, notably a high dependency on agricultural activity, and a lack of R&D capabilities. If this is the case, the limited emphasis on R&D interventions may have hampered the impact of Objective 1 interventions. Other contextual factors include the institutional structure in which cohesion support is set. The stronger the institutional structures, the greater is the impact of the structural funds in supporting regional growth. Other work by Ederveen demonstrates this point clearly, and Structural Fund support is found to be ineffective unless institutional structures are strong. This supports the Commission’s focus on strengthening institutional structures and suggests that management and implementation arrangements have a significance beyond the administrative process which is often overlooked. In the micro-regions it has been difficult to identify with any degree of certainty strong causal impacts. In part this a consequence of the modest contribution Objective 1 interventions have made to these regions, particularly when other shocks and the influence of domestic transfers are taken into consideration. This raises the question whether the more subtle long term effects of investment infrastructure and in improving the image of the region can be captured by an impact analysis in anything more than general terms. This is also reflected in the Belgium case, where qualitative analysis shows that the region has turned the negative trend, although the model used in this case also showed a negative continuation. Indeed, for most of the economies that were in decline, a turnaround was noticed. Observers and stakeholders have broadly concluded that the interventions had a positive impact, particularly in



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targeting particular sectors or segments of the labour force. However, on the whole deadweight, displacement and substitution effects have been relatively high. The broadest lesson to be drawn from this impact analysis is that whilst Objective 1 is a significant contributor to improved performance in the case of the major Objective 1 recipients, it has probably often been secondary to other factors. The extent of the beneficial impact has been heavily dependent on both institutional capacities and factors such as the structure and openness of the economy. These aspects are clearly crucial in particular to the capacity of the economy to respond to the challenges and opportunities of the process of economic integration. In the case of smaller programme areas, the overall impact is clearly much less significant in terms of influencing overall economic performance.



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6.0 MANAGEMENT AND IMPLEMENTATION ARRANGEMENTS

6.1 Introduction

Management and implementation systems contribute to the effectiveness, efficiency and impact of Objective 1. The following section examines the membership and functioning of the management structures for Objective 1, including the functioning of the partnership arrangements adopted. We address the management functions undertaken as well as outlining the management styles adopted. This is followed by an assessment of project selection and financial control mechanisms. We close with a consideration of the effectiveness of the monitoring systems and evaluation procedures for Objective 1. The management and implementation arrangements for Objective 1 of the Structural Funds have varied both between and within Member States and the analysis is based on an examination of the arrangements at Community Support Framework (CSF) and Single Programming Document (SPD) level within each of the Member States concerned.

6.2 Management of Objective 1

6.2.1 Regulatory framework

The 1993 Regulation (EEC) No 2052/88 sets out the conditions for the operation of the Structural Funds. This regulation proposes the following key management structures to be set up for the implementation of the Structural Funds in the Member States:

• A Partnership including the European Commission, the Member State and the competent Authorities and Bodies

• Monitoring Committees • A payment authority • A reporting authority

The specific regulations in relation to the Monitoring Committees and the wider partnership approach in relation to the Structural Funds (1993) were as follows: - Community operations shall be established through close consultations

between the Commission, the Member State concerned and the competent authorities and bodies - including, within the framework of each Member State's national rules and current practices, the economic and social partners, designated by the Member State at national, regional, local or other level, with all parties acting as partners in pursuit of a common goal.

- The partnership shall cover the preparation and financing, as well as the ex

ante appraisal, monitoring and ex post evaluation of operations. The



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partnership will be conducted in full compliance with the respective institutional, legal and financial powers of each of the partners.

- Monitoring Committees shall be set up within the framework of the

partnership, by agreement between the Member State concerned and the Commission. The Commission and, where appropriate, the EIB may delegate representative to those committees.

- The monitoring committee shall, if necessary, without modifying the total amount of the Community contribution and within harmonized limits by Objective, adjust the procedure for granting assistance as initially approved, as well as, in conformity with available resources and budgetary rules, the financing plan envisaged, including any transfers between Community sources of finance and the consequential adjustments of the rates of assistance.

6.2.2 Assessment of the partnership approach

The principle of partnership underlies the operation of the Objective 1 programme. Formally introduced in the 1988 reforms, the principle was strengthened in 1993 and has played a fundamental role in the implementation. The Regulation (1988) defines partnership as involving:

‘close collaboration between the Commission and all relevant authorities at national, regional or local level appointed by each Member State in the Programme’

The concept of Partnership was widened in 1993 to include ‘the economic and social partners designated by the Member State’ within the competent bodies and authorities. The Monitoring Committees are the most obvious instances of partnership working in the implementation of Objective 1, however partnership also occurred to a wider degree within programme implementation, including both formal and informal processes. The Thematic Evaluation of the Partnership Principle in relation to the Structural Funds (1999) found that the partnership principle provided a number of positive advantages to Structural Funds implementation including: · greater effectiveness in programme development and monitoring, · more effective project selection, · greater legitimacy and transparency in decisions and decision

making processes, · greater commitment and ownership of programme outputs, · opportunities for reinforcing innovation and learning across

organisational boundaries, and; · development of institutional capacity at sectoral and territorial levels.


Broadly, these advantages were also recognised by the Member States involved in the implementation of the 1994-1999 Objective 1 programme, and horizontal partnership working was welcomed as one of the ‘added-value’ aspects of European programming. For example, in the UK the ‘partnership principle’ has been highly influential in legitimising the demands for greater sharing of responsibility of regional policy and resources amongst local agencies including the community and voluntary sector and the private sector. It is clear that there was far more active involvement by local stakeholders in the development and implementation of regional development policy than had previously been the case. Similarly, in Ireland and Spain, the strong links forged with the private sector have made it easier to formulate actions based on real identified needs, which also enhances the absorption of Structural Funds. The partnership approach in the Objective 1 can be stylised in two ways. Firstly, there is a formal and informal aspect. The formal partnership is represented primarily through membership of the Monitoring Committee, as set out below. This varied significantly across Member States and largely reflected the particular institutional context in which different programmes were set but, on the whole, the partnership was broadest at the level of individual programmes. Secondly there is a vertical element (consisting of the relationship between the European Commission, national authorities and regional partners) and a horizontal element (broadly, the relationship between different partners at the regional level). This is partnership viewed in a very hierarchical manner but reflects the subsidiarity ethos of the EU. Figure 6.1 below conceptualises this notion. Figure 6.1 Horizontal and vertical partnership ThplaFoint

European Commission

National authorities

Regional partners

Ver

tical

Par

tner

ship

Socio-economicpartners

ECOTEC Research and Consulting L

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e role of the European Commission: In generalyed an important role in contributing to the partnershur DGs are involved in the management and implemeerventions (responsible for Regional Policy,

Horizontal Partnership

Socio-economicpartners

imited

, the European Commission ip process in Member States. ntation of the Structural Fund

Employment, Agricultural



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Development and Fisheries Policy) although they are dealt with as a single entity in the following. While the monitoring committees were the main vehicle in which vertical partnership working visibly occurred the EC was involved in supporting the Objective 1 process at a number of levels:

• Negotiation on the content of the strategies • Monitoring Committees • Sub-Committees • Bilateral discussions with CSF and OP managers • Bilateral discussions regarding large projects

On the whole the interventions of the Commission were well received. In particular, the European Commission involvement in Monitoring Committees was seen as positive by both programme representatives and community partners as it provided the means for direct input of the European Commission into the management process. The following are examples of where the European Commission had a positive impact: • In the UK and Greece, the views expressed by the European Commission on

programme development and implementation were felt to be ‘very helpful’ by programme partners. In the UK in particular community representatives welcomed the ‘alternative view’ on regional development provided by the European Commission

• In Portugal, the presence of the EC on the Programme Secretariat was welcomed

as it made the EC ‘a full partner’ in the process. • In Belgium vertical coordination between EC and Walloon (each active role) led

to both knowledge of the local situation and more global vision present However, some problems also existed in the vertical relationship between Member States and the European Commission. Some, but not all, of these were ironed out during the course of the programme: • In the UK, Germany and Italy relationships between the government and the EC

were sometimes tense, partly due to conflicting understandings of appropriate implementation strategies in the initial negotiation process. The negotiation process also produced significant delays in the start of a number of programmes.

• In Portugal, the need to communicate directly with a series of different

Directorate-Generals caused delays and complications and a lack of synergy • In Austria, the EC was felt to be inflexible on certain issues



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The role of national authorities: Vertical working at a national level was variable in its effectiveness. The links with higher administrative levels have aided those programmes where complementarity existed with national and regional programmes. In France, there was a strong partnership between the State and Corsica’s local authorities. Similarly, on La Réunion, there were three partners – the State, Region and Département – jointly presiding over the Monitoring Committee. This tri-partite structure translated into shared organisational arrangements for the implementation of the Objective 1 programmes.38 In Madeira, Portugal, strong links with regional authorities made it easier to connect Objective 1-financed interventions to those of the region, such as the infrastructure-centred Regional OP for Madeira. In some countries, however, communications at a national to regional level disrupted the overall vertical relationship. For example, in Spain, the centralised administrative/ co-ordination structure provided a central conduit for information from the Commission to the regions. However the benefits of this were not fully realised, because the structure was not supported by appropriate information systems and monitoring framework. Direct informal channels of communication were therefore established between the Commission and regions to resolve any issues regarding regulations more quickly. Role of socio-economic partners: The socio-economic partners have played an important role in the development and delivery of Objective 1. Sometimes as part of the vertical partnership but more often in the horizontal partnership arrangements adopted for particular programmes. The recommendation in the 1993 revision for the partnership principle to ‘include the economic and social partners designated by the Member State’ has broadly been followed. Social and economic partners were present in roughly three-quarters of all monitoring committees at both a CSF/SPD and Programme Level, and only in Portugal was there no representation of social and economic partners at any level (Table 6.1). At CSF level, Italy and Germany did not include socio-economic partners in the Monitoring Committees. In Portugal they could be present as observers as it was felt their inclusion as full partners would reduce the efficiency of the Monitoring Committee. In Italy, the social partners themselves could not decide on an appropriate composition of membership and so ended up being excluded. In Germany a separate Preparatory Meeting was set up for the socio-economic partners. This was unpopular, as the partners felt that the discussion was overly abstract in the absence of decision-making powers, and attendance significantly dropped by the end of the programme. At SPD and OP level, the inclusion of socio-economic partners increased over time in a number of Member States. For example, in Burgenland, Austria, programme representatives felt that the method of representing economic and social partners on

38 French report, p. 49.



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the Monitoring Committees would need some time to be agreed upon in the national context. The internal rules of procedure were finally adopted for the third monitoring committee meeting in September 1997. In the German Länder, similar delays occurred due to an initial reluctance to include social and economic partners at a Länder level, for example in Saxony. Table 6.1: Representation and involvement of social partners on the MC Involved social partners in MC at CSF/SPD

level Involved social partners at OP level

Austria Belgium France Germany x Greece Ireland Italy x Netherlands Portugal x x Spain UK Source: Adapted from National Evaluation Reports The nature of the representation of socio-economic partners on the Monitoring Committees also varied, in relation to voting rights. The social partners only had voting rights in a minority of cases on the Monitoring Committees. However, as decisions were frequently taken by consensus in the Monitoring Committees this did not necessarily cause a problem. In a significant number of cases, the social partners only had observer status. Socio-economic partners were consulted at different stages in the Structural Funds programme cycle through working groups, sub-committees and workshops (eg the French debates and preparatory meetings mentioned above). The Thematic Evaluation of the Partnership Principle (1999) found that these operational forms were generally seen as being of similar importance to the constitution of partnerships as the formal Monitoring Committees. Indeed, the Evaluation concluded that the most important contribution of partnerships to programme effectiveness comes through informal forms of consultation and co-option. A number of alternative routes were also taken to involve socio-economic partners in Objective 1 including consultations and discussion groups. In France, a series of debates was carried out with a large number of social and economic partners on the aims and objectives of the Structural Funds. In this respect horizontal partnership working was based strongly on informal structures. Positive experiences of horizontal partnership working Broad partnership working in Belgium created dynamism, enthusiasm and

good will amongst regional partners to the Objective 1 programme



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Partnership increased availability of co-financing in the Netherlands Partnership was felt to create common working habits in several countries Negative experiences of horizontal partnership working x Despite the fact that partnership is sometimes viewed as a mechanism for

disseminating innovation in terms of practice and ideas, the partnership process in Germany was not felt to lead to adoption of similar working practices amongst partner organization

x Partnership working was felt to limit objectivity and a ‘critical approach’ in

France, the Netherlands and the UK (Merseyside) Box 6.1 illustrates aspects of the benefits and difficulties of inclusive approaches to partnership working. Box 6.1 Illustrations of inclusive partnership working UK Pathways scheme Various community-led partnerships were established across the UK programmes, with primary responsibility for implementing the capacity-building elements of the programmes. In the case of Merseyside the ‘Merseyside Pathways Network’ was set up to represent community groups on the PMC. Pathways groups were funded by the programme’s fifth priority to allow for local action planning to meet local needs. These groups involved a broad range of partners, including colleges, the police and the private sector. Ten partnerships were chaired by local authority officers. A consensus of stakeholders believed the Pathways Partnerships had successfully built community capacity and developed local knowledge and local action planning capabilities. However, various stakeholders had negative perceptions of the network’s involvement in the PMC, with claims that they were often very negative and reluctant to be proactive. Some stakeholders criticised the Partnerships for having delayed the implementation of projects and for not providing the concrete results to satisfy such heightened expectations. Some of the representatives for this network were not actually involved in Pathways partnerships, but rather represented residents of specific areas more widely. Some stakeholders felt the structure of the Pathways Partnerships, with at least one representing each area of Merseyside, resulted in funding being allocated geographically rather than on the basis of quality applications. Germany - Mecklenburg Vorpommern The Mecklenburg Vorpommern region in Germany has been held up as an example of good practice due to the wide number of partners involved in their MC and wider partnership working. However it also demonstrates problematic aspects, in that in the case of EAGGF (which is highly decentralised in Germany), 30 agencies were occupied with this fund alone.



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6.2.3 Strategic management

A Monitoring Committee is charged with responsibility for the implementation of the adopted strategy. In accordance with the Regulation all Member States established a Monitoring Committee (MC), supported by a Secretariat. The Secretariat supports and administers the work of the MC, and oversees the practical management and implementation of the programme. Within those Member States with a Community Support Framework, a MC oversaw the operation of the CSF as a whole and each Operational Programme also had an individual MC. Where a Single Programming Documents operated, each programme had an individual MC. Representation of partners on the MC at the CSF level was wide ranging. The European Commission and representatives of Central Government were present in all cases and, in Greece, Spain Ireland and Portugal, various social and economic partners were also involved. However the latter were occasionally only present as observers. Table 6.2: Representation on the Monitoring Committee at CSF Level

Germany Greece Ireland Italy Portugal Spain European

Commission

Other European Institutions e.g.

EIB

Ministry of Finance

Other National ministries

Regional ministry

*

Local authorities Trades Unions **

Community Partners

**

Business representatives

** **

Source: Adapted from National Evaluation Reports * In Ireland, the Regional Authorities and the Social Partners joined the CSF Level Monitoring Committee in

1997 following the recommendation of the Mid-term Review Package

** As observers In practice, most significant decisions tended to be taken at the Monitoring Committee for the Operational Programmes rather than the CSF. Membership of the Monitoring Committee is at the discretion of the Member State. In practice a wide and variable range of partners were involved. Common members included the European



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Commission, the Ministry of Finance (or equivalent), other Central Government representatives and representatives of regional governments (Table 6.3). Table 6.3: Representation of the Monitoring Committee at OP/SPD Level (average representation)

A

ustr

ia

Bel

gium

Fran

ce

Ger

man

y

Gre

ece

Irela

nd

Italy

Net

herla

nds

Port

ugal

Spai

n

UK

European Commission

Other European Institutions e.g.

EIB

Ministry of Finance

Other National ministries

Regional ministry

Local authorities Trade Unions Community

partners

Business representatives

Source: Adapted from National Evaluation Reports Apart from the national and regional ministries, local authorities were the most represented group, being present in over half of the Monitoring Committees. Community representatives were more likely to be involved than business representatives, being involved in the Monitoring Committees in 63% of the countries. Business representatives were present in 50% of Member States. Trade Unions were the least likely to be involved, only appearing in 45% of the Member States. In practice most Monitoring Committees involved a high number of participants (Table 6.4) with an average membership of 44 people. However there was considerable variation between countries, evident in the fact that the smallest average membership examined as part of this study was 15, in Spain, and the largest 85, in Portugal. Actual attendance levels were not assessed as part of this study.



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Table 6.4: Average membership of the MC Country CSF/SPD Level

Austria 35-40 Belgium 51 France 60-70 Germany 59 Greece 25 Ireland 44 Italy 40 Netherlands 20 Portugal 75-85 Spain 15 UK 50 Source: Adapted from National Evaluation Reports Monitoring Committees are expected to take a strategic approach to the implementation of Objective 1: ensuring that the CSF and OP were implemented as planned and that re-programming occurred if required. The evidence suggests that the MCs did manage to operate as strategic bodies, although with a very strongly focus on financial management. Over the course of the 1994-1999 programme, it can be argued that a strategic overview was required to: • Ensure the overall financial delivery of the programme • Ensure the strategic objectives of the programme are met Achieving this would have required both a financial-led approach and objective-led approach. The evidence suggests that Monitoring Committees did succeed to some extent in following a financial-led approach to provide a strategic financial overview. MCs were strongly preoccupied in achieving spend in the majority of the Member States and this led to decisions to significantly re-programme financial profiles in a number of cases. For example in Italy, the Steering Committee defined yearly target levels of commitment and expenditure for all the programmes, and all OP’s not reaching their targets had to free part of their planned resources to programmes with better performance and expenditure capability. This method required agreement among a large number of different institutions, often with conflicting political orientations, and a transparent and efficient flow of information on financial progress to the Monitoring Committee. However, the mechanism was successful and its mix of competition and partnership supported the overall financial expenditure. The fact that most programmes succeeded in committing and disbursing most of the planned funds suggests that MCs were more widely successful in this regard, although some questions remain as to their overall role and practical influence within this process. The role of MCs as strategic bodies in relation to the achievement of ‘objectives’ has, arguably, been much more limited. This may partly be explained by the fact that for



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the majority of countries the monitoring data brought to the Committees focused on spend rather than outputs and results. Also, where broad representation of social and economic partners was achieved this sometimes reduced the strategic focus taken by the Committees, through the encouragement of a ‘project level focus’. For example in some cases (eg Greece, Netherlands and UK) the representatives on the MC were also project promoters, which made their role somewhat ambiguous and encouraged a focus on individual interests. In France, the national evaluator felt that the focus on a ‘partnership’ approach prevented a critical approach being taken to resolving issues. Overall, the MCs seem to have functioned most effectively as information and communication bodies. For example, the involvement of social partners in the MC allowed for early communication of issues and opportunities to these groups. In Italy, the MC reinforced the political will to succeed and helped to mobilize groups. Because of their public visibility, the MC’s also had the added benefit of acting as transparent bodies for raising problems. The resulting public exposure was felt by several national evaluators to have contributed towards the resolution of problems at both a national and regional level. For example in Italy the MC was used to challenge the government on serious problems in public so that they would be dealt with at a national level. The MCs in the UK (Merseyside) also functioned in this way at the level of the SPD, where the MC was used to highlight and ‘shame’ projects that were lagging behind in terms of outputs. The practical role of the Monitoring Committee has been questioned in some cases during the course of the national evaluations. Many saw it as a formal body that merely “rubber-stamped” decisions that had already been taken. In part this was a result of the short-comings highlighted above, the large number of members and lack of knowledge of the Objective 1 interventions reduced their ability to act as effective strategic bodies. However, concerns were also expressed that the Monitoring Committees might be used to legitimize decisions that had already been taken. For example, in Belgium, social partners questioned the fact that decisions appeared to be made on bilateral basis outside the meeting. In Ireland, and Italy the MC allowed cross sector agreement on decisions, but in fact the decision-taking occurred elsewhere. Finally, in Greece, the MC effectively agreed decisions, which were made between the EC and the relevant Ministry. That does not nullify their potential role in cases where prior agreement had not been reached, or where dissenting voices wished to be heard. Broad representation may also have contributed to a more democratic decision making process. Whilst the Monitoring Committee approach has proved broadly effective, a number of practical constraints have been identified which influenced the ability of Monitoring Committees to operate and, arguably, resulted in some of the shortcomings identified above. These were common across all Member States. • The high membership level was regarded as a key constraint on the efficiency of

the Monitoring Committees. Whilst high membership can allow monitoring



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committees to be inclusive it can have a detrimental effect on the effectiveness of larger meetings. In Belgium the broad representation led to dynamic and positive engagement with regional partners, but resulted in meetings that were regarded as inefficient by many partners. A similar experience was reported by partners in the UK. The Thematic Evaluation of the Partnership Principle (1999) found that there was no necessary trade off between inclusiveness and efficiency, however this obviously requires that the proper management structures are in place. The size of the MC meetings did, for example, make it difficult for decision making to take place in that there were many different viewpoints to take into consideration. This led to some difficult meetings at SPD level in the Austria and UK (Merseyside), where decision making promoted conflict between the different partners. In the Austrian case, however, a specific reason given for the origin of this ongoing conflict was also thought to be the absence of allocated voting rights to the social partners on the committee.

• On average meetings of the Monitoring Committee were held just twice a year.

This infrequent programme was a disadvantage in that it meant that many members did not generate a strong understanding of the objectives of the Objective 1 interventions.

• The capacity of a sector to represent itself effectively was an important constraint

on the ability of some groups to participate effectively. This largely depended on the level of knowledge of European funding and previous experience with similar partnership processes. In the UK (Merseyside), the private sector was present on the MC, but was initially weakly represented until a capacity building exercise funded by a local Chamber of Commerce proved successful in increasing their engagement. Technical assistance, in terms of capacity building amongst interested parties would have been beneficial in a number of cases to obtain more effective representation.

• A lack of preparation and poor communication prior to meetings made it difficult

for many Monitoring Committees to operate in an effective manner. In Italy, MCs worked best where discussion had occurred before the meeting which then had to approve or disapprove a decision.

• The availability of adequate monitoring and evaluation data was also an important

element in the ability of the MCs to make decisions. A lack of data, particularly in relation to achievement of strategic outputs, was a problem across the Member States. Information on financial spend was, on the other hand, frequently provided, but this often included a large amount of detail which was not ‘user friendly’ to the Committees. This supports the finding by the Thematic Evaluation of the Partnership Principle (1999) that the technical assistance provided to a partnership (eg nature of information provision) was crucial to its success.



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6.2.4 Wider management arrangements

In addition to the formal Monitoring Committee structure, provided for in the relevant Regulations, Member States introduced a variety of informal mechanisms to suit their own institutional contexts. There was considerable variation in these arrangements from one Member State to another and, occasionally, within Member States. These supplementary arrangements were partly driven by a perceived need for alternative approaches to deal with the strategic, administrative, technical and political processes involved in implementing the Structural Funds. In practice the MC could not address all these issues simultaneously. In part the wider management arrangements established in some Member States, to smooth the decision-making process, may also have contributed to the feeling that decisions were being made outside of the Monitoring Committees. The established groups had different roles, some were to make the decision-making process more efficient or more effective, whilst others sought to broaden the partnership involvement in the management process. Identified examples of different approaches, with attendant strengths and weaknesses are set out in Table 6.5 below. Table 6.5: Supplementary groups supporting the PMC Groups Member States Purpose Identified added value Overall Steering group

Belgium (Suggested in Netherlands)

To guarantee the regular follow-up of the execution of the programme

- Smaller group than MC (+- 15 members) which facilitated the decision making process - The steering committee dealt with the follow-up of individual projects so that the Monitoring Committee could work at a more aggregated level (measures). - The steering committee ensured regular meetings between the different administrations dealing with the co-ordination of Objective 1 projects.

Preparatory meetings

Germany Speed up the decision making process

- Separate groups for different funds and Lander helped to make MC meetings less complex - However, the meetings were poorly resourced and preparatory meeting involving social partners excluded them from main decision making committee. -Ultimately, social partners stopped attending because became abstract process in absence of actual decisions.



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Groups Member States Purpose Identified added value Informal advisory groups, Technical Working Groups and committees

UK, Italy, Belgium Netherlands and Portugal both felt that it would have been useful to utilize similar groups.

Expert sectoral and technical advice These groups comprised of relevant expert practitioners and sector co-ordinators who provided guidance to the PMC.

- In the UK, the groups ‘took the heat’ off PMC meetings, but did not have the technical expertise to really add value. - In Belgium, the groups were found to duplicate discussions held within the PMC so they were ultimately abandoned in 1997. - In Italy, the most important technical group was that which gave advice in relation to reprogramming but did not become really effective until the 2000-6 programming period due to delays in setting up.

Expert team Greece Ministry of National Economy (overall managers of the CSF) seconded teams of experts to all of the Ministries and General Secretariats of the Regions, to assist with setting up systems and planning

- Method for overcoming organizational and regulatory difficulties

Specialized quality assurance, project management and certification bodies

Greece Support for central management of CSF in terms of quality assurance, project management and certification

- Supported central management systems, and had a long term view beyond end of 1994-1999 CSF - Did not provide support at a more decentralised level, where many management projects remained.

Financial committees

Belgium Financial decision making

- Duplication. The same discussions were held by the PMC and the Financial Committees. As a result, the Financial Committees were abandoned in 1997.

Information reunion

France Consultative and communication bodies

- Spread information to social economic partners, local chambers who were not represented on regional MCs

Source: Adapted from National Evaluation Reports Each Monitoring Committee was supported by a Programme Secretariat. The basic role of the Secretariat was to support the Monitoring Committee, but, in practice, their role extended to taking on wider aspects of the management and implementation of the programme. The list below represents the variety of tasks which the Secretariats became involved in, though this is not exhaustive, and tasks undertaken varied between the Member States:



200

- Steering and monitoring the processes within the programme - Administering the Committees and groups (Monitoring Committees and other

supporting Committees and groups) - Communicating the objectives, operational methods and achievements of the

programme to internal and external audiences - Drafting selection criteria and criteria for prioritisation - Appraising projects and making recommendations to Monitoring Committees; - Encouraging project development and the development of partnerships; - Co-ordinating the preparation of the programme’s progress reports; - Applying financial advances from the EU - Monitoring the financial and physical progress of the programme and presenting

findings to the Monitoring Committees - Supervising the evaluations and evaluation procedures

6.2.5 Management styles

A number of different types of organisations were involved in the management of the Objective 1 programme 1994-1999, both in terms of acting as Programme Secretariat, and also in terms of the wider implementation of the programme. The organisations involved varied quite strongly across Member States. In some cases public management styles predominated, in others there was a stronger use of the private sector or other intermediate bodies. Spain, Portugal and the UK all adopted an approach broadly dominated by the public sector for the 1994-1999 programme, although in the UK, for example, an independent secretariat operated in Scotland. Greece, Ireland, Italy, France all worked with a wider variety of bodies to assist with delivery of Objective 1 including: • intermediate public bodies, • the private sector, • independent management units For example, in Italy, several of the sectoral multi-regional programmes were implemented by intermediate agencies and companies: - ANAS (Ente Nazionale per le Strade) a public sector body responsible for

implementing the multi-regional road programmes under the jurisdiction of the Ministry of Public Works;

- FS (Ferroviaria Italiana) implemented multi-regional rail programmes under the jurisdiction of the Ministry of Transport;

- Telecom (now privatised) implemented multi-regional telecommunication programmes under the jurisdiction of the Ministry of Telecommunications Greece made use of both intermediate public bodies and consultants in the delivery of Objective 1; partly on the recommendation of the European Commission. For



201

example, one of the key actors in the implementation of the Continuous Training Operational Programme was the Manpower Employment Organisation (OAED). Consultants were also utilised for the overall management of the CSF and for every Operational Programme excluding Health & Welfare. Consultants were involved in almost every aspect of planning, implementing and assessing programmes but were in particular used for: • Overall Management (Management consultant) • Project level implementation for infrastructure projects • Publicity and communications Ireland used a large number of intermediate public bodies for implementation, and after the mid-term evaluation transferred more responsibility to these agencies. For example the implementing arrangements for each OP was assigned to a series of dedicated Implementing Bodies. In the case of the Industrial Development Operational Programme four Implementing Bodies were responsible for implementing the majority of Measures for example, Enterprise Ireland was responsible for all aspects of indigenous industry development including food/natural resources. Instead of working with previously existing intermediate public bodies, a number of countries favoured the setting up of independent management units for delivering aspects of Objective 1. Examples included: • ESF Projectbureau (Netherlands) • Agile (Agence de Gestion des Initiatives Locales) – Tripartite management unit in

La Reunion (France) • Speke Garston Development Company (UK) These management units usually brought a number of different government or sectoral interests together to achieve the management of programmes, funds or significant multi-sector projects. Management units were also set up within more centralised management systems. For example, in Portugal, management units were set up in relation to each operation programme, each under an individual manager. These units were sectorally based, and so did not encourage cross working between sectors, but the entities interviewed found these units a useful way to work effectively together. Ireland offers an example of the benefits of using the public sector to deliver programmes. The management system was strong and fit for purpose because of the existence of a single lead department with overall management responsibility and with previous experience in this role, and throughout the departments had the experience to deliver the programmes using tried and tested techniques which achieved high absorption. In addition, there were no concerns in relation to co-financing within the Irish programme as this could be found through public sector departments. Table 6.6



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below illustrates some of the advantages and disadvantages identified of different agencies having responsibility for management: Table 6.6: Benefits and disadvantage of different management systems Positive factors Negative factors

Public sector • Strong links to wider vertical

and horizontal working

arrangements

• Dissipation of responsibilities

within existing government

departments

• Public sector workers cannot

be funded by Technical

Assistance budget leading to

secondments/short term

contracts which can prevent

continuity in management

• In a number of Member States,

the public sector lacks related

performance related promotion

strategies which can negatively

influence motivation.

• Importation of expertise • Ambiguities – in Greece, the

Manpower Employment

Organisation was a major

project promoter under two

Sub-Programmes but also

advised the Ministry on the

planning and implementation

of the programme.

Use of agencies and separate

management units

• Single focus on delivery of the

programme can lead to clearer

roles and responsibilities, and

more of an outputs-results

approach

• Importation of expertise • Lack of acceptance by local

communities

• Useful capacity building role

in terms of local/regional

authorities and project

promoters

• Can be expensive

Consultancies

• Lack of transparency

Source: Adapted from National Evaluation Reports Public sector management was effective in the implementation of Objective 1 programmes but the following difficulties were identified in the use of Public Sector bodies for the management of Objective 1:



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• Short-termism: This situation is increased because the public sector are not able to claim Technical Assistance allowances if they are already in post. In various countries this led to short term contracts, and secondments from different agencies which meant that the continuity within the Programme Secretariat within the programme was lacking.

• End of desk scenario: Frequently public servants picked up aspects of Objective

1 management but combined these with other responsibilities. In the UK, this became known as the ‘end of desk scenario’, in that responsibilities were so dispersed nobody took full responsibility for programme implementation.

• Lack of performance related motivation: In Greece, despite the fact that public

servants frequently had full-time responsibilities working on programmes, the lack of a performance related pay and promotion structures meant that they lacked the motivation to achieve targets.

• Lack of focus on innovation: A criticism of the Irish programme above was that

the delivery of the Objective 1 programme through tried and testing mechanisms led to a lack of innovation.

• Lack of output orientated management: In Portugal it was found that public

servants were less likely to be skilled in output orientated management, and this was combined with a dissipation of responsibility and internal department divisions to prevent the development of a proper ‘project’ focus.

In Italy, Greece and Ireland, the experience of using private agencies was broadly positive. Overall, in the Greek and Italian cases, the use of external agencies and the private sector was important in allowing the effective running of programmes given the lack of capacity and expertise in the public sector, at least at local and regional levels. However in some cases external agencies experienced similar problems to public sector ones. For example in Greece, the vertical organizational structure of the Manpower Employment Organisation (OAED) prevented cross working and synergy within the OP on Continuous Training and Education. Two examples of good practice that demonstrate advantages gained from using alternative management styles are illustrated in Box 6.2 below.



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Box 6.2: Independent Management Units La Réunion – Tri-partite management structure

A tripartite management unit had been set up in 1990 by the three partner institutions to provide secretarial services for the Committees, produce progress reports and assist the services with regard to implementation. This unit, the Agence de Gestion des Initiatives Locales (AGILE) – Local Initiatives Management Agency - consists of managers from each of the partner institutions. Its responsibilities are defined by the Local Monitoring Committee, but it is under the authority of the SGAR (Secrétariat Général pour les Affaires Régionales). Its role and missions have been clarified in 1994 (and in 2000). This tripartite programming unit was particularly effective and allowed a broad horizontal partnership. UK - Speke Garston project In the UK (Merseyside) a development company was used to deliver a significant part of the Objective 1 programme in relation to the Speke Garston area of Liverpool. The Speke Garston Development Company was launched in 1996 as a joint initiative between North West Development Agency and Liverpool City Council, backed by substantial Objective 1 funding (£14,076,000), and a significant land holding bought in its name by English Partnership (a national regeneration organisation in England). The company’s key objective has been to develop high-quality business sites and premises and attract investment and jobs to South Liverpool. In six years, £17,852,000 of Objective 1 funding has helped to attract £223 million of private sector investment to the area, generate more than 4,600 new jobs, and improve 192 hectares of land. In terms of outcomes, Speke Garston Development Company has pump-primed development activity in the area and helped to change perceptions of Merseyside as a location to invest, a starting point for long-term sustainable economic regeneration. In addition to differences in the use of public and private sector approaches to the management of Objective 1 differences also existed in the location of management activity. In some cases arrangements were highly centralised, in others they were very decentralised and in the remainder a mix of the two approaches prevailed. Highly centralised model involving mainly sectoral programmes: Two of the Cohesion countries, Ireland and Portugal developed the most centralised implementation structures for Objective 1 1994-1999. Ireland developed a series of purely sectoral programmes that were run by the national ministries. In Portugal the CSF 1994-1999 was built on a set of three sectoral axis (corresponding to about 79% of the overall revised expenditure of the CSF) and a fourth axis that comprised of interventions directed at the regions (corresponding to 20%). This last axis included particular regional OPs for Azores and Madeira Islands and five Regional Operational Programmes of the Mainland Portugal. However to give some indication of



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respective importance, the Regional Operational Programmes only represented 8.5% of the overall revised expenditure. Mixture of centralised and decentralised programmes: Greece, Spain and Italy operated implementation systems that were partly centralised and partly decentalised, including regional and sectoral programmes with local level responsibilities but also strong central interventions. Both Greece and Spain operated programmes which had 50% regional focus 50% sectoral focus. In Spain, relevant government departments within the regions shared responsibility for managing the delivery of the programmes, while in Greece the public sector, consultancies and national agencies all took some responsibility (see section below). Italy was slightly different in that it represented a transitional system, moving from centralised arrangements under the 1989-1993 programming period to a new decentralised system under the 1994-1999 programming period (Box 6.3). During the 1994-1999 period much more power was given to the local and regional administrations. However this was a slow process, given that local and regional administrations often lacked capacity and expertise to deliver the programmes, particularly during the first few years. Despite this delegation of responsibility, the vertical partnership between the national government and the EC was still a central factor in the programme. Agreements between government and European commission resulted in three centrally implemented changes:

1. Reprogramming 2. Annual spending objectives 3. Implementation of Similar projects (Spondi)

Box 6.3 A note on Italy as a Transitional system For a number of years of the 1994-1999 Italy was in a transitional phase, which caused significant problems in terms of coordination and delivery. Due to a lack of experience and capacity at a regional and local level, real partnership failed to exist, and a simple translation of vertical government departments at a local/regional level prevented the ability to deliver multi-sectoral programmes. An emerging lesson from this is that a large amount of investment is needed at a local and regional level to support the ‘decentralisation’ of Structural Funds delivery unless robust regional/local ‘Programme delivery’ structures are already there to start with. Decentralised approach, reflecting more regional programmes: Finally, the remaining Member States operated a more decentralised system. This was the case for France, UK, Belgium, Austria, and Netherlands, none of which operated a Community Support Framework and therefore managed individual programmes at a regional level, but was also the case in the East German Lander. In the case of Eastern Germany, the European and Federal levels were mainly involved at a political, conceptual and control/audit level. A strong direct involvment



206

was only visible in the case of the ESF programme, “Training of Labour Force” which went across several Lander.

The following table (Table 6.7) sets out the advantages and disadvantages of the three different broad approaches taken in relation to centralised/decentralised delivery: Table 6.7: Advantages and disadvantages of decentralised/centralised management systems

Advantages Disadvantages Centralised management systems

Efficient delivery. The Member States with centralized management systems achieved relatively quicker decision making on elements such as absorption. In terms of overall impact, Portugal and Spain have been more successful CSFs. Flexibility In Portugal the centralised management process gave it the flexibility needed to rapidly adapt to change.

Both Portugal and Ireland were concerned at a lack of responsiveness to regional needs which has led to changes in the current programmes (eg regional programmes now count for 32.6% of overall expenditure in Portugal as opposed to 8.5%) The reliance on more traditional centralized procedures at times prevented innovation, and encouraged an emphasis on efficiency and absorption rather than outputs and results. This also meant that these management systems were less likely to be able to reach new target groups.

Partly centralised, partly decentralised

Good coordination in parts The centralised administrative/co-ordination structure in Spain provided a strong framework for the collection of management information as well as a central conduit for information from the Commission to the regions. In Italy, positive effects were provided by the strong co-ordination promoted by the Treasury

Confusion of roles and responsibilities n both Spain and Italy there was a confusion of responsibilities and difficulties in communication between the regional and national levels. Local and regional implementation have had real difficulties in Italy and Greece due to lack of capacity and expertise.

Decentralised systems Efficiency In Germany, the deconcentrated or decentralised approach adopted by several OPs for the

Lack of capacity Problems where there is a lack of capacity and expertise at regional and local level,.



207

approval and accompaniment of projects also contributed to increase the efficiency of the implementation process. Decentralised systems represented regional needs to greater effect (this was stated explicitly in Spain, Germany and Italy)

Complexity (eg Germany) in terms of roles and responsibilities eg even though federal more responsibility for labour market, also supplemented at a regional level.

Source: Adapted from National Evaluation Reports Despite the broad typology identified above, there is also variation within Member States in relation to individual Funds. The way in which funds operated (ie whether they were centralised or decentralised) depended more on the way in which overall management and implementation mechanisms worked, rather than on any innate properties of the funds themselves. However, different Ministries have different approaches and that the Funds which they control are managed under their terms rather than in relation to a single Structural Fund model. For example, in the UK, EAGGF was highly centralised and run from national government departments. This led to some problems ‘on the ground’ as this fund was not fully integrated under regional partnership control. The EDRF was run in a more decentralised manner, with much more regional freedom and control. In Germany, the EAGGF was managed in a highly decentralised manner, with 30 different agencies running this fund in Mecklenburg Vorpommern alone. In contrast, the ERDF was more centralized. whereas in Italy and UK it was one of the more decentralised funds.

6.2.6 Management of the different Funds

The 1993 Regulation (EEC) No 2052/88 argues strongly for a synergy between the funds which make up Structural Funds, arguing that ‘Coordination between the activities of the various Funds and the FIFG shall be carried out in particular through: Community support frameworks, multiannual budget forecasts, where advisable, the implementation of integrated forms of assistance, prior appraisal, monitoring and ex post evaluation of operations under the Funds carried out in connection with a single objective and of those carried out in connection with a number of objectives in the same territory’. However, the Thematic Evaluation of the Partnership Principle (1999) found that the European Social Fund and the European Regional Development Fund worked in parallel rather than in integrated partnerships within the implementation of Objective 1. This finding is supported by the current evaluation, which has also showed that EAGGF and FIFG are perhaps even more isolated in terms of implementation mechanisms.



208

Across all the Objective 1 programmes, the fact that the funds operated to different principles and with different financial requirements restricted synergy between these funds. This was not helped by the fact that the funds are administered by different Directorate-Generals at a European level. However the national and regional management systems themselves further restricted synergy through developing separate fund delivery mechanisms and through the wider existence of divisions between departments. It appears that the three funds and the FIFG instrument are in fact administered separately in a number of cases. In a significant number of Member States, the ESF has a separate Secretariat, and separate administration systems at a national and regional level. In addition, it is common for EAGGF and FIFG to be implemented by national government departments for Agriculture and Fisheries. In the Netherlands, for example there was a strong division of tasks between the PME and specialist departments. Parts of EAGGF and FIFG measures were managed by the Ministry of Agriculture which blurred sight of the overall implementation of the programme. In addition a split operated between ERDF and ESF implementation. However, in the Netherlands this was not found to be particularly ineffective, mainly because a group was set up to discuss synergies and overlaps. The split between funds had several implications for the overall effectiveness of programmes in that:

- an overview was not achieved of the workings and impact of the funds - synergies were not achieved on the ground in terms of delivering projects

In terms of synergy on the ground, several issues emerged. Timing was one issue. In Greece, the ESF training schemes were found to be mistimed in relation to the job –creation elements of the ERDF. A lack of synergy between the different projects limited the ability of those coming out of training to quickly find a job. Another problem occurred in relation to several different funds addressing one sector. In both the Netherlands and France there was rather a strict separation between ESF management and the other funds management which prevented complementarities between ERDF support to SMEs and vocational training support to SMEs. Apart from the problems caused by a separation in Fund delivery, strict divisions in some of the departments involved in delivering programmes also caused problems for achieving a wider synergy between programmes and measures. In Ireland and Italy, the vertical hierarchy and sometimes ‘watertight separation’ between different departments hampered transfer of know-how and flexible adaptation to the needs of the programming cycle. This did not simply occur in more centralised systems. In Belgium, the compartmentalisation between the different functional administrations at a regional level also complicated information flows and co-ordination.



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In general, synergy with national programmes seems to have been achieved more successfully than synergy with other European funds. For example in Germany, the Objective 1 programme was highly integrated with national programmes. However this was not the experience across the board. In Italy, the fact that there had not previously been a ‘regional administration’ made it very difficult to link national and European programmes together. The degree of decentralisation occurring in the different Member States inevitably shaped the relations between key actors within partnerships and determined the competencies and composition of partnerships. This evaluation has found that there is no necessary relationship between the level of centralisation and the level of inclusiveness and exclusiveness (Table 6.8). For example, countries operating centralised programmes such as Ireland, also involved social partners strongly in the partnership process. However, overall, those with decentralised systems were more likely to engage social partners. In Italy, the extent of partnership varied between the regions – in Southern Italy, where the history of partnership working is less strong, it was more difficult to develop inclusive processes. Table 6.8: Relationship between management arrangements and levels of inclusiveness Country Management

arrangements Level of Inclusiveness

Ireland Centralised Strong Portugal Centralised Weak Greece Mixed Strong Italy Mixed Weak Spain Mixed Weak Belgium Decentralised Strong Germany Decentralised Strong UK Decentralised Strong France Decentralised Strong Netherlands Decentralised Weak Austria Decentralised Strong Source: Adapted from National Evaluation Reports Figure 6.2 illustrates the broad position of the different Member States in the Objective 1 programme 1994-1999 in relation to horizontal and vertical partnership. It divides practice into four camps based on the sample analysis: Strong vertical partnership and strong horizontal partnership (6 Member States); strong vertical partnership and weak horizontal partnership (4 Member States); weak vertical partnership and strong horizontal partnership (1 Member State), and weak vertical partnership and weak horizontal partnership (no cases).



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Figure 6.2: Horizontal and Vertical

6.2.7 The effectiveness of the overall management approach

The management systems were thought to be adequate by the national evaluations in just under half of the eligible Member States. For example, in Ireland, the CSF was administered through a well established, experienced, and generally effective public administration system. Operational Programmes were delivered via a clear sectorally-based national lead departments (ministries) and implementing agencies. In Portugal, the functioning of the management and implementation system, namely by its flexibility, was a key element for the overall effectiveness of the CSF. The existence of a strong management flexibility was verified, which allowed the different Programmes to adapt, in a easy and quick way, to the changes verified in the context in which the Programmes were executed. In Spain the ministries and Objective 1 regions participating in the management of the OPs had the capacity to manage the Objective 1 programmes. The structure, size and experience of these institutions were sufficient for the implementation of the programmes in general. This may have been helped by a significant increase in staffing in the 1994-1999 period in comparison with the previous period.



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A number of countries were felt to lack the capacity to manage the Objective 1 programme at the start of the programme, but developed sufficient capacity over time. For Belgium, Austria and the Netherlands, the main reason for the problems at an early stage in the programme was a lack of experience in implementing Objective 1 programmes. For these countries, the Objective 1 programme 1994-1999 was a significant learning process and the responsible authorities experienced large learning effects in the co-ordination: structural funds methodology, e.g. the use of indicators, becoming familiar with multi-annual planning and evaluation etc. In comparison, Germany and Portugal found their experience gained during the 1989-93 period to be helpful in organising the implementation mechanism for the 1994-1999 programmes. In Greece and Italy a slightly different situation emerges. In Italy, initial management problems were caused by the move away from the centralized management system which operated during the 1989-93 programme. The problems this caused included weak coordination between the national structures and the regions, and a lack of capacity and expertise at a local/regional level to implement the programme. As time progressed, and the organizations and individuals gained the required expertise, the situation improved In Greece, the increased scale of the second CSF may have been responsible for the fact that the authorities lacked the ability to manage the programme, although in fact many of the problems also existed in the first programme. Those assigned with the task of managing and monitoring the implementation of the CSF were unprepared not only in terms of human and other resources but also in terms of legal tools and specialized know-how for the management of investment with the size and importance of the projects of the CSF. This fact caused serious delays in the first three years of the Programme and led to significant changes in the managing and monitoring mechanisms. These changes had a positive effect centrally, but problems persisted at a local and regional level. In all Member States, the capacity to manage varied between programmes and regions. However in the UK, stakeholders identified serious weaknesses in available capacity in one particular programme. A general consensus among stakeholders in the Merseyside programme was that the organisations involved in the Objective 1 partnership did not have the necessary capacity to manage the programme, and this did not improve over time. This ultimately had knock-on effects for the programme, with poor quality bids, project managers lacking expertise and unnecessary additional costs of using external bodies, i.e. consultancies, for their expertise. A particular problem was experienced across a number of the Member States in relation to the management of large projects. The absence of experience in managing interventions of the kind in Objective 1 programmes is cited in France, Italy, Greece and Ireland as being at least partly to blame for the delays that occurred in many of the large infrastructure projects. In Ireland, several of the ‘flagship’ projects – such as the light rail project, the Dublin Port Tunnel and the National Conference Centre – were delayed. On the French island of La Réunion, the delays in two large projects –



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the Boulevard Sud and Transfert d’eau est-ouest – are attributed to a ‘lack of practice in the management of large projects.’ Although there were problems in relation to the capacity to implement the 1994-1999 Objective 1 programme across the Member States, the programme managers interviewed for this evaluation rarely blamed this on the implementation requirements of the Objective 1 programme per se. Emphasis was rather placed on the weaknesses of the national/regional administration systems. However, it is important to assess whether the effort required to implement the complex management procedures associated with the programme (partnership processes, selection, monitoring, evaluation etc) were worth the gain for participants. It is clear from this evaluation, that the administrative burden was most felt by smaller project promoters, particularly SMEs, and that technical assistance would be advantageous to support these promoters to gain most added value with least cost from their engagement with the programme. The two most frequently cited processes that caused administrative problems were the project application/selection process and the audit/monitoring process. In the first instance, a large number of applications to the programme caused delays. However the flexibility allowed by the programme to have either a competitive or continual application process helped programme managers to adapt and overcome these problems. In relation to audit and monitoring, the sheer number of projects involved in the Italian ESF programme for example made monitoring an almost impossible task for the staff allocated. One of the overall key factors which increased the difficulty of administering the Objective 1 programme was the need to be come familiar with new instruments which were difficult from traditional grants and aids. A key method of reducing implementation difficulties in Italy was therefore to increase the synergy between national and European programme by introducing the similar project scheme. In Austria, the fact that the Objective 1 programme was run down rather traditional implementation routes also increased the efficiency of the administrative process. The administrative cost of the Objective 1 programme varied according to the national and regional policy contexts within individual Member States. For example in Italy, considerable administrative difficulties appear to have occurred due to the changing Cohesion policy context, which produced a number of new regulations and laws to be complied with. In Greece, new regulations actually assisted with the ease of implementing the Objective 1 programme. A conclusion of the Irish evaluation was that a more appropriate balance could be struck between the administrative costs associated with implementing Structural Funds and the need for accountability. The view was expressed by several informants that the administrative costs associated with the implementing Structural Funds, in terms of the costs associated with meeting reporting and regulatory requirements, could be reduced without a corresponding reduction in accountability. This was not a



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general finding of this evaluation, but will be an important point to assess in the future evaluation on the Efficiency of Structural Fund implementation.

6.2.8 Effectiveness of different types of management style

When looking at the overall impact of the Objective 1 programmes, the member states which adopted either a fully centralised, or fully decentralised system were the most effective (Table 6.9). Italy and Greece, which adopted a partly centralised and partly decentralised approach were the least effective and had ongoing problems with coordination and management. In centralised countries, Portugal and Ireland had positive results, perhaps because the system offered freedom and room to manoeuvre so that management decisions could be taken and implemented relatively quickly. Italy (being partly centralised) also benefited from this in the case of the re-programming exercise. However, the decentralised systems developed by Austria, Germany were also successful, if complicated, systems which delivered well at a local and regional level. Table 6.9: Management systems most effective for Member States/Macro/Micro Regions Country Type of region Management

arrangements Management capacity

Ireland Member State Centralised Adequate Portugal Member State Centralised Adequate Spain Member State Mixed Adequate Greece Member State Mixed Inadequate* Italy Macro Region Mixed Inadequate* Germany Macro region Decentralised Adequate Belgium Micro region Decentralised Became adequate

over time UK Micro region Decentralised Variable** France Micro region Decentralised Adequate Netherlands Micro region Decentralised Adequate Austria Micro region Decentralised Became adequate

over time Source: Adapted from National Evaluation Reports * Management capacity did however improve over the course of the programme period

** Management capacity varied considerably in the UK, with the Merseyside programme having capacity

problems throughout the programme period. Public sector management can be highly effective (eg in centralised systems) but there are a series of problems which can occur, partly because of difficulties with Structural Funds regulations such as the limitations in the use of Technical Assistance budgets. In the light of these problems, separate management units, and the use of private



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sector organisations can offer positive alternatives which might be developed further in future Structural Funds programmes. Inclusive and exclusive structures each have their advantages for implementing programmes –exclusive structures can be more efficient, but can lead to less appropriate strategies for beneficiaries, and can lack means for communication. Inclusive structures can be more inefficient and programmes can become caught up in ‘process’ but the broad benefits of engaging in this process and in communicating the aims and achievements of the Objective1 programme should not be overlooked. Our findings would support the conclusions of the Thematic Evaluation of the Partnership Principle(1999) evaluation that robust management mechanisms are required to ensure that ‘inclusive’ approaches remain efficient and effective. As Table 6.9 shows, there was no strong correlation between management and implementation systems used for different sizes of regions and their overall effectiveness. This to some extent illustrates the fact that a variety of different management approaches can be adopted for a single region, and that other factors are important in ensuring the adequacy of programme implementation including the regional and national administrative context.

6.3 Project Selection procedures

An important element in maximising the effectiveness and impact of objective 1 is the strength of the actual projects funded.

6.3.1 Project selection criteria

The use of project selection criteria varied significantly over the Member States (Table 6.10) and within individual programmes. This mainly related to the use of ‘third level’ strategic selection criteria above and beyond eligibility and capacity issues. In the majority of cases eligibility and capacity criteria were used to a much greater extent that criteria relating to the strategic objectives of the strategy and the meeting of needs. In Italy, for example, almost no reference was made to strategic selection criteria as the drive to increase absorption favoured a focus on eligibility and capacity issues. In Greece, UK and Spain, no reference was made to labour market needs in relation to granting monies to ESF training projects. In Ireland, while schemes had selection criteria, the relative importance of each of these normally remained implicit and there was generally no attempt to formally score project applications against the criteria. In Greece, there was inconsistency between different operational programmes in the extent to which strategic selection criteria was used. For example, the OP Industry had complex selection process to show economic added value, whereas the OP Agriculture did not. However, Greece also saw the absence of consistent ‘capacity’ criteria which perhaps caused more significant problems (see below).



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In the Netherlands, despite otherwise robust project selection mechanisms, discrepancies were experienced between ESF and other funding streams which caused some criticism. However these were cleared up over the course of the programme. Table 6.10: Use of Project Selection criteria

Main project criteria used

Eligibility Criteria relating to capacity

Criteria relating to strategic objectives

Criteria relating to environment and equal opportunities

Austria Strong Strong Strong Strong Belgium Strong Strong Strong x France Strong Weak Weak Weak Germany Inconsistent Strong Strong Strong Greece Weak Weak x x Ireland Present Present Only implicit x Italy Present Present Weak/absent x Netherlands Present Present Present x Portugal Present Weak x x Spain Present Present Present Present UK Present Present Present Variable Source: Adapted from National Evaluation Reports The level of robustness and formality in terms of project selection varied between Member States. Project selection was found to be robust in the majority of cases. However, in Ireland for example, more rigorous project selection criteria were used within the public sector itself in comparison to external agencies. In Greece, there were loop holes within the eligibility criteria which allowed ineligible projects to be funded. Also, for ESF schemes, a two stage application process occurred where the second stage did not apply unified criteria but could still override earlier decisions. In Spain, again despite overall satisfaction, doubts were raised as to the selection of a few institutions for the delivery of training actions and the presence of unclear expectations and analysis about these choices. In Germany and Austria, project selection criteria were generally robust due to the strong linkages with national programmes which traditionally involved detailed selection criteria. However in the case of Germany, there was some incoherence in relation to eligibility criteria, particularly in relation to SMEs. 39

39 For example, in Germany, the eligibility of SMEs to receive funding depended on whether or not programmes chose to comply with federal regulations which excluded funding to very small SMEs with no significant supra-regional importance.



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One criticism which could be levelled against the robustness of the Objective 1 1994-1999 programme was the widespread absence of published scoring criteria. Member States varied in the publication of selection criteria for use by project applicants. For example, in Ireland, only a minority were informed of the relative importance of different selection criteria. In Germany EAGGF measure sheets did not list selection criteria but this problem was also experienced in terms of national funding schemes in this field. Countries such as the UK did however introduce scoring mechanisms which could be seen as good practice examples.

6.3.2 Selection of projects

Programme Managers generally adopted one of two different approaches in relation to project selection - a competitive process (those which compare different applications to each other at a given time and choose between them) or a queuing process (whereby selection criteria are set and projects are funded as they apply and meet the criteria). Both of these systems appeared to have a series of advantages and disadvantages in relation to effectiveness. For example, competitive processes caused problems in a number of countries eg UK, because of the sheer number of projects bidding for funding, particularly in the first years. In some cases this promoted a switch to queuing processes. However, queuing requires significantly more robust project selection techniques in terms of scoring processes and stronger links back to strategic overview to ensure that needs are being met, and too many projects are not being approved in certain areas. According to the Irish evaluation, competitive processes were normally superior to queuing systems as they forced reflection on scheme objectives and choices between alternative projects, and they ensured the scheme budget does not run out before all potential applications are considered. However, queuing were also appropriate for some smaller schemes, or where agencies were working on an ongoing basis to support companies in changing their behaviour. Problems occurred particularly in the Member States when competitive processes were used outside the project selection process. For example, in Greece, public works projects were written in at programme level and therefore not submitted to project selection. However, competitive processes were used to acquire sub contractors to carry out the work. This led to problems in that sub-contractors bid low for the work and ultimately could not deliver quality schemes at these prices. A state of confusion can be seen in relation to who project promoters should turn to in relation to project applications across at least half the Member States. For example, in Spain the unclear division of responsibility between national and regional bodies caused a lack of clarity among project promoters regarding who to apply to. In the UK, large projects effectively had to go through three application processes, with the Programme Secretariat, the UK Government and directly with the European Commission. In Portugal, projects had to be approved by two ministries which



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caused delays. In Italy, the complexity of the application process also caused delays, particularly in relation to ESF. Project approval times varied between programmes and funds. The shortest average time recorded (Table 6.11) was two months (Ireland) and the longest eight/nine months (Italy). In a number of cases (eg Belgium and France) projects were approved on a six monthly basis at Programme Monitoring Committees. The average across the Member States who recorded selection times was 5 months. Table 6.11: Duration of project selection process Country Duration (months) Austria 4-5 Belgium 6 France 6 Germany n/a Greece 4-5 Ireland 2 Italy 8-9 Netherlands 6-9 Portugal n/a Spain 3-4 UK n/a Source: Adapted from National Evaluation Reports n/a: in these cases the project selection procedures either varied significantly between Funds and programmes, or durations were not monitored so preventing any sensible conclusions to be drawn. In Germany, innovative schemes, and those which focused on private sector project promoters, were generally found to take longer to approve due to a lack of knowledge and experience of application criteria. This problem also occurred more broadly in regions which were inexperienced in dealing with Objective 1 programmes as a whole. For example, Austria had significant problems with their ERDF application process in this respect.

6.3.3 Acceptability to project applicants

The project selection process for Objective 1 seem to have been broadly acceptable to project promoters in Ireland and France, where no complaints were raised. However, problems were identified in: • Spain (in respect of training institutions) • Germany (overly fragmented process) • Austria (in respect of delays to selection of ERDF projects) For example in Spain, selection criteria were found not always to be transparent. For example, there were doubts raised about selection criteria for ESF interventions given a concentration of training actions in a few training institutions. In Germany, criticism



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occurred in cases where the process was highly fragmented, particularly where private service providing structures were concerned. In Austria, the main criticism voiced was delays to the selection of ERDF projects, but this can partly be blamed on the difficulties which applicants experienced in filling out the forms.

6.4 Financial control

Financial control systems appear to have functioned relatively well within the Member States under the Objective 1 1994-1999 although some adjustments needed to be made to accommodate the new Financial Regulations in 1997. In the majority of countries financial control systems were felt to be fit for purpose and operated relatively efficiently. Financial control appears to have been generally reliable and respected the 5% rule. In addition to external audits by the European Commission and the Court of Auditors, internal audits were also carried out by national agencies, and private consultancies. Where concerns were raised about the functioning of particular projects and schemes, audit rates were stepped up in some cases. For example in Greece, 10-15% of training projects were audited to counter mistrust of financial management systems by project promoters. The main problem highlighted relates to a lack of integration of funds, and different rules for different funds, that caused a number of problems across Member States particularly UK and Portugal. Management difficulties also had some impact on payments to projects and also had an impact on the financial performance of the programme in a limited number of cases. These were specific to individual circumstances and generalised lessons cannot be drawn. The most difficulties were experienced in Greece and Italy; we highlight these below in so far as they may have had an impact on the margins of the operation of individual programmes. In Greece all 13 regional programmes suffered serious delays in payments due to the late enactment of the Collective Decision for Regional Projects which was precondition for release of funding nationally. Furthermore, there was no cost updating in relation to the physical progress of the infrastructure projects. Periodic reassessments of the cost of completion of individual projects did not happen, which led to problems when it transpired that a number of infrastructure projects were over budget. The financial system also failed to take account of changes to timetables leading to disruptions to the flow of payments. These problems were exacerbated by delays in EU payments, which was then furthered exaggerated by slow processing in the national ministry. In Italy the main problems were experienced in relation to national match funding, particularly in relation to the reduction in public funds after the public deficit in 1996, but also due to wider management difficulties in relation to this funding. Management



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difficulties caused a series of financial bottlenecks. Also, a lack of capacity in the European financial control teams, especially for ESF caused problems. The links between financial control and project monitoring were variable across the Member States. This meant that payments were not always made against outputs achieved, but rather against proof of spend. For example, whereas in Ireland, under the Industrial Development OP, money was also only paid to clients upon verification of project implementation, in Austria, Belgium and Netherlands payments were made on the basis of proof of spend. Indeed a number of countries, including Netherlands and Austria offered advanced payments on the basis of partial spend.

6.5 Monitoring and evaluation systems

6.5.1 Monitoring

Monitoring was significantly weak in the management of Objective 1 interventions during the period 1994-1999, as has been previously identified in this report. Difficulties were experienced in relation to monitoring and evaluation across all the Member States, although in many cases there was improvement over the course of the programme. Across all of the Member States there was a lack of quantification to the objectives defined at the start of the programme (Table 6.12). While context indicators were likely to be defined, output and results indicators were less frequently used. The countries which attempted slightly more quantification, at least initially, were Austria, Ireland and the UK, although in Austria, some quantified targets were later abandoned. Table 6.12: Quantification of Objectives Country Level of

quantification Explanation

Austria Adequate in 1994. Quantification only at the level of the overall strategic goals. Initial precise quantifications relating to job creation targets by sector were later abandoned.

Belgium Poorly quantified Lack of definition and quantification of indicators at the start of the program. A new set of indicators was developed after the interim evaluation.

France Poorly quantified Generally speaking, the initial SPDs were relatively little quantified as for their objectives of outputs and results. Most of the time there were only qualitative goals. When there were quantified goals, they were general ones, as total employment growth, or increase of the GDP per capita.

Germany Poorly quantified Greater level of quantification at CSF as a result of the negotiation process in developing the regional development plan. However most of the individual Operational Programmes subsequently adopted to implement the Objective 1 CSF for 1994-1999 were



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Country Level of quantification

Explanation

reluctant to specify quantitative impacts or even output targets. The absence of initially quantified output targets seemed to be stronger in ERDF-programmes, whereas EAGGF- or ESF-programmes more frequently included a number of quantified initial indicators of forecasts.

Greece Poorly quantified There was a scarcity of quantified indicators (output, result, impact). During reprogramming or programme modifications targets and indicators were set to align with relevant budget modifications; these indicators correspond usually to the final output and are more or less unreliable leading inevitably to a 100% effectiveness ratio. A limited number of measures provided physical information prevailing physical monitoring.

Ireland Variable There were no quantified targets in the CSF, but at OP and measure level objectives were generally quantified and indicator targets set. Measure level indicators typically related to outputs or to activities.

Italy Poorly quantified There was a lack of clear and quantified objectives both at the CSF and the OP levels.

Portugal Poorly quantified One of the main constraints was the fact that in most of the cases the Programmes objectives were not quantified at the beginning of the programming period, which made difficult the accurate assessment of the effectiveness of Structural Funds application. Even in those programmes that had precisely quantified objectives, this quantification was not based on a rigorous process. Furthermore the fact that the Information System did not have results and impact indicators made the performance appraisal of the Programmes difficult.

Spain Poorly quantified The CSF includes quantified targets at programme and sub-programme level for changes in the socio-economic conditions. At sub-programme level (measure level), the CSF includes baseline socio-economic indicators and targets to be achieved by the end of the programming period. However, these indicators do not provide a robust framework for an evaluation of programme impacts and effectiveness for the following reasons: • they are not sufficiently clearly defined or

matched to programme priorities or measures • they are not comprehensive and indicators are

missing for some priority areas including agricultural and rural development

• they are not linked to a comprehensive set of quantified target outputs and results indicators

UK Adequate at the time One would expect the objectives to be much more

specific and quantified by current standards




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Across all the Objective 1 programmes, monitoring was mainly financially driven, focusing on financial indicators rather than outputs and results, or physical indicators. The programmes were probably most effective linking financial monitoring procedures to the wider programme. For example in Ireland, under both the Operational Programmes for Industrial Development and for Agriculture the monitoring process identified sub-measures where expenditure was not occurring as planned. The reasons for under-expenditure were also identified and information produced through the monitoring exercise assisted the Monitoring Committee is making decisions in relation to financial reallocations between sub-measures. The reallocation of funding to sub-measures with high demand levels consequently improved the overall effectiveness of the OP. The financially driven approach may partly reflect the lack of outputs and results indicators at the beginning of the programme. The quality of financial information collected was in many cases relatively good, and this led to reprogramming decisions in a number of countries. This also reflects the primacy of the objective of financial monitoring, in order to ensure the absorption of EU funding allocations. The lack of monitoring against outputs and results prevented the effective monitoring of the achievement of physical targets, which had implications for the monitoring or projects on the ground. In Italy and Greece, the absence of physical indicators was problematic in terms of monitoring the physical progress of projects. This led to serious problems in the realisation of infrastructure projects in Greece within the projected timescale. A recurrent problem across most of the Member States was the lack of linkages back from the monitoring systems to the rest of the programme. This had implications for the ability of the monitoring system to influence the overall effectiveness of the programme. The computerised information systems set up for monitoring during the 1994-1999 period were frequently criticised due to their lack of integration across programmes and between funds. This had an impact on the ongoing ability of managing authorities to achieve an oversight on progress within the programme, as well as posing a problem for later evaluations. In a number of countries there was a lack of consistent verification of the outputs gathered. For example, in the UK there were some concerns raised over the outputs claimed under the Merseyside programme in relation to over-counting in monitoring returns. Also, where projects did not report back on monitoring information, there were relatively weak sanctions in a number of countries. The lack of adequate monitoring systems and limited use made of the material can partly be explained by a lack of monitoring and evaluation culture in many of the Member States – particularly in Spain, Portugal and the French peripheral states. In respect of these countries, the requirements of Structural Funds were to some extent



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‘ahead of their time’ and promoted the development of positive practice in this field over time.

6.5.2 Evaluation

The level of evaluation activity undertaken during the 1994-1999 period complied with the requirements of the European Commission. Aside from the Ex-ante and Mid-term evaluations, a number of other ongoing evaluations took place within the Objective 1 regions. These internal evaluations were carried out by the ministries or regional authorities, with assistance from universities and external agencies. The degree to which evaluation was carried out may, perhaps be surprising in the light of the weakness of monitoring systems. This perhaps is a reflection of the perceived requirement to undertake evaluation activity, although to be fair the results did often feed through into programme management. In several countries eg Ireland, Italy and Greece, operational programmes were subject to ongoing evaluations by the Ministries. However this level of evaluation was not common across all the Member States. In Portugal, Austria and France, little or no internal evaluations were carried out over the course of the programme. In France for example, only a few thematic evaluations were undertaken (eg on the export sector) largely because the responsible authorities did not have enough time to undertake evaluations due to pressure on time and resources. In Germany, several Lander carried out their own funds-specific programme interventions but this was not a uniform process. The quality of evaluations varied. The lack of output and result indicators at the start of the programmes can partly be held responsible for this and was a significant hindrance. However, evaluations also varied in terms of the understandings of their aims and objectives. In Ireland, the CSF Evaluation Unit in particular noted that there was a lack of understanding of what evaluation actually means and that there was a tendency to confuse monitoring and evaluation. However the European Commission’s “Common Guide for Monitoring and Interim Evaluation” was viewed, at least in the Irish case, as having contributed to raising standards and in ensuring consistency in the coverage and depth of evaluations. The incidence of evaluations in relation to the Objective 1 programme increased over the programming period, particularly in Ireland, Belgium and Germany. This reflected the development of a stronger evaluation culture but was problematic in that, in a number of cases, evaluations came too late in the programme in order to influence its operation. For example some cases in Greece evaluations did not start till 1998 – and therefore could not influence development of the programmes. In Belgium, the second (the mid-term) evaluation was only finished in 2000 by which time budgets were already frozen and projects were being finished. The key factor in determining the effectiveness of evaluation activity is whether or not the recommendations were actually absorbed and acted upon. This did not happen in



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all cases. For example, in Greece, although internal evaluations were ongoing and of a relatively high standard, they were more about fulfilling an obligation held by the Ministries, rather than actually contributing to the effectiveness of the programme. There were considerable time delays between the issuing of recommendations and their implementation. It seems that evaluations were more effective in influencing financial reprogramming decisions. For example in Spain and Belgium, the evaluations mainly had an influence on financial reprogramming, rather than encouraging a reorientation within the strategy. In both Spain and Ireland however, evaluations were thought to have had an effective influence on ongoing programme effectiveness and the findings have informed the nature of the Operational Programmes developed for the current programming period.

6.6 Conclusions

Partnership conveys a range of benefits. At a formal level it has been implemented primarily through the framework of Monitoring Committees. A range of factors – including their size, the infrequency with which they meet and shortcomings in the information available – have limited the significance of the Monitoring Committees in relation to decision making and they have functioned most effectively as information and communication channels. They have generally been inclusive in their membership, although the extent and nature of the involvement of the social partners in the implementation process has been quite variable in practice. The focus of the activities of the Monitoring Committees has been overwhelmingly on issues of financial management and in particular ensuring the absorption of the Structural Fund resources, rather than strategic management. This no doubt reflected in part the combination of the limited framework of clear objectives and targets for many interventions and the weaknesses of the available monitoring data on outputs and in particular results. The wider focus of the decision making process on financial absorption contributed to the observed tendency for the use of resources to be demand led and worked against the adoption of new approaches and directions. Reflecting in large measure contextual factors, the supporting administrative arrangements varied widely between member states – with substantial differences in the extent in use of intermediary public bodies, independent management units and the private sector. Each of these different arrangements had both positive and negative aspects. However, the most significant differences were in the extent to which the management process operated on a centralised or decentralised basis, or some hybrid of the two. This typically reflected the interrelated combination of the structure of the interventions and the wider organisation of the process of government in the member state concerned. The evidence in that either centralised or decentralised arrangements worked best, with the hybrid arrangements most problematic – although this may reflect the existence of unresolved issues of responsibilities between tiers of government in the member states which took this path.



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The management of the four structural funds operated to a large extent in isolation. Though not a major source of problems, this clearly contributed to the problems of achieving real integration between the different strands of the interventions. In all member states management capacity varied across programmes and regions. A number of regions had to go through a significant learning process, either because they were new to Objective 1 or because of a wider government re-organisation. Capacity improved over time in most cases but the problems of large infrastructure projects indicate that significant issues remain to be addressed. Whilst the project selection process worked reasonably, it too often lacked consistency and transparency. As indicated, monitoring remained a major weakness despite the emphasis on developing its role since the first programming period. The available data is fragmented, inconsistent, overly focused on physical outputs and often of doubtful reliability. Evaluation activity developed significantly over this programme period but many evaluations had little impact, often because they were completed too late to influence the key decisions they were designed to inform. The quality and therefore usefulness of many evaluations was also limited.


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7.0 COMMUNITY ADDED VALUE

In the context of increased subsidiarity and decentralisation of the management of the Structural Funds, the concept of community added value is becoming increasingly relevant. There is an assumption that Community resources, when used judiciously, generate an “added value” in comparison with a situation characterised by the absence of such public intervention40. The “community” dimension of this added value relates to the specific benefits which result if the intervention is carried out at Community and not state or regional level. In the past the presence of such an added value dimension has been an implicit assumption in the operation of the Structural Funds and it is only now that ex-post evaluations are beginning to consider the matter more explicitly. The evaluation has examined where Community based interactions have added most value in terms of policy and practice. It is important to note that the evaluation has only been able to assess the benefits associated with Objective 1 in this regard and has not been able to make a strong assessment of the corresponding costs. Neither is this assessment of Community added value intended to analyse the policy on situation versus a policy off scenario but rather it focuses on the different dimensions of added value. In a recent paper by the Commission four dimensions to added value are identified: (1) The achievement of Community objectives related to economic and social

cohesion, implementation of Community priorities of a transnational character, as well as the desire to promote balanced and sustainable development within the Union.

(2) Community resources mobilised (about one third of the community budget) having a triple prerequisite: a significant redistributive effect; an additional character as compared to the financial effort of the member States; and a guarantee of a maximum leverage effect, especially on the private sector.

(3) The method of implementation of the Structural Funds, which implies rules and principles (programming, partnership, control, monitoring and evaluation) to ensure greater effectiveness of interventions.

(4) Co-operation and networking, facilitating transfer of know-how, an exchange of experience and the pooling of resources, which often would not happen in the absence of Community initiative.

We explore the Community added Value dimension to Objective 1 through each of these headings. By necessity this is somewhat of qualitative assessment as the

40 The mid-term evaluation of the Irish CSF (1994-99) presented four cases which justify public intervention employing national and community resources: provision of public services for the public good; introduction of corrective subsidies aimed at modifying prices of goods and services where market prices do not reflect social costs correctly; state aids targeted at specific enterprises in order to modify their behaviour and efficiency; redistribution towards particularly disadvantaged social categories (cf. ESRI, EU Structural Funds in Ireland: a mid-term evaluation of the CSF 1994-99, 1997)



concept has not been considered in a systematic manner in previous work, or during the implementation of Objective 1, 1994-1999.

7.1 Achievement of Community policy objectives

Community added value may be defined here at three complementary levels:

(1) The contribution to the objective of economic and social cohesion (2) The contribution to the implementation of the Community priorities (3) The contribution to the objective of balanced and sustainable development The promotion of these policy objectives can have an influence on both policy approaches and the nature of the projects supported as part of regional development activities. In this regard Objective 1 can potentially have a significant influence in promoting the introduction of new activities and approaches to development or influencing the balance of different forms of intervention.

7.1.1 The contribution to the objective of economic and social cohesion

The contribution to economic and social cohesion has already been covered in the preceding section. The Structural Funds have had a positive impact on the GDP of the Objective 1 regions and their overall performance relative to the EU as a whole has improved. The impact is quantified in the modelling undertaken for the Cohesion countries, Eastern Germany and Northern Ireland, where the strongest impacts were found in Eastern Germany and Portugal, with less impacts evident in Spain and Greece. Lower long-term impacts are projected in Northern Ireland. However, although economic convergence has been witnessed at a national level for the Cohesion countries, individual regions have seen disparities worsen.

7.1.2 The contribution to the implementation of the Community priorities

Objective 1 can also add value to Community-wide policies where they promote their implementation. This will occur where funding regimes are specifically designed to implement different community policies and may occur where expenditure programmes contribute to delivering more general Community Policy Objectives. The clearest example of the former is the manner in which Objective 1 supported the objectives of the Common Fisheries Policy. Support from the FIFG has been instrumental in promoting many of the objectives of this policy, as agreed by all member States, whilst the support framework of the FIFG has had a profound effect on the balance of policy and practice in eligible areas. Objective 1 has also broadly supported the objections of the Common Agricultural Policy. Rural development measures financed through the EAGGF focused on agricultural development activities and support for farm diversification. Five key policy areas are identified by the European Commission where Objective 1 might be anticipated to support Community priorities. These relate to:

• Improving Infrastructure, particularly the Trans-European Networks



• Competitive Firms creating Jobs • Developing Human Resources • The Environment and Sustainable Development • Promoting Equal Opportunities

Whilst it is not possible to make a quantified judgement as to the extent to which this has occurred some clear trends are present. Support for Community priorities was possibly strongest in the field of infrastructure, particularly transport. Objective 1 has, for example, supported the development of 3 TENs (as agreed at the European Council of Ministers in Essen). Objective 1 has also supported the delivery of human resource development priorities, particularly promoting the development of a qualified labour force across all Member States. The overall impact of this cannot be ascertained at this stage. Objective 1 proved less effective at assisting the transition from training and employment. However, this is primarily due to the weakness in existing implementation systems. There is some evidence that Structural Fund interventions have promoted more effective interaction mechanisms. (Targeting of actions, on identified existing groups is also a strong supporting action to EU community policies) The contribution of Objective 1 in the form of the general policy theme of regional competitiveness is also regarded as positive. This is a more disparate field and clear quantitative results are lacking. On balance the national evaluations judge the aggregate effects of efforts to enhance the productivity of the manufacturing sector, promote greater R&D potential and support the potential for job creation through local development initiatives as broadly positive, although some strategies were regarded as weaker in some elements than others. There is strong evidence that in a number of areas Objective 1 has had a significant effect on the balance of activities undertaken in particular regions. This is particularly the case in the field of R&D. Objective 1 is credited with expanding the financial balance allocated to this area, raising awareness of its importance within regions and influencing the nature of the activities undertaken. This effect is covered more fully in Section 3. A strong example of where the decentralization of approaches, due to the introduction of Objective 1, has amended practice can be seen in Germany where the Länder were gradually provided with greater freedom in the field of economic development. This led some to ‘decouple’ regional initiatives from the GRW leading to a greater flexibility in delivery. In the field of R&D significant practice changes are also apparent – with the introduction in many regions of a range of softer measures and actions designed to stimulate the demand and take up of innovation rather than simply boosting the supply side. The Objective 1 interventions have also supported a stronger focus on the particular needs of excluded groups. Although this was not a policy consideration, all member



states of the Objective 1 interventions increased the importance attached to issues such as equal opportunities and early signs of changes in practice began to emerge over the course of the programming period. In some cases the Objective 1 interventions have also had an influence on public policy delivery mechanisms. In Merseyside, UK for example the Objective 1 programme enabled greater levels of voluntary sector provision in the field of vocational training than previously. This increased choice and promoted approaches that were more tailored to the needs of particular groups than had previously been available. Support for Community environmental policies, in terms of compliance with legislation was also provided by projects co-financed by Objective 1 as illustrated in Section 3. However, the added value of Objective 1 in the field of Equal Opportunities was less strong across all Member States, although it may be regarded as having laid the foundations for stronger actions which came later. Overall, Objective 1 has supported the delivery of Community priorities, although this is less the case in some areas, such as Equal Opportunities, than others, as summarised in Figure 7.1.

7.2 The contribution to the objective of balanced and sustainable development

Promoting the balanced and harmonious development of the Union (Treaty Article 1) is regarded as a necessary response to growing economic and monetary integration and globalisation of markets. This requires that activities in the Union are not overly concentrated in a limited number of geographical locations. Objective 1 contributes to this objective, notably by supporting urban development in a regional approach integrated with rural development in its dual dimension of contributing to the European model of agriculture and to economic and social cohesion. It also targets territories, specific handicaps and cross-border regions. The European Spatial Development Perspective (ESDP) adopted in Potsdam in 1999 provides the Commission, the Member States, the regions and the local authorities with an indicative framework of policy guidance for determining choices in regional policy. This clearly post-dates this assessment of Objective 1 but it is useful to consider the extent to which Objective 1 has contributed to this overall objective.

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The evidence suggests that a national level there has indeed been a degree of convergence in overall economic performance during the period under consideration, but that this does not extend to regional convergence. This would suggest that Objective 1 is only able to partially contribute to this objective. When taken in more qualitative terms the picture is more fragmented. Micro-regions argue that Objective 1 has not contributed to balanced and sustainable development whilst the macro-regions and Member State Objective 1 areas felt that it does. This suggests that it is a reflection of the location of the territory as well as the value of resources.

7.3 Financial Effects

Through Objective 1 of the Structural Funds and the Cohesion Fund there was a significant transfer of community resources and the eligible regions between 1994 and 1999, with residual expenditure still occurring at the end of 2002. Two types of financial effect make up the added value of Objective 1: additionality and the financial leverage effect. In the context of the current evaluation we focus on the second of these. This financial transfer provides a substantial resource with which to finance investments in eligible activities. To the extent that this transfer constitutes a net addition to regional or national expenditure, i.e., does not crowd out other public spending a strong added value can be construed. Even where projects tend towards rent seeking (i.e. those projects are developed which are most likely to gain support rather than have the highest return) net positive benefits are likely to accrue. The research findings suggest that the principles of additionality41 were respected in the design and implementation of the Objective 1 programmes in most Member States. Whilst the Member State research teams were not able to provide an analysis of how much Government funds would have been forthcoming in the absence of Community Funds the case studies reported that Member States generally either maintained or increased public expenditure (or equivalent) in the fields of intervention concerned. The French National Study, for example, found that there was evidence that the National Government increased its contributions to two Objective 1 regions during the programme period whilst, in the Netherlands the identification of Flevoland as eligible for Objective 1 also led to an increase in the level of domestic funding received. In the UK the picture is more complex with a perception amongst some stakeholders that Objective 1 Funds had offset UK Government expenditure in a least one region.

7.3.1 Leverage of Public Funds

The requirement that community subventions are co-financed from domestic sources also acts to increase levels of finance available for investment. The assessment of actual versus planned expenditure patterns demonstrates that this requirement has been met and, in some instances, exceeded.

41 That is the overall public effort should remain the same or greater with respect to the fields of intervention supported by Community Funds.



The public sector leverage effect may not be additional in the same way as the Community funding. In so far as this money is likely to have been spent in the particular area anyway it cannot be called additional. However, the effects of a structural fund programme may be to shift the investment priorities of public authorities to those areas where Structural Fund expenditure can also be obtained. Some concerns were raised in two of the member state evaluations that public-sector financial constraints had hindered the leverage effects in this area. However, whilst this may occur for individual sources there is no evidence that, overall, public expenditure sources have been insufficient to match the Objective 1 Funds available. This evaluation has not been able to determine whether the availability of Structural Fund grants has led to a shift in the balance of public expenditure. There is however previous evidence from the UK that this can occur in practice to the extent that public expenditure programmes (and potentially those of the private sector) are skewed toward the priorities of Objective 1 a shift in the balance of policy implementation will also occur.

7.3.2 Leverage of Private Sector Funds

The Objective 1 interventions can also be instrumental in securing additional private sector investment in an area. In practice, the strong initial expectations of private sector leverage were not realised. Nevertheless Objective 1 did succeed in drawing a relatively high proportion of private sector investment, as demonstrated in Table 7.1. In general, private sector investment accounted for between 13% and 45% of total programme expenditures. Leverage rates tend to vary by Member State, types of activity supported and, to an extent, the project selection process. The leverage effects were strongest in the micro-regions, particularly Netherlands and Belgium. In the Cohesion Countries leverage rates tended to be lower – typically between 15% and 20%. This is due both to the balance of the interventions supported and the amount of private sector investment available. The different leverage rates partly reflect the nature of the intervention – infrastructure and human resource actions typically attract low private sector contributions – and the surrounding micro-economic conditions. Programmes with a stronger balance of activities aimed at supporting business development tend to have higher leverage rates than those with an alternative focus. Project selection procedures can also play a role where levels of private sector funding are taken into account when making the selection. The average of private sector leverage in those countries with actual expenditure information available is 18%, whilst the corresponding figure for combined public sector and private sector resource mobilised is 49%.



Table 7.1 Estimated Actual Expenditure (€m) Total SF Other public Private Leverage (%)

Germany 48,243.30 14,540.30 5,109.30 21365.4 44.29Spain 40,143.63 26,606.69 13,536.94 naItaly 30546.9 13722.1 21032.1 na2

Greece 27,725.73 16,135 7,547.96 4,042.46 14.58Portugal 24,389.60 13,845.80 6,125.50 4,417.60 18.11Ireland 10241.7 5784.9 2462 1994.9 19.48UK1 4,107.51 1774.18 1,302.01 593.22 14.44France 4,019 1581 1236 522 12.99Belgium 2,030.25 546.1 582.83 901.32 44.39Austria 1,039.97 176.7 277.907 661.113 63.57Netherlands 746.122 125.3 395.394 225.405 30.21Total 193,233.72 94,838.37 59,607.94 34,723.42 17.97

Source: Adapted from National Evaluation Reports 1 no data for Highlands and Islands 2 included in Other Public category

7.4 Criteria related to how Objective 1 operates

The final area where Objective 1 has added value is in terms of the development of effective contribution to delivery systems. The benefits of this between 1994-1999 are very clear and exist across all the Member States involved. These are summarised in Figure 7.2. Added value is observed across the board in terms of the management and administration of Objective 1. During the 1994–1999 period the multi-annual programming approach and the application of the partnership principle had a positive effect, supporting improvements in methods and approaches and strategy planning as well as improvements of the capacity of the public sector. Whilst strong added value can be observed in this area, in so far as the delivery mechanisms were seen as a positive development in comparison to prevailing domestic arrangements at the outset of the programme period, there is less evidence as to the wider impacts of these arrangements. In some cases positive developments in the monitoring and evaluation of interventions were registered which had positive spillover effects, with changes to approaches to domestic programmes and initiatives. Improvements to financial control mechanisms, in the form of improvements to audit control procedures were also noted in most Member States. There is no reliable evidence on which to base any judgements as to the durability of the changes introduced, nor how widespread the adoption of new approaches has been.

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7.5 Co-operation and networking

Networking and the explicit exchange of experience and good practice is one mechanism through which changes in practice occurs. There is no substantial evidence of this channel although in a limited number of areas it was remarked upon by the national evaluations. The more common channel by which practice changes appear to be through the gradual diffusion of different ideas and approaches. Again, though, hard evidence for this remains scarce. Whilst there has undoubtedly been a diffusion and uptake of new approaches to development across the eligible regions this is apparent only at the margins. The bulk of the interventions adopted are characterised as relatively traditional approaches to tackle the acknowledged needs and opportunities of the areas in question. A gradual evolution in approaches can be discerned across the programme period, however. Examples of such evolutionary diffusion include new approaches to rural development such as the case in the Mezzogionno where Objective 1 facilitated the introduction of agri-tourism activities, which were seen to have been previously successful in Tuscany.

7.6 Conclusions

Changes in the balance of policy interventions are rarely substantial across the whole of the EU. The process of policy shift is incremental and differs across regions and Member States. Some authorities are more willing to introduce new ideas earlier than others, some are already in advance of Community thinking and provide the source for the next ideas in regional development. Furthermore, not all interventions are universally appropriate. What applies in one region does not necessarily apply in another. Changes in the nature of the policy interventions have also been stimulated by the Objective 1 interventions. Examples of these are many but can be broadly divided into two types: • Those that occur through the decentralisation of responsibility • Those that occur through the introduction of new approaches Whilst Objective 1 appears to have had a limited influence on the exchange of experience and good practice a strong area of added value has been the introduction of new alternative practices. The process has been principally based on the gradual diffusion of information rather than explicit networking and exchange of information. The question may be posed as to whether opportunities for common learning are currently being maximised. This is equally true in the field of innovation. The primarily ‘traditional’ approaches taken by most authorities have already been noted. This is understandable given the significance of the actions being undertaken. However, the question arises as to whether such a risk aware procedure fully maximises the potential of Objective 1.

Ex-post Evaluation of Objective 1 1994-1999


8.0 CONCLUSIONS

8.1 Overview

A total of €232 billion was planned to be spent on Objective 1 Structural Policies in the 11 eligible Member States between 1994 and 1999. In practice, a total of approximately €210 billion is estimated to have been spent, with most of the shortfall being represented by lower than anticipated private sector expenditure. Planned expenditure has not been evenly distributed between Member States, with 6 Member States receiving 92% of Objective 1 funds. Objective 1 divides very clearly into large programmes, where the fiscal impact should be noticeable, and a series of smaller programmes, where noticeable impacts will be much less clear.

In the larger programme areas the Structural Funds have had a positive impact on the GDP of the Objective 1 regions and their overall performance relative to the EU as a whole has improved. The impact is quantified in the modelling undertaken for the Cohesion countries, Eastern Germany and Northern Ireland, where the strongest cumulative impacts were found in Eastern Germany, Ireland and Portugal, with lower impacts evident in Spain, Northern Ireland and Greece.

Table 8.1: CSF 94-99: Cumulative Objective 1 multipliers East

Germany

Ireland Portugal Spain Northern Ireland Greece

1994-1999 1.69 1.44 1.12 1.07 1.24 0.67 1994-2002 2.11 1.88 1.53 1.23 1.33 0.76 1994-2010 4.44 2.83 2.55 1.77 1.48 1.07 LR ranking 1 2 3 4 5 6 In the case of the Cohesion Countries it is clear that, whilst Objective 1 is a significant contributor to improved performance, it has probably often been secondary to other factors. The extent of the beneficial impact has been heavily dependent on both institutional capacities and factors such as the structure and openness of the economy. These aspects are clearly crucial in particular to the capacity of the economy to respond to the challenges and opportunities of the process of economic integration. In the case of East Germany the Objective 1 effort represents a relatively small contributor to the development effort. Its integration within the ‘Common Task’ makes it impossible to identify a separate, distinctive impact. In the case of the Mezzogiorno the major contribution of Objective 1 was as a counterweight to the retrenchment of domestic regional policies. The extension of the coverage of objective 1 to - a fairly heterogeneous grouping of northern – ‘micro’ regions has raised a range of issues:



− The problems of some of these regions are in many respects much more like those of what were at that time the Objective 2 regions. The interventions in these regions were confronted with a momentum of decline and a set of problems which in practice may prove more intractable than those of traditional, underdeveloped Objective 1 regions (‘turning round’ declining industrial areas has proved an – in many cases unresolved – policy challenge);

− It appears doubtful in some cases whether the resources devoted to these

regions were sufficient to have a major impact on their situation. Resources alone may be anyway insufficient; some of these areas also desperately need major social and cultural changes, new approaches to governance, etc.

It is difficult to draw summary conclusions in relation to the effectiveness and efficiency of the Structural Funds in Objective 1 regions, given the disparity of countries and contexts. The limitations of the available monitoring data, along with the lack of clearly quantified objectives in a substantial proportion of the programming documents, mean that while much has clearly been achieved, it is not possible to aggregate these results to give a reliable picture of the overall achievements of Objective 1. Relative efficiency has been achieved, in the sense that money has been spent and substantial outputs have been secured. However, the more in depth examination of project implementation suggests that there are particular problems in delivering large projects according to time and cost projections.

Management and implementation arrangements – though often characterised by weaknesses – were generally fit for purpose, and significant benefits were achieved through the partnership approach. Decision making structures typically failed to establish strong strategic direction. However, important benefits in terms of wider ‘added value’ were achieved through the programming approach and the development of public sector management capacity and practices.

8.2 Appropriateness of strategies

In overall terms, there has been a concentration of Structural Fund investment towards the Cohesion countries. However, total levels of spending per head on the structural interventions were actually higher in Germany, Austria and the Netherlands because of the greater mobilisation of national and/or private sector resources.

Within individual countries and regions the allocation of resources also often sought to reflect needs but other factors – such as strategic priorities, efficiency considerations and/or capacity to absorb resources – also exerted an influence in particular cases. Reduction in internal disparities tended not to be an important explicit objective, with priority implicitly given to the achievement of overall improvements in national or regional performance. Arguably, this has contributed to the observed phenomenon of improvements in national economic convergence whilst regional disparities have remained or even widened.



The interventions were comprehensive given the framework set by the relevant regulations – in some cases perhaps overly so – and they are judged to have been broadly appropriate. They reflected the particular needs of the individual regions – being typically based on extensive prior analysis, closely aligned with established national and regional strategies and involving a high level of continuity with the structural interventions of the preceding programme period.

Interventions were typically based around addressing identified market failures and a range of constraints on growth. Compared with the previous programming period they involved a greater strategic emphasis on the stimulation of indigenous potential rather than outside investment. Nevertheless, they mostly lacked a clearly articulated underlying ‘model’ of how the particular region could best develop. There does not appear to have been strong assessment at the outset of the relative gains to be made through adopting different strategy approaches. Along with the excessive number of separate measures in some programmes and other factors, this probably worked against the achievement of a truly integrated approach.

Infrastructure has been a high strategic priority in the Cohesion countries and Objective 1 regions in the Netherlands, UK and France, accounting for at least €24,400m (11%) in planned spending and €34,600m (16%) in actual spend42. In most cases, at least, this emphasis is judged to have been justified. The most significant element of this has been transport.

Business development has been a strong focus of actions across all Objective 1 regions – particularly in East Germany and the micro-regions - correcting an under-emphasis in the previous programming period. Such interventions accounted for at least €95,300m (45%) of planned spend and for €73,700m (34%) of actual spend.

There was an under-emphasis in the Objective 1 strategies on R and D at the start of the planning period, especially in the Cohesion countries. Directly identifiable expenditure in programming documents amounted to just 1% (€2,500m) of actual expenditure, compared to planned expenditure of €3,060m. However, this is likely to be an under-estimation of true expenditure in this area. Stronger strategies are evident in relation to the micro regions and Eastern Germany. The growing spend on R and D in the EU’s leading regions, and the lack of a clear focus in the Objective 1 interventions on stimulating activities involving the private sector, limited the extent to which disparities could be addressed.

Human resources were an important priority across all regions, particularly in Ireland and the UK. Nevertheless, there was a potential case for a greater emphasis on this aspect, especially in Austria. Total planned spend on such interventions amounted to at least €30,500m (14%), with actual spend of €40,000m (18%).

42 The figures will be something of an understatement because of the exclusion of such spend within regional programmes which have not been included within the case study work, as well as difficulties in ascribing spend to activities below the level of individual Priorities.



Whilst rural development was an explicit focus in some regions it is difficult to separate spending on agriculture from that on wider development actions. Some programmes involved significant new elements, such as village renewal, but – in common with fisheries – interventions in relation to agriculture itself tended to be driven, or at least constrained, by wider Community policies rather than the particular objectives or priorities of the region concerned.

The strategies as implemented were in large measure those planned at the outset, at least in terms of the balance between identified Priorities. There were changes in most Member States but these were primarily at Measure level and were not large enough to change the fundamental strategies adopted. In some instances these changes do influence the relative balance of expenditure between particular types of activity, such as business support or transport infrastructure, but the data is not sufficiently strong to draw general robust conclusions in this area.

Changes to strategies were largely driven by considerations of financial absorption rather than changing strategic needs, although particular ‘events’, emerging policy priorities such as ICT and evidence of the success, or otherwise, of particular actions also drove a range of changes.

The available structural fund and national co-financing resources were in large measure absorbed – estimated absorption rates are put at 99% and 100% respectively. The private sector contribution was only around 54% of the planned figure which was clearly aspirational rather than effectively committed at the planning stage.

8.3 Effectiveness

The analysis of effectiveness has had to rest to a substantial extent on qualitative judgements rather than quantified comparisons of results with targets. This reflects a combination of: the lack of a proper framework of targets in many programmes - with those which are available largely relating to outputs (and thus primarily to efficiency) rather than to results (and thus effectiveness); and, the fact that the currently available monitoring data is often either out-of-date or of questionable reliability, or both. At a general level many of the apparently most effective actions have been those of a largely ‘mainstream’ character. However, funding has largely tended to reinforce existing patterns of economic development related activity, rather than providing a basis for developing new activities to meet identified objectives, or stimulating more innovative approaches. In the transport sector the focus of activity has been on roads, with at least 4,104 km of motorway and 31,844 km of other roads constructed or upgraded. In the cases for which targets and output data are both available, targets have mostly been met. Transport investment has produced significant benefits in terms of improving both internal and external accessibility and, to a lesser extent, in helping to tackle problems of urban congestion – reducing journey times and/or distribution costs in the process.



Clear instances of resulting economic development benefits emerge but evidence to quantify such impacts on a more systematic basis is lacking. Interventions focussed on SMEs have supported at least 214,188 firms, provided at least 3,839 hectares of industrial sites and supported the creation of at least 798,000 gross jobs. Where targets and data are available, targets for SMEs supported and hectares of industrial sites provided have mostly been exceeded, in the latter case substantially so. Good evidence on the results of those interventions is again limited. Often interventions have focussed on established sectors, particularly tourism, rather than supporting diversification. Deadweight and displacement have probably been substantial. Interventions combining investment incentives and support services seem to have been most effective and, in some contexts at least, venture capital and loan schemes have been relatively effective. Interventions focussed on smaller SMEs seem to have been the most effective in terms of job creation. In relation to Research and Development the interventions have achieved a range of positive results, particularly in terms of developing the physical infrastructure base. Where the evidence is available, targets have been achieved, and – perhaps more important for the longer term – R & D activity now has much greater policy prominence. However, at this stage at least, translating academic and public sector research into commercial spin-offs has generally proved difficult, although more enterprise – focussed, ‘softer’ measures have produced positive results. The interventions have supported the education and training of at least 8.15m people. Targets, where set, have generally been exceeded, often by impressive margins – although this clearly raises questions about the quality of the underlying analysis. Objective 1 support has also helped substantially in developing the educational infrastructure and capacity of the poorest member states. Again, good evidence on the effects of the resultant improvements on the stock of human capital is limited. It is clear that interventions have tended to be more effective where – as has not always been the case – they have been based on a proper assessment of the needs of the labour market and the economic and institutional contexts have been favourable. In the case of interventions in favour of socially excluded people, actions tailored to individual needs have proved the most effective. Most of the EAGGF resource provided through Objective 1 has focussed on support for the agricultural sector and its structural adjustment rather than the wider process of rural development. This only became an explicit focus of the Structural Funds for the first time in the 1994-1999 programming period. Most of the available evidence on effectiveness relates to the agricultural sector itself where targets – such as those for farm holdings modernised, land irrigated, land reparcelled and young farmers installed – have been exceeded. This has had a range of positive effects in increasing productivity, reducing costs, improving quality and extending growing seasons.



Specific subsidies to producers in the Less Favoured Areas have had important effects in underpinning incomes and helping to maintain agricultural activity in these areas. More generally, Objective 1 resources have benefited significant – but unknown – numbers of producers by supporting the shift to higher value – added products and assisting diversification into non-agricultural activities. Although systematic data is lacking, at a fund level the ERDF has brought about very large scale job creation, most importantly – or at least most directly – through support for productive investment. The ESF has greatly strengthened the human capital base of the Objective 1 regions, although the full benefits of this have not yet been realised. The major effects of the EAGGF have been in supporting and encouraging the restructuring of the agricultural sector, whilst the FIFG has been most effective in supporting the renewal and modernisation of the fishing fleet and the development of processing facilities and marketing. A range of the interventions supported through Objective 1 – particularly in the areas of water infrastructure and waste treatment – are having substantial positive environmental effects, whilst the emphasis on ensuring that projects more generally comply with relevant EU and/or national standards has helped to minimise adverse effects. Some negative effects will, of course, have resulted from the development process, especially road traffic growth. However, the emphasis on sustainable development per se only emerged as a general European policy priority after this generation of programmes was put in place. Some of the Objective 1 programmes – particularly in Germany – have been characterised by a strong emphasis on equal opportunities, whilst a number of other regions developed particular actions to address the labour market needs of women. However, the development of this area as a major EU policy priority again post-dated the preparation and approval of these interventions. Nonetheless, in practice ESF supported projects have tended to include higher proportions of women than the groups on which they have been targeted, indicating that the interventions have been making positive contributions in this area. Reflecting its lack of focus as a policy priority, there is little evidence that the interventions have significantly reduced spatial disparities within the Objective 1 regions. In some cases at least they have contributed to the concentration of growth within capital city and other relatively strongly performing regions. In terms of effectiveness, value for money and contributions to economic development and thus quality of life we can be confident that EU support for infrastructure and human resource development has played a crucial role in laying the foundations for long term growth. Whether all projects have been equally effective has not been a question that this evaluation has been asked to address, although this is a potential issue in relation to some major investment projects where political considerations may have influenced priorities. It is much less clear how effective



expenditure on SME support has been because of the issues of deadweight and displacement and the potential associated distortions in behaviour (‘rent-seeking’, featherbedding effects, etc). The evidence here is simply not complete, or in our view, convincing.

8.4 Efficiency

There have been major problems in delivering large projects to time and budget. This underlines the need for better project planning and appraisal and a strengthening of implementation procedures. Only 1/3 of the 60 projects reviewed were completed within the originally planned timescale, with 1/3 over a year late. Environmental, and particularly water treatment, projects were the most susceptible to delay. Factors promoting timely delivery were: strong political commitment, externally imposed deadlines and strong project management and monitoring. Factors underlying delays included: inadequate planning, land ownership issues and weather conditions. Approximately two-thirds of the projects examined ran over budget, with 20% costing over 30% more than originally planned. Again environmental projects emerge as a particular problem area, along with roads. Factors underlying overruns included: modifications to projects; emerging environmental, geological and archaeological issues; delays; inadequate cost estimates; and, imperatives to meet particular deadlines. The assessment revealed wide variations in unit costs, often because of the multi-faceted nature of the projects concerned – and the effects of factors such as topography and geology. This limits the scope to establish ‘benchmark’ unit cost figures for particular types of project.

8.5 Impact

The impacts of Objective 1 are very dependent upon the amount of support available. Where substantial resources were available we can, and do, see some impact on overall economic performance. In the case of smaller programmes the impacts have been much less visible. The maximum impacts on GDP during the CSF period amounted to 4.7% pa (Portugal), with increases of up to 4.0% pa in Germany, 2.8% pa in Ireland, 2.2% pa in Greece, 1.8% pa in Northern Ireland and 1.4% pa in Spain. The scale of the impacts in different cases reflects the relative importance and allocation of the CSF resources, as well as factors such as initial factor endowments, economic structures, levels of competitiveness and the degree of ‘openness’ of the economy concerned. The HERMIN modelling based approach captures both the transitory demand side effects of the interventions and their ongoing supply side impacts. The emerging results inevitably flow to some extent from assumptions made within the modelling



process. The general pattern is for the maximum impacts on GDP to occur around the end of the CSF period when both the demand and supply side effects are operative, falling away in all but one case thereafter as the demand side effects decay. The peak effects in reducing unemployment largely derive from the demand side effects and tend to occur early on in the programme period. Projected long term effects are greatest in East Germany - where GDP is expected to be boosted by 4.7% pa even in 2010 – followed by Portugal (2.1%), Ireland (1.0%), Greece (0.6%), Spain (0.6%) and Northern Ireland (just 0.1%). Such long term effects depend crucially on the extent to which CSF expenditures succeed in raising investment within, and the performance of, the manufacturing sector. More generally, the modelling work and the literature support other study findings which indicate that the success of interventions depends on whether the region concerned has an economic structure which provides the potential for growth and whether other conditions for growth – such as a supportive national policy environment and strong institutional structures – are also present. Achieving fundamental change clearly often requires interventions over more than one programming period. Impacts tend to be greatest where they form part of a virtuous circle of improving competitiveness, increasing exports and domestic sales, and enhanced levels of indigenous – and/or inward – investment. Employment may or may not increase as part of this process. Clearly, as the modelling suggests, a focus on wider markets – and thus the potential to take advantage of the process of economic integration and the growth of trade – is crucial. There is no comparably systematic basis for assessing impacts on the micro-regions. The interventions in these regions have been more limited in scale and often in scope, although individual programme have tackled a wide range of identified problems. The available monitoring data indicates that gross job creation has been substantial but it is clear that deadweight and displacement are also likely to have been substantial – even though estimates are rarely available. In some cases the underlying momentum of decline has meant that the relative performance of these regions has fallen back markedly, despite the benefits of the interventions.

8.6 Management and implementation

Partnership conveys a range of benefits. At a formal level it has been implemented primarily through the framework of Monitoring Committees. A range of factors – including their size, the infrequency with which they meet and shortcomings in the information available – have limited the significance of the Monitoring Committees in relation to decision making and they have functioned most effectively as information and communication channels. They have generally been inclusive in their membership, although the extent and nature of the involvement of the social partners in the implementation process has been quite variable in practice.



The focus of the activities of the Monitoring Committees has been overwhelmingly on issues of financial management and in particular ensuring the absorption of the Structural Fund resources, rather than strategic management. This no doubt reflected in part the combination of the limited framework of clear objectives and targets for many interventions and the weaknesses of the available monitoring data on outputs and in particular results. The wider focus of the decision making process on financial absorption contributed to the observed tendency for the use of resources to be demand led and worked against the adoption of new approaches and directions. Yet, this focus has not prevented significant time and budget overruns on major projects. In practice the role of the PMCs is to a large extent a symbolic, quasi-political one, largely involving a ‘rubber-stamping’ or legitimation of decisions made elsewhere, generally by the national or regional authorities. The involvement of the social partners in the decision process is to a large extent also symbolic/political. Limited knowledge and resources and the focus of their participation on the more formal aspects of the process heavily constrain their capacity to make a real contribution. Whilst the process of selecting from competing projects can work well it depends on there being a diversity of promoters. In too many cases – especially in the smaller member states – particular promoters and their projects are ‘the only game in town’. In these cases making the selection process more rigorous is unlikely to help and the key issue is how to bring in a critical assessment of options earlier in the process. Reflecting in large measure contextual factors, the supporting administrative arrangements varied widely between member states – with substantial differences in the extent in use of intermediary public bodies, independent management units and the private sector. Each of these different arrangements had both positive and negative aspects. However, the most significant differences were in the extent to which the management process operated on a centralised or decentralised basis, or some hybrid of the two. This typically reflected the interrelated combination of the structure of the interventions and the wider organisation of the process of government in the member state concerned. The evidence is that either centralised or decentralised management arrangements work best, with the hybrid arrangements most problematic – although this may reflect the existence of unresolved issues of responsibilities between tiers of government in the member states which took this path. The management of the four structural funds operated to a large extent in isolation. Though not a major source of problems, this clearly contributed to the problems of achieving real integration between the different strands of the interventions. In all member states management capacity varied across programmes and regions. A number of regions had to go through a significant learning process, either because they were new to Objective 1 or because of a wider government



re-organisation. Capacity improved over time in most cases but the problems of large infrastructure projects indicate that significant issues remain to be addressed. Whilst the project selection process worked reasonably, it too often lacked consistency and transparency. As indicated, monitoring remained a major weakness despite the emphasis on developing its role since the first programming period. The available data is fragmented, inconsistent, overly focused on physical outputs and often of doubtful reliability. The approach to monitoring which is now being followed contributes greatly to the ‘weight’ of process associated with the Structural Funds whilst producing information which is of only limited reliability or value – and which, in practice, is little used in many cases. Whilst much greater attention is being given to monitoring activity in the current programming period, it is not clear that the data which results is much more reliable because projects (a) too often have little basis for estimating what they are expected to measure, and (b) have a vested interest in talking up results. Evaluation activity developed significantly over this programme period but many evaluations had little impact, often because they were completed too late to influence the key decisions they were designed to inform. The quality and therefore usefulness of many evaluations was also limited. Whilst the quality of evaluations could be improved to some extent by the transfer of good practice, the arrangement under which regional partnerships – and ultimately to a large extent therefore programme managers - control the process inevitably tends to dilute criticism.

8.7 Community added value

The Objective 1 interventions contributed significantly to a range of Community policy priorities, although detailed supporting quantitative evidence is lacking. Key areas of contribution have been in: strengthening infrastructure (particularly in the transport sector) and supporting the development of the TENS; helping to extend the base of competitive SMEs; and, developing human resources. Contributions have been made in relation to the environment and sustainable development, whilst the programmes also included substantial measures to further Community policies in relation to agriculture and fisheries. The interventions have contributed to the process of convergence at national level but, as indicated, the picture at regional level is more mixed. Financial transfers to the Objective 1 regions have amounted to an estimated €114bn and the evidence is that the principle of additionality has generally been respected. The need to provide national co-financing has drawn domestic public expenditure to the agreed priority activities and – whilst results have fallen short of original expectations – some €35bn in private funding has been levered in within the 9 member states for which data is available. A range of benefits have been brought about by the Objective 1 process, including: the wider development of multi-annual programming and strategy led approaches, the embedding of partnership working; improvements in the capacity of public sector



management; the wider utilisation of monitoring and evaluations; and, improvements to systems of financial control. However, as noted above, this process has not been wholly positive and improvements to practice are required. Co-operation and networking have occurred to a modest extent and there is evidence that some diffusion of good practice and innovation has resulted. Co-operation and networking is, though, not a focus of Objective 1 and, arguably, Objective 1 has enabled support for new approaches to be provided rather than actively encouraging such developments.

8.8 The extent to which emerging issues have been addressed in the programming period, 2000-2006

A range of aspects have been addressed in the new generation of interventions. Programmes are based on more extensive needs and SWOT analyses. Objectives are more extensively developed and there is greater quantification. Ex-ante evaluations were more extensive and in-depth, leading in the best cases to greater consideration of the underlying strategic choices. The extent to which this will lead to improved impacts in the programme areas will only become apparent over time. Monitoring systems have been developed, with greater effort to standardise indicators so that data is more meaningful. This links in particular to the new Performance Reserve system which is geared to reducing the extent to which expenditure becomes ‘back end loaded’. The Mid Term Review and Performance Reserve requirements are clearly strengthening the role of the Mid Term Evaluations which are currently underway. Some problems – such as the difficulties faced by Monitoring Committees in taking a real strategic role – remain largely unresolved. Whilst objectives are more extensively quantified, the evidential basis for establishing targets has often been limited. Inevitably too, the efforts to address the problems of the past are creating new issues. The introduction of the ‘n+2’ rule with respect to financial allocations has led to an increased focus on financial absorption, an area where, arguably, greatest attention was already directed. The efforts to hit Performance Reserve targets have potentially led to the approval of projects which might have been improved with further development, or for which better alternatives might well have come forward. The efforts to improve monitoring have increased the ‘weight of process’ confronting projects – a significant issue for community projects with limited management resources. Although we have focused on outstanding issues it should be said that the current programmes have learnt from and built upon the lessons of the last programming period. The new programmes are certainly far more in-depth and do set out a much more developed strategy with more extensive targets. Some regions have also learnt valuable lessons in terms of strategy development and the effectiveness of different policy interventions. Attempts are being made to address the problems of monitoring



experienced in the previous programming period. Furthermore there is clear evidence that partnership arrangements have deepened and widened and that there has been increasing delegation of responsibility for decision-making to the programme partnership.



9.0 RECOMMENDATIONS

Our recommendations are divided into those which can be implemented, at least in part, within the current programming period and those which largely relate to the longer term. The latter are of particular importance in the context of the development of interventions for the new Member States. The recommendations are directed towards the implementation of current programmes by Programme Managers, as well as towards the European Commission and other partners.

9.1 The current programming period

• There needs to be greater recognition of spatial differences in needs in resource allocation decisions, particularly where programmes typically span large geographical areas. Where programmes currently cover larger geographic areas there should be greater consideration given to the spatial patterns of development being promoted. This is not necessarily to argue that resources should automatically follow needs or, far less, that there should be area allocations. However, the spatial implications of the pattern of decisions is an issue that should receive consideration and many interventions could benefit from an explicit spatial strategy. This will become a particular issue in relation to interventions in the Accession States which are typically characterised by dominant capital city regions. This recommendation also holds for new programmes being developed within the current programming period, particularly where they may relate to new Member States.

• Research and Development activities should receive greater prominence

with a greater focus on the business utilisation of R and D results.

• In developing programmes in new Member States, there should be an explicit focus on identifying and addressing the contextual factors which are likely to constrain – or have the potential to enhance – the effectiveness of the interventions. This includes, for example, the extent to which taxation, regulatory, competition and domestic industrial support policies provide the sort of framework within which EU funded initiatives to encourage the development of SMEs can be effective. Getting the wider policy and institutional framework right will be particularly critical in relation to the Accession States.

• Programme managers should consider ways in which the effectiveness of

Human resource interventions can be increased. Interventions need to include: − a labour market analysis which seeks to identify existing and

prospective demands for different types of skill;



− a policy framework which links and creates pathways from education to initial vocational preparation to employment;

− in the case of measures in favour of socially excluded people, a clear focus on the needs of individual participants.

• Rural development needs to be considered as an explicit focus of all

interventions which cover rural areas. . Rural development should be promoted as an integrated programme of activities in its own right. In this respect interventions should recognise the integration of different activities drawing on ERDF and ESF interventions as well as activities supported through the EAGGF

• Programme Operators should be encouraged to take a pro-active

approach to supporting the development of projects to address identified issues as part of a more objectives-led approach to programme management.

• A programme management culture which is more supportive of innovation and risk taking needs to be encouraged. This raises issues for both the way project proposals are appraised and for the ways in which programme managers are appraised and incentivised.

• Equal opportunities and sustainable development need to be clearly

embedded as horizontal themes. We are aware that this has happened in the new generation of programmes and is being assessed through the current mid-term evaluations. However, it is important that these themes are interwoven with, and reflect, local issues rather than being ‘imported’ to programmes as external requirements. This is a point that the mid-term evaluations should take on board.

• To address the unacceptable problems of cost-overruns and delays, a

major effort is required to utilise best practice management techniques – particularly in relation to major projects. This includes an emphasis on ensuring that there are adequate prior technical studies, that proper professional project management skill are brought in and that contracts are closely specified, providing an appropriate framework of incentives to contractors.

• An effort should be made to further encourage networking and the exchange of good practice. Current practice suggests that networking and exchange of experience occurs on the margin of programmes at best. The opportunity to learn from best practice elsewhere in Europe in the delivery of programmes based on very substantial resource transfers should be encouraged more actively than currently occurs.



• Interventions need to have more extensive, realistic and quantified targets for outputs and results, with improved monitoring against these targets. For the process to be useful it is important that definitions are clear and that there is proper control of data quality. There is a strong case for:

• Focusing monitoring on a few, readily measurable and objectively verifiable output indicators;

• Leaving the measurement of results and impact to the evaluation process (which will then need to be vastly better resourced);

• Providing much greater discretion to those Member States which have effective domestic monitoring systems to utilise their own monitoring requirements in relation to EU supported initiatives. This would reduce the costs involved and the data which emerges would probably be more meaningful.

• In a number of areas – such as transport infrastructure – there is a need for

quality research on the extent of the associated economic development spin-off effects providing a clear indication of how these depend on different contextual factors. At present the evidential base is insufficient either to guide resource allocation decisions or to establish meaningful targets for the results of such interventions. It is not enough to rely on the formal evaluation process, such as the mid-term evaluations, but consideration should also be given to the commissioning of specific subjects on particular themes. At a programme level the results of these should be fed into the ongoing development of the programme. A similar exercise should also be undertaken by the European Commission, in order to build a stock of comparable project or thematic evaluations that can assist in developing stronger programme strategies in the future

• The role of Monitoring Committees needs to be shifted towards one of

strategic direction rather than issues of financial management. This has implications for their composition, the data they need to receive and when they consider issues. The European Commission could look at the possibility of offering advice in this area, although this is more strictly the role of national authorities.

• As part of the shift towards a more objectives-led approach, decisions on

reprogramming need to focus more on questions of objectives, strategic needs and priorities and less on questions of absorption.

• The timing of interim and other evaluations has to ensure that findings are

available in good time to inform the decision making process.



• In partially and fully decentralised management systems, information flows and co-ordination between the national and regional levels needs to be improved.

• More effective arrangements – probably generally involving integrated

Secretariats – are needed to bring together the administration of the individual funds in each region, enabling their administration and decision making to be better co-ordinated and helping to achieve a more integrated approach.

• Project selection needs to be on a transparent competitive basis wherever possible. This will generally be achieved best through the use of an objective, quantitative scoring system.

• In view of the risks that enhanced levels of monitoring activity lead to a

greater ‘weight of process’, to the detriment of smaller and community based project applicants, Member States should be encouraged to integrate the indicators and reporting requirements of domestic funding regimes and those of their EU programmes.

9.2 The Post 2006 Future

• A major effort will clearly be needed to build institutional capacity in the new Member States. This has to cover not just narrow issues related to the implementation of the structural funds but the broader ones of project management and institutional capabilities.

• The programmes for the new Member States need to be grounded in a

proper analysis of needs and opportunities, involving an explicit ‘model’ of the route to development, with explicit consideration of key strategic choices. Experience in existing Member States needs to be widely drawn upon. It will be important to use the negotiating process to implement these changes to ensure ‘buy-in’ by the new partnerships and a sense of local ownership.

• Interventions need to be put in place in good time to avoid the problems of

‘back end loading’ of expenditure and pressures to catch-up, which may have led to sub-optimal decision making.

• There is at least an argument for greater future flexibility in relation to

programming periods. In the case of many of the Accession States it is clear that a longer period of support is likely to be required and there is a case for putting the planning and funding of infrastructure support on a longer term basis.



• Mid-term reviews of future programmes could usefully be more fundamental in scope – particularly if the suggestion of longer programming periods were taken up, rather than – as in the past- largely being confined to incremental changes.

• More use could be made of independent ongoing evaluations – providing

an objective external input. These evaluations may include particular types of actions undertaken by Structural Fund programmes or major projects. Equally, it could cover aspects of process. One function of such evaluations could be to provide external expertise to act as a sounding board to assist in programme development and delivery, encouraging consideration of alternative approaches.

• Thought needs to given to how to achieve better integration between funds

and a more nationally/regionally customised focused approach within EAGGF and, where relevant, FIFG supported measures. This raises issues of whether the administration and procedures of the funds could be more closely aligned and how to tie interventions in relation to agriculture more closely into local priorities. The latter issue will clearly depend on how the CAP evolves, particularly in relation to the Accession States.

• For the future there is clearly a question of how much the detail of the Community method for the utilisation of Structural Fund resources will continue to add value in many of the existing Member States. Particularly for the micro-regions there is a case for allocating resources through a lighter, less prescriptive framework. This is particularly an issue of proportionality and the costs associated with implementing the Structural Funds for small programmes, especially where there is past experience of implementing similar programme. This requires a comprehensive review of appropriate mechanisms, perhaps with less central prescription.

• Increasing consideration also needs to be given to the ‘exit strategy’ from

Objective 1 of the existing Objective 1 regions. The presumption is that this will involve an increasing focus on the development of competitiveness as a reasonable level of infrastructure and basic education are achieved. Exit strategies need to consider how the momentum achieved during the programming periods can be maintained to safeguard and build upon the investments made and sustain the valuable partnerships previously established. Although it is beyond the scope of the current evaluation, it is not clear that this is happening to the degree that is desirable under the current transition programmes. This is an issue which requires further exploration following the mid-term reviews.