Ex-post Evaluation of the Objective 1 1994-1999 National ...ec.europa.eu/regional_policy/sources/docgener/evaluation/doc/obj1/... · Ex post evaluation of the Ob. 1 – 1994/1999

Ex-post Evaluation of the Objective 11994-1999

National Report – ITALY

ISMERI EUROPA

November 2002

ISMERI EUROPA - Index

Ex post evaluation of the Ob. 1 – 1994/1999 - ITALY 2

INDEX

INTRODUCTION.................................................................................................................... 6

1. METHODOLOGY............................................................................................................... 71.1. APPROACH ....................................................................................................................... 71.2. INFORMATION SOURCES FOR CSF.................................................................................... 71.3. COLLECTION AND ANALYSIS OF PHYSICAL DATA ............................................................. 9

ANNEX A - List of interviews........................................................................................... 14ANNEX B – Financial data per OP ................................................................................. 17

2. APPROPRIATENESS OF STRATEGY ADOPTED AND PURSUED 1994-99 ........ 192.1. KEY ISSUES IN 1994 AND THEIR EVOLUTION ................................................................. 19

2.1.1. The European scenario: cohesion policies introduce “multilevelgovernance” in the E.U.................................................................................................... 192.1.2. The Italian scenario: constraints and policy changes in southern Italy ............... 202.1.3. Public expenditure fall, macroeconomic impact and crisis demand .................... 222.1.4. Decentralisation and new local actors: the new economic policy in thesouth and the routing from central to local government.................................................. 252.1.5. Crisis in multilevel governance: the slimming of public authoritybureaucracy...................................................................................................................... 27

2.2. DESCRIPTION OF CSF..................................................................................................... 292.2.1. Main aspects of the strategy................................................................................... 29

2.2.1.1. The principal orientations and social demands during the programming.................................................... 292.2.1.2. The objective and the allocation of resources .............................................................................................. 31

2.2.1.2.1. The objectives: a strategy for increasing the competitiveness of the productive system ..................... 312.2.1.2.2. The allocation of resources.................................................................................................................. 332.2.1.2.3. The priority axes.................................................................................................................................. 342.2.1.2.4. The integration with the national policy.............................................................................................. 372.2.1.2.5. The principal instruments of the CSF.................................................................................................. 39

2.2.2. Main components of the CSF ................................................................................. 402.2.2.1. Regional and multiregional sub-frameworks ............................................................................................... 402.2.2.2. Regional and multi-regional Operational Programmes................................................................................ 43

2.2.3. Expenditure planned and actual ............................................................................ 462.2.3.1. Commitments and payments of CSF by priority axis and fund ................................................................... 462.2.3.2. Commitments and payments of CSF by OP ................................................................................................ 50

2.2.3.2.1. The Evolution of Commitments and payments ................................................................................... 512.2.4. Reasons for deviations from Plan .......................................................................... 54

2.2.4.1. Reprogramming........................................................................................................................................... 552.2.4.2. The “automatic” reprogramming ................................................................................................................. 582.2.4.3. Main changes in the initial strategy ............................................................................................................. 602.2.4.4. The CSF leverage effects on private funds .................................................................................................. 64

2.3. ASSESSMENT OF GEOGRAPHICAL SPREAD...................................................................... 652.4. CONCLUSION ON APPROPRIATENESS OF STRATEGY......................................................... 66ANNEX TO CHAPTER 2 – FINANCIAL TABLES ......................................................................... 70

3. EFFECTIVENESS............................................................................................................ 753.1. PROGRAMME OUTPUT AND RESULTS ............................................................................. 75

3.1.1. Communications..................................................................................................... 753.1.1.1. Communications- Railways......................................................................................................................... 763.1.1.2. Communication – National Roads and Motorways ..................................................................................... 773.1.1.3. Communications – Telecommunications.................................................................................................... 793.1.1.4. Communications- Other Means of Transport .............................................................................................. 80

3.1.2. Industry, Craftsmanship And Business Services ................................................... 80



3.1.2.1. Industry Operational Programme................................................................................................................ 813.1.2.2. “Territorial Pact” Operational Programme ................................................................................................. 853.1.2.3. The Regions’ Industrial Policy ................................................................................................................... 86

3.1.3. Tourism ................................................................................................................. 883.1.4. Economic Infrastructures..................................................................................... 90

3.1.4.1. Water resources and the Environment ......................................................................................................... 903.1.4.2. Energy ........................................................................................................................................................ 923.1.4.3. Research & Development ........................................................................................................................... 94

3.1.5. Development of Human Capital.......................................................................... 1013.1.6. Development and Diversification of Agricultural Resources and RuralDevelopment................................................................................................................... 104

3.2. PROGRAMME EFFECTS................................................................................................. 1103.2.1. Programme Contributions to Overall Social and Economic Changes ............... 1103.2.2. Key Influences on the Effectiveness of the Programme ..................................... 1223.2.3. Success Factors ................................................................................................... 1243.2.4. Obstacles ............................................................................................................. 1253.2.5. Fund Distribution and Effectiveness ................................................................... 125

4. EFFICIENCY .................................................................................................................. 1324.1. DESCRIPTION OF PROJECTS.......................................................................................... 132

4.1.1. Brief description of projects................................................................................. 1324.1.2. Final beneficiaries................................................................................................ 1344.1.3. Changes to plan.................................................................................................... 134

4.2. UNIT COSTS.................................................................................................................. 1374.2.1. Actual Unit Costs compared to those Planned..................................................... 1374.2.2. Actual Unit Costs compared to available benchmarks ........................................ 141

4.3. CONCLUSIONS .............................................................................................................. 142

5. IMPACT ANALYSIS ..................................................................................................... 1435.1. EVOLUTION OF NATIONAL, REGIONAL OR SECTORAL CONTEXT FROM 1994 ................ 143

Productivity and market competition of SME in manufacturing.................................... 1435.1.1. Research &Technology Development ................................................................. 1455.1.2. Agricultural productivity..................................................................................... 1455.1.3. Tourism ............................................................................................................... 1465.1.4. Environment and Water Resources ..................................................................... 1475.1.5. Main Trends in Public Works.............................................................................. 1495.1.6. Main changes in the labour market..................................................................... 1505.1.7. Investments, exports and GDP........................................................................... 151

5.2. ACHIEVEMENT OF CSF/SPD STRATEGIC TARGETS...................................................... 1535.2.1. Impact on employment ........................................................................................ 156

5.3. CONTRIBUTION OF CSF/SPD TO ACHIEVEMENT OF TARGETS...................................... 1595.3.1. Additionality ........................................................................................................ 1595.3.2. Gross Impact ....................................................................................................... 160

5.3.2.1. Impact on infrastructure supply ................................................................................................................ 1625.3.2.2. Impact on industrial enterprises................................................................................................................ 1645.3.2.3. Impact on farms ........................................................................................................................................ 1655.3.2.4. Impact on tourist facilities ........................................................................................................................ 1655.3.2.5. Impact on human resources ...................................................................................................................... 166

5.3.3. Net Impact in aid schemes................................................................................... 1685.4. CONCLUSIONS ............................................................................................................ 171

6. MANAGEMENT AND IMPLEMENTATION SYSTEMS ......................................... 1726.1. INSTITUTIONAL ARRANGEMENTS.................................................................................. 172



6.1.1. Overview of Programme management structure ................................................. 1726.1.1.1. Management at National Level.................................................................................................................. 1746.1.1.2. Programme Management at a Regional Level ........................................................................................... 1786.1.1.3. Programme Management at Local Level ................................................................................................... 181

6.1.2. Involvement of Other Groups............................................................................... 1826.1.3. Vertical partnership ............................................................................................. 183

6.1.3.1. . The role of the Monitoring Committee (MC) .......................................................................................... 1846.1.4. Horizontal partnership......................................................................................... 1866.1.5. Management capacity in 1994 ............................................................................. 1876.1.6. Development in management capacity................................................................. 1886.1.7. Processes in 1994-99 compared to 2000-06 ........................................................ 188

6.2. PROJECT SELECTION PROCESS....................................................................................... 1896.2.1. Description of process.......................................................................................... 1896.2.2. Average length of time to approve a project ........................................................ 1906.2.3. Rigour of the Project Appraisal System ............................................................... 1916.2.4. Project Selection Criteria..................................................................................... 1926.2.5. Participants Views of Process.............................................................................. 192

6.3. FINANCIAL SYSTEMS ................................................................................................... 1936.3.1. Financial system and their Impact on the Programme........................................ 193

6.3.1.1. . The structure of financial system............................................................................................................. 1936.3.1.2. The Main Processes ................................................................................................................................... 1946.3.1.3. The Impact of the Financial System on the Programme ............................................................................ 195

6.3.2. Evolution of the Financial Systems over 1994-99............................................... 1966.3.3. Link to Output Monitoring ................................................................................... 1976.3.4. Quality of Financial Control Mechanism ............................................................ 1976.3.5. Project Auditing ................................................................................................... 197

1.4. MONITORING STRUCTURES........................................................................................... 1981.4.1. Description of Monitoring Structures .................................................................. 1986.3.6. Recipients of Monitoring Information and Frequency of Provision ofInformation..................................................................................................................... 1996.3.7. Accuracy of Output/Result data ........................................................................... 2006.3.8. Quality of Monitoring data .................................................................................. 2006.3.9. Evolution in Quality of Monitoring data.............................................................. 2016.3.10. Added Value of Monitoring ................................................................................ 201

6.4. PROGRAMME EVALUATION........................................................................................... 2026.4.1. Description of Evaluation System ........................................................................ 2026.4.2. Evolution of Frequency and Amount of Evaluation ............................................. 2036.4.3. Evolution in Evaluation Capacity ........................................................................ 2036.4.4. Evolution in Evaluation Quality........................................................................... 2046.4.5. Added Value of Evaluation................................................................................... 204

6.5. EFFECTS OF SYNERGY .................................................................................................. 2056.5.1. Internal Effects ..................................................................................................... 2056.5.2. External Effects .................................................................................................... 205

6.6. EQUAL OPPORTUNITIES AND ENVIRONMENT................................................................. 2066.6.1.Equal Opportunities .............................................................................................. 2066.6.2. Environment ......................................................................................................... 206

6.7. CONCLUSIONS ON IMPLEMENTATION AND MANAGEMENT ............................................ 206

7. STRENGTHS AND WEAKNESSES ............................................................................ 2087.1. PROCESS ISSUES ........................................................................................................... 2097.2. ACHIEVEMENTS............................................................................................................ 2107.3. OVERALL EFFICIENCY .................................................................................................. 212



8. CONCLUSIONS.............................................................................................................. 2148.1. INFLUENCE OF THE 1994-99 ON 2000-2006 PROGRAMMING ........................................ 221

9. RECOMMENDATIONS ................................................................................................ 2239.1. SHORT-TERM RECOMMENDATIONS (2000-2006) ......................................................... 2239.2. LONG-TERM RECOMMENDATIONS – POST 2006 .......................................................... 225

ISMERI EUROPA - Introduction


INTRODUCTION

The present text is the final report of the evaluation of the CSF for Italy. It takes deals withthe results of the case studies and of the analysis of the other OPs included in the CSF.

In the first chapter the principal characters of the methodology are presented, with specialattention to the data collection. A large part of the information included in the report dependson this aspect.

The second chapter offer the analysis of the CSF strategy. A brief survey of the maineconomic and institutional changes both in Italy and in the EU, which affected the economicscenario, introduce the subject. These changes are analysed in relation to the cohesion policiesof the nineties and their impact on them. This general survey, which intends to furnish ananalitical framework for all the other analysis of the CSF and, more in general, on nationalcohesion policies and on their impact, is followed by a breakdown of the major changeswhich objective 1 was subject to from the political, institutional and economic point of view.

The analysis of CSF strategy, the change it underwent over time and an evaluation of thestrategy in facing the problems of objective 1 regions conclude the chapter. The chapterincludes the information on the allocation of resources, on the financial performance of theinterventions and on the reprogramming occurred during the implementation.

The third chapter, which relies heavily on the results of the case studies, is centred on theanalysis of the effectiveness of the activities carried out with the CSF and on the coherence ofthese with the strategies and targets originally fixed by the planners.

The fourth chapter shows the results of the efficiency analysis. It has been based on 7 casesstudies of large projects in the fields of industry, roads, rail and water infrastructures. Theanalysis contains elements on unit cost of the projects and of the whole CSF and points outthe principal causes of on-going modification of the projects.

In the fifth chapter an analysis of the socio-economic impact is carried out. It points out firstlythe principal modifications occurred to the structural conditions of the objective 1 regionsduring the 1994-99 period. Then the focus moves on the physical and financial contribution ofthe CSF to the key socio-economic variables. The analysis includes an estimation of theimpact on employment and a calculation of the possible net impact in the aid-schemes

The sixth chapter deals with the analysis of implementation systems and management. Thispart is based on the results of 5 case studies, as well as on the results of the interviews withdifferent representatives responsible for the OPs and the analysis of the officialdocumentation.

General conclusions and recommendations are presented in the last 3 chapters. In the seventhchapter the principal strengths and weakness of the 1994-99 objective 1 CSF are summarised.The eight chapters shows the main conclusions suggested by the previous analyses. The ninthchapter proposes the short term (2000-06) and long term (post 2006) recommendations tostructural policy in the Italian objective 1 regions.

ISMERI EUROPA - Strategy


1. METHODOLOGY

1.1. APPROACH

The methodology of the Italian evaluation report follows the guidelines of the European co-ordinator (see: “Ex-Post Evaluation of Objective 1 Programmes 1994 – 1999: Inception report;ECOTEC, January 2002). The structure of the Italian report and the main analyses herepresented are the same as other national reports, that is:- Desk analysis of CSF actions using official documentation and other available studies or

surveys;- Nine case studies on effectiveness (POP Calabria; EAGFF OP Calabria, POP Campania,

POP Sicily, POP Basilicata, POP Research and Development, OP Road Transport, OPEmployment Emergency, OP Industry and Services);

- Seven case studies on efficiency (the large road project: Completion of the Messina-Palermo Motorway; the large rail project: Substitution of the Railway Line betweenMessina and Palermo; the Substitution of the Railway Line between Lesina and Apricena,the Construction of the Campania Tract of the Rome-Naples High-Speed Line; waterinfrastructures: the Acerenza dam in Basilicata; large industrial projects: STMicroelectronics in Catania and Laminazione Sottile Spa( producing rolled aluminiumsections) in Caserta;

- Five management case studies (EAGFF OP Calabria, POP Campania, POP Research andDevelopment, OP Employment Emergency; OP Industry and Services).

In analysing effectiveness the report studies all the OPs that have been implemented, apartfrom the OPs that appear as case studies. The aim is to present a complete overview whileusing other available information to fill any data gaps in the case studies and connect them toother similar programmes.

Annex A gives a list of those responsible for actions who were interviewed during casestudies and general meetings.

1.2. INFORMATION SOURCES FOR CSF

The evaluation uses financial and physical data, which were gathered from three mainsources:- The Treasury – Department of Cohesion, Services for Structural Funds;- The Treasury – Department of State Accounting, Services for EU Liaison;- Management Authorities (implementation report, monitoring report, evaluation report,etc.)

Data collection covered all OPs. Mailing, direct interviews and meetings with officials wereused to gather data on the OPs in the sample, while mailing and telephonic interviews wereused for the other OPs.

The following table summarises the characteristics and problems of each source.



Source Treasury – Department of Cohesion, Services for Structural FundsType of data Aggregated financial data at CSF levelCharacteristics This source was used to process CSF data since it is very precise, and

adjusted the connections between CSF and OPs. It is only available at CSFlevel.

Update It provides figures for initial and final CSF programming.Problems Only aggregated figures are available; no other relevant problems

Source Treasury – Department of State Accounting, Services for EU LiaisonType of data Financial data at measure levelCharacteristics The data are official, since the Service is responsible for financial

monitoring.Update Data used were collected in June 2002, but do not relate to the completion

of programmes. Many OPs are still completing their accounts. The nexttable (A and B) shows the situation of financial data for regional andmulti-regional OPs.

Problems - For some OPs initial programming data are not available.- in other cases, financial data were available only at sub-programme

level (estimations or extra sources at measure level are provided)- In the early years, during the 1995-96 period, only a part of OPs - for

commitments and expenditure - were included in the databank

Source Management AuthoritiesType of data Physical data at measure levelCharacteristics Data were generally limited to implementation, and very rarely included

results or impact indicatorsUpdate It is difficult to specify one particular date:

- some time indicators relate to 2000,- other time indicators relate to 2001 and to expenditure completion.The situation is also very diversified within the same OP.

Problems - Data do not cover all the measures (this implies under-estimation, butfinancial resources relating to physical indicators are provided).

- Data relate to a stock of projects that are continuously changing. Thechoice of projects being co-financed varies over time following thefinancial progress of each project. Physical indicators are not updatedwith the same frequency and often they represent estimatedimplementation.

- Data are not always available in one single document, but have to becollected from many different sources

- In the majority of cases only in June-July 2002 were physical dataobtainable, and were processed from then on.

- Indicators use different units of measurement, and it is not alwayspossible to aggregate them.

- When commitments were in overbooking, data often relate tocommitments and it was impossible to correct with total eligibleexpenditure (implying over-estimation)

Annex B summarises the availability of financial data at the completion of the report.



Some OPs (such as Campania) were able to complete expenditure at the end of September2002, while many others are still closing their financial accounts and defining finalexpenditure. It will probably be only at the end of 2002 that a comprehensive figure of thefinancial status of CSF will be available. For this reason, in July we did not wait to receiveadditional financial information and worked with the data available at June 2002.

1.3. COLLECTION AND ANALYSIS OF PHYSICAL DATA

Physical data was collected from the monitoring, evaluation and activity reports of all the OPsand several GGs. The authorities responsible supplied the documentation; data collectionfinished at the end of July 2002, but not all the authorities answered.

Physical data concerned outputs, while results or impact indicators were very rare. Theindicators for effects on employment were also more sporadic. For this reason only outputindicators were processed.

Data collection was very detailed. The information was organised in a databank whereindicators relate to OPs, the priority axis and sub-axis, the measure, three different types ofaction1, and the financial indicators for the measure.

Despite this detailed work of collection and classification, the data-base is still incomplete,since available documentation did not always supply the updated information necessary (forexample, the date and the expenditure relating to the physical indicator, the source ofinformation, etc. In general, we used the last, most updated information available; but we areaware that the information refers to a period before OP closure and may have changed due tothe completion of projects or changes in the stock of co-financed projects.

Within these limitations, we believe that the information shown in the report is meaningfuland close to the maximum information available at July 2002. The table below summarisesthe coverage of physical indicators in terms of total cost and number of measures.

1 One classification is related to the general typology of the instrument (in house training, vocational training,incentive to private investment or to employment, support to income, public work) and was defined by ISMERIEUROPA; other two more articulated classifications mixed the typology of the instrument and the typology ofthe objective of each intervention and derived by a monitoring classification of the CSF.



Table 1 Rate of coverage of physical indicators used in the reportFUND Available Unavailable Total Rate of coverage

Total cost (.000 Euro) 2.354.510 1.148.835 3.503.346 67%EAGGF No.of measures 123 68 191 64%Total cost (.000 Euro) 15.490.154 3.240.743 18.730.897 83%ERDF No.of measures 251 174 425 59%Total cost (.000 Euro) 1.496.013 2.183.609 3.679.623 41%ESF No.of measures 107 127 234 46%Total cost (.000 Euro) 339.222 30.166 369.388 92%FIFG No.of measures 11 4 15 73%Total cost (.000 Euro) 19.679.900 6.603.354 26.283.254 75%Total No.of measures 492 373 865 57%

Source: ISMERI EUROPA processing of CSF physical and financial data.

The total rate of coverage is 57% for the number of measures, and 75% for total cost. Thismeans that indicators relate to the most important measures in terms of finance.

The least covered fund is the ESF (46% for measures and 41% for resources). In the case ofthis fund the collection of information encountered different problems: availability of data,indicators referring to initial projects and the relationship between existing data and thedifferent ESF measures (i.e. Abruzzo). In this last case, sometimes we estimated the result foran individual measure with its percentage of total resources, assuming a constant relationshipbetween financial and physical indicators.

In total about 600 different indicators were collected. These were examined and, wherepossible, aggregated in order to aid interpretation. About 80 different indicators were finallyadopted, although we were aware that there would be an inevitable loss of information.

The following table gives more detail of the coverage of physical indicators by individual OP.



Table 2 Coverage rate of physical indicators in ERDF programmesERDF – OPERATIONAL PROGRAMMES Physical indicators

Unavailable (.000 Euro)Physical indicators

Available (.000 Euro)Total

(.000 Euro)Rate of coverage

(%)AT - GP PORTO GIOIA TAURO 39 39 0%AT - PO RISORSE IDRICHE 15 15 0%AT - PO TURISMO 12 12 0%AT -POP SICILIA 12 12 0%AT -POP SICILIA 12 12 0%GP PORTO GIOIA TAURO REGIONE CALABRIA 120.000 120.000 0%PO PROTEZIONE CIVILE 268.592 268.592 0%PO INDUSTR. ARTIG. SERV. IMPRESE 14.700 5.568.987 5.583.687 100%PO INFRASTRUTTURE AEROPORTUALI OB1 400 109.600 110.000 100%PO INFRASTRUTTURE TRASPORTO STRADALE 6.000 492.000 498.000 99%PO MPI (FESR-FSE) 171.350 360.394 531.743 68%PO MULTIR. AMBIENTE 106.954 106.954 0%PO RICERCA E SVILUPPO TECNOLOG. 2.034 1.012.299 1.014.333 100%PO RISORSE IDRICHE 967.686 685.010 1.652.696 41%PO SVILUPPO VALORIZ. TURISMO 2.100 236.580 238.680 99%PO TELECOMUNICAZIONI 1.500 1.153.710 1.155.210 100%PO TRASPORTI FERROVIE 418.586 1.614.923 2.033.509 79%PO AT QCS OB1 30.715 30.715 0%PO NAPOLI-PIANURA 51.500 3.800 55.300 7%PO SICUREZZA PER LO SVIL DEL MEZZOGIORNO 668 289.864 290.532 100%PO ENERGIA 165 465.541 465.706 100%POP ABRUZZO 108.993 194.685 303.678 64%POP BASILICATA 173.362 413.487 586.849 70%POP CALABRIA 100.633 932.022 1.032.655 90%POP CAMPANIA 781.702 1.382.298 2.164.000 64%POP MOLISE 21.583 295.054 316.637 93%POP PUGLIA 618.964 808.642 1.427.606 57%POP SARDEGNA - 888.025 888.025 100%POP SICILIA 4.443 1.837.000 1.841.443 100%PO PATTI TERRITPER L'OCCUPAZIONE 10.990 172.449 183.439 94%PO STUDIO VALUTAZIONE TELECOMUNICAZ. 42 42 0%SG AREA DI CRISI DI GELA 38.815 38.815 0%SG BIC SICILIA 1.350 20.022 21.372 94%SG OASIS ORCHESTRARE AZIONI SVILUPPO DELLE PMIS 22.526 22.526 100%SG CENTRO ANTICO NAPOLI-CAMPANIA) 47.790 47.790 100%SG AREA DI CRISI DI TARANTO 9.170 40.524 49.694 82%



SG PUGLIA (AREA CRISI MANFREDONIA) 2.236 49.296 51.532 96%SG BIC BASILICATA 1.078 9.700 10.778 90%SG AREA DI CRISI DI CROTONE 72.367 72.367 0%SG AREA DI CRISI DI SIRACUSA 50.221 50.221 0%SG PROG. BIC BUSININN. COOP. INDUSTR. 1.550 23.450 25.000 94%SG PROGSEPRI SVIL.RISORSE IMPREN.LOCALI 900 17.883 18.783 95%SG PROGETTO CARTESIO 25.435 25.435 0%SG AREA DI CRISI BRINDISI 550 72.673 73.223 99%SG CREAZIONE PARCHI LETTERARI 2.000 27.310 29.310 93%SG AREA DI CRISI GIOIA TAURO 63.180 63.180 0%SG COOP. TRA PMI NEL MEZZOGIORNO 4.566 317 4.883 6%SG PROGETTO ALIMENTARIA 2.155 29.600 31.755 93%TOTAL ERDF 4.259.325 18.917.067 23.176.392 82%Source: ISMERI EUROPA processing of CSF physical and financial data

Table 3 Coverage rate of physical indicators in EAGGF programmesEAGGF – OPERATIONAL PROGRAMMES Physical indicators




(%)PO SOSTEGNO SERVIZI SVIL AGRICOLTURA 5.244 226.185 231.429 98%PO MONOFONDO SVILUPPO RURALE ABRUZZO 50.120 139.730 189.850 74%PO MONOFONDO SVILUPPO RURALE CALABRIA 508.173 508.173 0%PO SERV. VALOR. PROD. AGR. MERIDIONALI 102.690 102.690 100%PO MULT. SOSTEGNO COSTIT. E ATTIV. PRODUT. ORT. 1.936 6.290 8.226 76%POP BASILICATA 283.322 143.677 426.999 34%POP CAMPANIA 72.407 528.506 600.913 88%POP MOLISE 38.679 182.810 221.489 83%POP PUGLIA 97.680 575.819 673.499 85%POP SARDEGNA 315.666 328.348 644.014 51%POP SICILIA 12.627 726.446 739.073 98%PO PATTI TERRITPER L’OCCUPAZIONE 2.083 34.718 36.801 94%SOVVENZIONE GLOBALE ZOOTECNIA CAMPANIA 66.470 66.470 0%Total EAGGF 1.454.407 2.995.218 4.449.625 67%Source: ISMERI EUROPA processing of CSF physical and financial data



Table 4 Coverage rate of physical indicators in ESF and FIFG programmes ESF – OPERATIONAL PROGRAMMES Physical indicators




(%)PO INDUSTRI, ARTIG.SERV. IMPRESE) - 50.667 50.667 100%PO MAE FORMAZ ITALIANI ALL'ESTERO 37.333 37.333 100%PO ML ASSISTTECNICA E AZIONI INNOV. 106.133 106.133 0%PO ML EMERGENZA OCCUP. SUD 433.977 20.290 454.267 4%PO ML FORMAZ. FORMAT. E FUNZIONARI PA 192.933 192.933 0%PO MPI - 360.394 360.394 100%PO RICERCA E SVILUPPO TECNOLOG.) 193.629 101.038 294.667 34%PO PARCO PROGETTI: UNA RETE PER LO SVIL.LOC. 51.963 17.921 69.884 26%POP ABRUZZO 55 57.945 58.000 100%POP BASILICATA 248.065 248.065 0%POP CALABRIA 224.573 224.573 0%POP CAMPANIA 61.370 264.638 326.008 81%POP MOLISE 78.706 78.706 0%POP PUGLIA 370.388 370.388 100%POP SARDEGNA 283.987 283.987 0%POP SICILIA 614.082 614.082 0%PO PATTI TERRITPER L'OCCUPAZIONE 3.293 11.225 14.518 77%Total ESF 2.492.767 1.291.837 3.784.605 34%

Total FIFG 30.166 409.056 439.222 93%Source: ISMERI EUROPA processing of CSF physical and financial data

Table 5 Coverage rate of physical indicators in total of actions Physical indicators




(%)GENERAL TOTAL 8.236.665 23.613.178 31.849.843 74%Source: ISMERI EUROPA processing of CSF physical and financial data



ANNEX A - List of interviews

General themes InterviewsDott.sa Paola De Cesari - Ministero dell’Economia (responsabile Servizio FondiStrutturali)Dott.sa Sabina De Luca - Ministero dell’Economia (responsabile obiettivo 1 nelServizio Fondi Strutturali)Dott. Pugliese – Ministero dell’Economia (responsabile monitoraggo nel servizioFondi Strutturali)Dott. Sicca e Dott. Pascali – Ministero dell’Economia (funzionario monitoraggonella direzione IGRUE)Dott. Raimondi (CE – DG Regio)Dott. Paderi (CE – DG Regio)

Effectiveness case studies

Calabria POP

PLANNING UNITDott. Cirò Candiano - Direttore GeneraleERDFDott. Turatto - Responsabile dei programmi ERDFESFDott. Benussi - XII Dipartimento, Assessorato al lavoro e alla formazioneprofessionale, Direttore GeneraleDott Solano - , XII Dipartimento, Assessorato al lavoro, Dirigente del settoreispettivo e di rendicontazioneDott. Paladino - XII Dipartimento, Assessorato al lavoro e alla formazioneprofessionale, Funzionario responsabile della contabilitàMONITORING UNITDott. PromenzioEVALUATION UNITDott. Cenderello

Calabria EAGFF OP

EAGGFDott. Cumino - Dirigente generaleDott. Caruso - Responsabile monitoraggioMONITORING UNITDott. PromezioOTHERSProf. Gaudio (Istituto Nazionale di Economia Agraria)

Campania POP

Dott. Lupacchini – responsabile OPDott. Falesci – responsabile EAGGFDott. Scorpio – responsabile ESFDott. Gallo – AT monitoraggioDott. Coluccello – AT ERDF

Sicily POP

PLANNING UNITArch. Marino- Dipartimento della Programmazione- responsabile del monitoraggioArch. Morale - funzionario alla Presidenza della Regione, al tempo responsabile delcomitato di coordinamento dei programmi comunitariEDRFDott. Giordano - Funzionario del Dipartimento Beni culturali, responsabile dellamisura Inteventi sui beni culturali, sottoprogramma 2Ing. La Rocca - Funzionario del Dipartimento Turismo, responsabile della misureInterventi per lo sviluppo turistico e Aiuti al turismo rurale del Sottoprogramma 2Dott. Greco - Dirigente Generale del Dipartimento Turismo, responsabile dellamisura Aiuti per il turismo del Sottoprogramma 2Ing. Falletta - Funzionario del Dipartimento dei Lavori Pubblici- responsabile dellamisura Interventi finalizzati all'approvvigionamento idrico del Sottoprogramma 3Rag. Ragonese - funzionario del Dipartimento sulla programmazione, responsabiledella misura Riqualificazione urbana e sviluppo locale del Sottoprogramma 1Dott. Montoro - Direzione PI, responsabile della misura Interventi sulle strutturescientifiche d'insegnamento universitario del Sottoprogramma 3Dott. Nogaro - responsabile della misura Interventi sulle strutture scientifiche



d'insegnamento universitario del Sottoprogramma 3Arch. D'Aquilla - responsabile della misura Interventi sulle strutture scientifiched'insegnamento universitario del Sottoprogramma 3Dott. Nicosia - responsabile della misura Interventi sulle strutture scientifiched'insegnamento universitario del Sottoprogramma 3ESFDott. Marinese - Dirigente Generale del Dipartimento sul Lavoro e FormazioneDott.ssa Greco - Capo della Segreteria Tecnica, Dipartimento Lavoro e Formazionecon funzioni di coordinamentoDott.ssa Spatafora - Funzionaria del Dipartimento Lavoro e formazione confunzioni amministrativeEAGGFDott. Cimò - Dirigente tecnico, Coordinatore dei sottoprogrammi finanziati dalEAGGF, Assessorato dell'Agricoltura e delle Foreste- Gruppo studi eprogrammazioneAll the responsibles of the single measures attended to the meeting, f or a total ofabout 12 persons (Dott. Cimò was supposed to send us the complete list of theparticipants but he did not until now).MONITORING UNITDott. La NaveDott.ssa RussoEVALUATION UNITDott. Toma

Basilicata POP

PLANNING UNITDott Freschi - Dipartimento Presidenza della Giunta- Ufficio Coordinamento egestione dei programmi comunitariDott.ssa Lomio - , Responsabile del monitoraggioEAGGFDott. De Franchi - Direttore generale del Dipartimento AgricolturaDott. Martelli - Dipartimento Agricoltura, dirigenteDott.ssa De Vivo - Istituto Nazionale di Economia AgrariaESFDott. Rizzo - Assessorato delle politiche attive del lavoro e della formazione,FunzionarioDott.ssa Falcitelli - Assessorato delle politiche attive del lavoro e della formazione,FunzionariaEVALUATION UNITDott. Cenderello

Research andDevelopment POP

dr.ssa C. Galletti - Dirigente MIUR – Responsabile Coordinamento POdr. F. Cobis - Dirigente MIUR – Responsabile interventi a sostegno della ricercaindustrialedott.sa A. Paone - MIUR – Misure FSEing. A. Rebichini - MIUR – Misure FESRing. M. Masselli - MIUR – Legge 488/92 – Piani potenziamentodr.ssa S. Cenciarelli - NOVA – Coordinatrice Assistenza Tecnicadr. A. Feleppa - Isti. Tagliacarte- Progetto DIT sul Trasf. Tecnologico.dr.ssa M. Labia -Istituto Tagliacarne –Progetto DIT sul Trasferimentoing. L. de Paola - PST Technapoli (Campania) - Pianificazione controllodr.ssa Calò - PST Technapoli (Campania) - Pianificazione e controlloprof. Marletta - Università di Catania –DU in Scienza dei Materiali

Road Transport OP

Dott.sa Imperi – Ministero Infrastrutture (ex-Lavori pubblici)Dott. De Mattia – ANAS responsabile OPDott.sa Pennacchiotti - ANASDott.sa Megna - Technical assistanceDott. Ricci – Evaluator

Employment EmergencyOP

D.ssa Battistoni – Responsible for ESF interventions in Ministero del LavoroD.ssa Tomai – Responsible for Objective 1 ESF interventions Ministero del Lavoro(several times)D. ssa Caputo – assistano to Ms. Tomai Ministero del Lavoro (several times)Dott. Ferrucci, Dott. De Marco e D.ssa Porru – Tecnostruttura



Formedil - (beneficiary)

Industry and services OP

Dott. Ciufo – coordinator of OP in Ministero delle Attività ProduttiveDott. Martini – IPI , Technical Assitance to Ministero delle Attività Produttive(several times)D.ssa Proietti – IPI , Technical Assitance to Ministero delle Attività ProduttiveDott. Belardi – Mediocredito CentraleDott. Vigilanza – ArtigiancassaDott, Pieche – Ministero delle Attività ProduttiveD.ssa Mauro – Ministero delle Attività Produttive

Efficiency case studiesCompletion of theMessina-PalermoMotorway

Ing. G. Fatteschi - ANASIng. A. Di Mattia – ANASGeom. G.P. Semola – ANAS

Substitution of theMessina-PalermoRailway Line

Dott. P. Parrilla e suoi collaboratori – Responsabile finanza agevolata FS

Substitution of theLesina-Apricena RailwayLine

Dott. P. Parrilla e suoi collaboratori – Responsabile finanza agevolata FS

High Speed RailTransport Rome-Naples Dott. P. Parrilla e suoi collaboratori – Responsabile finanza agevolata FS

Acerenza Dam inBasilicata Ing. R. Ruoppoli – Ministero delle infrastrutture e trasporti

ST Microelectronics inCatania Dott.sa Annarumi – ST Microelectronics Spa

Laminazione Sottile Spain Caserta Dott. G. Scivicco - Gruppo Laminazione Sottile Spa

Management case studies

Calabria EAGFF OP

EAGGFDott. Cumino - Dirigente generaleDott. Caruso - Responsabile monitoraggioMONITORING UNITDott. PromezioOTHERSProf. Gaudio (Istituto Nazionale di Economia Agraria)

Campania POP

Dott. Lupacchini – responsabile OPDott. Falesci – responsabile EAGGFDott. Scorpio – responsabile ESFDott. Gallo – AT monitoraggioDott. Coluccello – AT ERDF

Research andDevelopment POP

dr.ssa C. Galletti - Dirigente MIUR – Responsabile Coordinamento POdr. F. Cobis - Dirigente MIUR – Responsabile interventi a sostegno della ricercaindustrialedott.sa A. Paone - MIUR – Misure FSEing. A. Rebichini - MIUR – Misure FESRing. M. Masselli - MIUR – Legge 488/92 – Piani potenziamentodr.ssa S. Cenciarelli - NOVA – Coordinatrice Assistenza Tecnica

Employment EmergencyOP

D.ssa Battistoni – Responsible for ESF interventions in Ministero del LavoroD.ssa Tomai – Responsible for Objective 1 ESF interventions Ministero del Lavoro(several times)D. ssa Caputo – assistano to Ms. Tomai Ministero del Lavoro (several times)Dott. Ferrucci, Dott. De Marco e D.ssa Porru – Tecnostruttura

Industry and services OP

Dott. Ciufo – coordinator of OP in Ministero delle Attività ProduttiveDott. Martini – IPI , T.A. to Ministero delle Attività Produttive (several times)D.ssa Proietti – IPI , Technical Assitance to Ministero delle Attività ProduttiveDott. Belardi – Mediocredito CentraleDott. Vigilanza – ArtigiancassaDott, Pieche – Ministero delle Attività ProduttiveD.ssa Mauro – Ministero delle Attività Produttive



ANNEX B – Financial data per OP

Table B1 Situation of last available financial data in June 2002 – regional programmes

OP FundYear of

implementation

Quarterlyof

implementation

Update

PO MONOFONDO ABRUZZO FEOGA 2000 4 Updated at 31/12/01FESR 2000 4 Updated at 31/12/01POP ABRUZZO FSE 1999 3 Updated at 31/12/01FESR 2001 3 Not updated at 31/12/01FSE 2001 3 Not updated at 31/12/01POP BASILICATA

FEOGA 2001 3 Not updated at 31/12/01G.G. BIC BASILICATA FESR 2001 3 Not updated at 31/12/01

FESR 2001 4 Updated at 31/12/01FSE 2001 4 Updated at 31/12/01POP CAMPANIA

FEOGA 2001 4 Updated at 31/12/01G.G. ZOOTECNIA CAMPANIA FEOGA 2000 4 Not updated at 31/12/01PO"NAPOLI-PIANURA" FESR 2000 4 Not updated at 31/12/01GG CENTRO ANTICO (CREDEM) FESR 2001 4 Updated at 31/12/01PO MONOFONDO CALABRIA FEOGA 2001 4 Updated at 31/12/01

FESR 2001 4 Updated at 31/12/01POP CALABRIA FSE 1996 2 Updated at 31/12/01 on

paperGG AREA DI CRISI DI CROTONE FESR 2001 4 Updated at 31/12/01GG AREA DI CRISI GIOIA TAURO FESR 2001 4 Updated at 31/12/01

FESR 2001 3 Not updated at 31/12/01FSE 2001 3 Not updated at 31/12/01POP MOLISE

FEOGA 2001 3 Not updated at 31/12/01FESR 2001 4 Updated at 31/12/01FSE 2001 3 Not updated at 31/12/01POP PUGLIA

FEOGA 2001 4 Updated at 31/12/01GG AREA CRISI MANFREDONIA FESR 2001 4 Updated at 31/12/01GGAREA DI CRISI BRINDISI FESR 2001 4 Updated at 31/12/01GG AREA DI CRISI DI TARANTO FESR 2001 4 Updated at 31/12/01

FESR 2001 4 Updated at 31/12/01FSE 2001 3 Not updated at 31/12/01POP SARDEGNA

FEOGA 2001 4 Updated at 31/12/01FESR 2001 4 Updated at 31/12/01FSE 2001 4 Updated at 31/12/01POP SICILIA

FEOGA 2001 4 Updated at 31/12/01GG AREA DI CRISI DI SIRACUSA FESR 2001 4 Updated at 31/12/01GG BIC SICILIA FESR 2001 4 Updated at 31/12/01GG AREA DI CRISI DI GELA FESR 2001 4 Updated at 31/12/01Note: “updated at 31/12/01” does not mean the final data, because management authorities could still correctdataSource: Treasury – Department of State Accounting, Services for EU Liaison



Table B2 Situation of last available financial data in June 2002 – multi-regional programmes

OP FundYear of

implementation

Quarterlyof

implementation

Update

PO MAE FORMAZ.ITALIANIALL'ESTERO FSE 2000 4 Not updated at 31/12/01PO SOSTEGNO SERVIZI AGRICOLTURA FEOGA 2001 2 Not updated at 31/12/01PO SERVVALORCPRODAGRMERIDIONLI FEOGA 2001 2 Not updated at 31/12/01POMULT"SOSTEGNO PRODUTTORI FEOGA 1999 4 Not updated at 31/12/01SFOP PESCA ACQUACOLTURA SFOP 2001 4 Updated at 31/12/01PO MULTIR"AMBIENTE" FESR 2001 4 Updated at 31/12/01GP PORTO GIOIA TAURO FESR 1998 4 Updated at 31/12/01

PO"ASSISTENZA TECNICA QCS" FESR 2000 2 Updated on paper, but not at31/12/2001

FESR 2000 3 Updated on paper, but not at31/12/2001

FSE 2000 3 Updated on paper, but not at31/12/2001

FEOGA 2000 3 Updated on paper, but not at31/12/2001

POPATTI TERRITPER L'OCCUPAZIONE

SFOP 1999 Updated on paper, but not at31/12/2001

FESR 2001 4 Updated at 31/12/01PO INDUSTRARTIGSERVIMPRESE FSE 2001 3 Not updated at 31/12/01POENERGIA FESR 2001 4 Updated at 31/12/01GG "PROG BUSIN. COOP INDUSTRIES" FESR 2001 4 Updated at 31/12/01GG SVILRISORSE IMPRENLOCALI FESR 2001 4 Updated at 31/12/01GG "PROGETTO CARTESIO" FESR 2001 4 Updated at 31/12/01GG OASIS FESR 2001 4 Updated at 31/12/01GG LA COOP TRA PMI FESR 2001 4 Updated at 31/12/01GG ALIMENTARIA MZ ITALIA FESR 2001 4 Updated at 31/12/01PO"SICUREZZA PER LO SVILUPPO" FESR 2001 4 Updated at 31/12/01PO ML EMERGENZA OCCUPSUD FSE 2001 4 Updated at 31/12/01PO ML ASSISTTECNICA E AZIONI INNOV FSE 2001 4 Updated at 31/12/01PO ML FORMAZ.FORMATORI PA FSE 2001 4 Updated at 31/12/01PO"PARCO PROGETTI” FSE 2001 4 Updated at 31/12/01PO RISORSE IDRICHE FESR 2001 3 Not updated at 31/12/01PO TRASPORTO STRADALE FESR 2001 4 Updated at 31/12/01

FESR 2001 2 Not updated at 31/12/01PO MINISTERO PUBBLICA ISTRUZIONE FSE 2001 3 Not updated at 31/12/01PO TELECOMUNICAZIONI FESR 2000 1 Not updated at 31/12/01PO TRASPORTI FERROVIE FESR 2001 4 Updated at 31/12/01PO INFRASTRUTTURE AEROPORTUALI FESR 2001 3 Not updated at 31/12/01PO SVILUPPO/VALORIZTURISMO FESR 2001 4 Updated at 31/12/01GG"PARCHI LETTERARI" FESR 2001 4 Updated at 31/12/01

FESR 2001 4 Updated at 31/12/01PO RICERCA E SVILUPPO TECNOLOG FSE 2001 4 Updated at 31/12/01

PO "PROTEZIONE CIVILE" FESR 2001 4 Updated, but not still includedin Treasury DB

Note: “updated at 31/12/01” does not mean the final data, because management authorities could still correctdataSource: Treasury – Department of State Accounting, Services for EU Liaison



2. APPROPRIATENESS OF STRATEGY ADOPTED AND PURSUED

1994-99

2.1. KEY ISSUES IN 1994 AND THEIR EVOLUTION

The evaluation of the 1994-99 CSF in Italy takes place within a decade of fast and dramaticeconomic, institutional and political changes which have affected both Italy and the EuropeanUnion. The latter is going through a phase of profound internal changes which must amongother tasks provide an effective response to the market globalisation strongly encouraged bythe United States government.

As the cohesion policies are not only a relevant element of this context but (as will be seen)are also profoundly influenced by it, these contextual elements and the influence which theyhave had on the CSF will be outlined.

2.1.1. The European scenario: cohesion policies introduce “multilevel governance” inthe E.U.

In the 1990s, European integration policy followed two main strategic paths:- the enlargement of the European Union, its internal market, its market harmonisation

policies and its budgetary policies, which paved the way for the single currency- the strengthening of social and cohesion policies aimed at consolidating a European model

of “regulated capitalism”

Over the past 20 years, the EU has dedicated its energy to increasing the number of MemberStates, admitting Greece, Ireland, the Iberian peninsula and then the Scandinavian countries.This was intended to strengthen the internal market, rendering it as large and open tocompetition as possible.

European economic cohesion policies were created in the mid 1970s following pressure fromItaly. They were strengthened between the second half of the 1980s and 1993, following theintroduction of regional programming and the recognition of the EU’s co-ordinating role.

This reforms, intended to simultaneously achieve the deepening of market integration withsocial equality and territorial redistribution, paved the way for a process which is stillcontinuing; that of increased political participation brought about by the democraticstrengthening of European institutions and increased involvement (especially in cohesionpolicies) by local and regional authorities.

The cohesion policy after 1988 changed the state-centric regulating model of the Europeaninstitutions. Cohesion policies bring to a progressive enforcement of a form “multi-levelgovernance,” which was increasingly focussed on the subsidiarity principle and on thepartnership model. The latter broadens the scope of many aspects of economic policy bymeans of the co-decisional body made up of the European Union, national government andlocal authorities. The reforms cracked the skill of intergovernmental bargaining in the E.U.regional development policy by admitting subnational and supranational actors into decision



making; they required collaborative networking among public and private actors at multiplelevels.

These decision-making mechanisms of multi-level governance, although generallysatisfactory in the policy decision phase, proved to be far more complex to carry out in theadministrative and implementation phases of the programs due to the multiplication of theproblems of legal and procedural coherence between the U.E. and the Regions. Theseproblems have paralysed a local bureaucracy which is still tied to an outdated organizationand procedural rules.

The increases in financial resources for cohesion policies under Delor’s two presidenciestogether with the enforcement of the single market and the signing of the Maastricht treaty in1992, increased the weight of the structural funds relative to the total resources in the EUbudget, previously dominated by the agricultural policy alone. These additional resourceswere a financial counterbalance to the policies to open the markets of the backwardeconomies in southern Europe. The increases also brought cohesion policies into second placein the list of expenditure and have given them an important function within the EU’seconomic policy.

2.1.2. The Italian scenario: constraints and policy changes in southern Italy

At the start of the 1990s, due to a series of both international and internal factors, the policiesof the 1980s, the spending strategies and the political and operational bodies (“Southern ItalyDevelopment Agency”) responsible of the southern development policies– were put underscrutiny. Also under discussion were public sector owned companies, and the size of publicresources which had been employed, judged as excessive given the modest results obtained.The model of political consensus, which the programme had rooted within Southern society,was singled out as having the main responsibility for this unsatisfactory results. This modelwas the most serious problem among the above, given that it had contributed to rooting withinsociety a culture and political practices which were resistant to change and to modernisation,aspects which these resources should have encouraged.

In the 1970-92 period, Italy carried out a policy of internal cohesion, called the“Extraordinary intervention” which was in charge of a level of resources far greater than thoseof the EU, inclusive of national co-financing, which oscillated between 0.5 and 1.1% ofnational GDP. These circumstances led the national and local authorities responsible forcohesion spending to grossly underestimate the necessity to comply to the administrative andfinancial rules which were imposed by the UE funding. The consequence was an under-utilisation of disposable resources and a rather inefficient use of those.

In the years which immediately followed 1992, there has been a time gap in programmingfrom both a strategic and a financial point of view. Following the closure of the Southern ItalyDevelopment Agency, from a strategic point of view the South could only rely on operativeprogrammes co-financed by the EU in the 1994-99 period. From a financial point of view,the 1992-1996 resource constraints and the difficulty in managing operative programmespending in line with the rules and timescales imposed by the EU, there was a large decline inexpenditure which lasted until 1998. This brought public works schemes and largeinfrastructure projects to a standstill for almost a decade.



While the institutional changes and the disappointing results from the cohesion programmewere affecting the growth of the South, the Central and Northern regions of Italy emergedwithin the EU as a successful area. In 20 years, the Centre and North have largely exceededthe Community average for production per inhabitant; and with the exclusion of the city-regions in Northern Europe and several regions in Southern Germany, it has emerged as therichest and most dynamic European region.

Though the immediate objective was to reduce territorial inequalities its larger goal was tostrengthen European Regulated Capitalism. Cohesion policies became an experimentingground for institutional changes which go behond the efficiency targets in the european-wideredistribution process.

Rates of growth of GDP (Euro at 2001 prices)

-2,0

-1,0

0,0

1,0

2,0

3,0

4,0

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

years

%

Mezzogiorno Centro-Nord ITALIA

Source: ISMERI EUROPA elaboration on Svimez data

This result shows how the Central and Northern regions took advantage of the expansion ofthe European market and the reduction in the role of the State (backed by policiesencouraging competition which have led to a privatisation of State-owned businesses), toincrease the economic power of their industrial and financial operators. Until the start of the1990s, public companies carried out a central role in the regional redistribution ofinvestments2, which they now no longer do. On the contrary, these public holdings, largelyprivatised are now firmly in the hands of private groups in the Centre and North.

On the other hand the reduction in the public deficit, previously financed by Treasury Bondsheld by operators and families in these regions, evident in the Bankitalia data, caused achange in the composition of their financial portfolios and allowed the investors to profitfrom the exceptional and lengthy rise of shares in the principal world stock exchanges.

Alongside with the persistent income disparities, southern regions lost the large publiccompany investments, and did not benefit from the “wealth effect” resulting from thechange of ownership of these firms.

2 PPSS investments in the 1980s oscillated between 1.5% and 2.2% of Southern GDP



From a purely economic point of view, the Centre and North took advantage of the largedevaluation in 1992-93 to increase exports and growth, while the South, lacking of an exportoriented , is losing ground due to the crisis in spending and public investments.

In the ‘70 and ‘80 demand cycles the impact of public expenditure deflationary policies hasalways been more severe for the objective 1 region, whereas the apposite happens with thecrisis due to a fall of private consumption and exports.

The response to the crisis has been two-fold: the abolition of the Extraordinary Interventionand its operational agent – and the decentralisation of policy making responsibility in favourof the regions and local, provincial and municipal authorities. Expenditure policy wasslimmed in size and then reformed in terms of decision-making and selection mechanisms,making them more automatic and more in line with the market.

The Italian cohesion policy scenario in the 1990s is characterised by several transformations,partly resulting from the process of European integration and partly resulting from thepolitical and institutional crisis which broke out in 1992.

This crisis brought about the rapid abolition of the Extraordinary Intervention and thedismantlement of the PPSS which up to that point had had a central role in investments in theSouth.

In 1992 a series of reforms to the cohesion policies began, with the aim of defining newtools and new beneficiaries of the policy. These are:- Policies to counter-act the monetary crisis and to re-enter the parameters of Maastricht.

These policies have had disruptive effects on public spending in the South- Policies to overcome the centralist model. The decentralisation substantially enlarged

local bodies’ jurisdiction, but experienced financial problems and cultural resistance.

These reforms caused a sort of administrative bottleneck due to the superposition of lowsand administrative procedures which regulate the management of the programs.

From 1995-1999 the old rules from the Extraordinary intervention had to coexist with thenew rules both in central government and in the regions. These rules aimed to adapt to thenew regime of European programmes and to the new national legal framework which haveregulated the decentralisation.

2.1.3. Public expenditure fall, macroeconomic impact and crisis demand

With the increase in markets competition and with the loss of control over the exchange ratepolicy, Italy’s economic strategy, based on deficit public spending, transfers to the South,inflation and systematic devaluations which protected the competitiveness of businesses in theCentre and North, became impracticable. After Maastricht, this policy would have precludedItaly from participating in the single currency. The only method of adjustment possible wasthat of cutting expenditure. This took place between 1992 and 1996, as a result of stronglydeflationary budgets.



To understand the size of total public spending in the South, it should be noted that the latterdoubled at the start of the 1980s, reaching almost 1% of national GDP in 1983, beforeprogressively being reduced to almost half that in the 1990s.

The substantial decrease in expenditure flows in comparison to the 1980s stands out, not somuch in the expenditure dedicated to cohesion, now classified as expenditure for depressedareas, but especially in the ordinary expenditure within this infrastructure and public workscosts have been the most penalised.

Even if the crisis in the Extraordinary Intervention had shown that it was necessary toradically reform expenditure along qualitative lines and in terms of choices and beneficiariesetc, an analysis of flows shows that a strong deflationary policy has taken place, specificallyaffecting the South.

An examination of the two areas shows that in the 1980s, total State expenditure in the Southwas on average equivalent to 45% of regional GDP. In the 1990s it fell by 8 points in theSouth as opposed to a more contained fall in the Centre and North. (see Table 2), where it didnot had a deflationary stance.

An analysis of State expenditure per head during the nineties, reveals that the Centre andNorth expenditure holds to its initial level during the 1992-95 crisis and that in the last yearsin gaining momentum and overcame the per head expenditure in the South. In the same time,the fall in ordinary public expenditure in the period under examination caused the fall in GDP.

Therefore it should not be surprising that GDP growth in the South relative to the Centre andNorth, in the 1992-95 period halved, following a decade of substantially equal growth.

Within this trend, in contrast to the effect of cohesion, a constant level of expenditure indepressed areas can be noted. Its weight in relation to GDP however always remains below0.5%, therefore marginal with regard to total State spending in these regions.

The stabilisation strategy following 1994 took place in an unfavourable macroeconomiccontext, reinforced among other factors, by EU countries deflationary expenditure policy,combined with a fragile and turbulent global context, caused by the crisis in Mexico and inthe Far east. This pushed the fall in growth in Italy to below the EU average.

Source: ISMERI EUROPA elaboration on data of Cassa per il Mezzogiorno and Agenzia per lo sviluppo delMezzogiorno for the 1981-91 period, Treasury data on 1992-99 data.

Expenditure for development policy in the objective 1 regions (% on national GDP)

00,10,20,30,40,50,60,70,80,9

1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999



Table 6 Central and Local Government expenditure in Objective 1 Regions and Centre-North Regions (value per capita euro and price 2001)Years Current expenditure Capital expenditure Total

Central

GovernmentLocal

Authorities Total % on GDPCentral

GovernmentLocal

Authorities Total % on GDPCentral

GovernmentLocal

Authorities Total % on GDP Objective 1 regions (mezzogiorno)

1991 1.782,9 1.960,5 3.743,4 34,73 243,6 613,3 856,9 8,0 2.026,5 2.573,8 4.600,3 42,71992 1.859,0 1.826,5 3.685,5 34,16 119,8 640,2 760 7,0 1.978,8 2.466,7 4.445,5 41,21993 1.959,0 1.899,0 3.858,0 36,39 166,7 507,2 673,9 6,4 2.125,7 2.406,2 4.531,9 42,71994 1.959,6 1.876,1 3.835,7 36,04 241,7 480,8 722,5 6,8 2.201,3 2.356,9 4.558,2 42,81995 1.911,7 1.765,2 3.676,9 34,34 334,4 410,2 744,6 7,0 2.246,1 2.175,4 4.421,5 41,31996 2.046,0 1.817,6 3.863,6 35,77 336,8 481,9 818,7 7,6 2.382,8 2.299,5 4.682,3 43,4

1996 (a) 1.543,9 1.817,6 3.361,5 31,13 336,8 481,9 818,7 7,6 1.880,7 2.299,5 4.180,2 38,71997 1.301,9 1.906,7 3.208,6 28,98 230,1 465,8 695,9 6,3 1.532,0 2.372,5 3.904,5 35,31998 1.253,2 1.852,2 3.105,4 27,52 264,7 482,8 747,5 6,6 1.517,9 2.335,0 3.852,9 34,11999 1.232,6 1.985,4 3.218,0 28,06 192,2 472,1 664,3 5,8 1.424,8 2.457,5 3.882,3 33,92000 1.255,8 2.017,6 3.273,4 27,78 102,2 511,4 613,6 5,2 1.358,0 2.529,0 3.887,0 33,0

Centre-North Regions (Lazio excluded) 1991 1.534,9 2.049,9 3.584,8 19,52 108,7 500 608,7 3,3 1.643,6 2.549,9 4.193,5 22,81992 1.608,6 1.963,2 3.571,8 19,34 82 445,2 527,2 2,9 1.690,6 2.408,4 4.099,0 22,21993 1.680,9 1.998,7 3.679,6 20,2 121,1 474,7 595,8 3,3 1.802,0 2.473,4 4.275,4 23,51994 1.727,5 1.953,4 3.680,9 19,66 196,8 409,3 606,1 3,2 1.924,3 2.362,7 4.287,0 22,91995 1.687,1 1.872,8 3.559,9 18,32 184,5 484,1 668,6 3,4 1.871,6 2.356,9 4.228,5 21,81996 1.860,0 1.958,8 3.818,8 19,45 208,1 561,2 769,3 3,9 2.068,1 2.520,0 4.588,1 23,4

1996 (a) 1.284,2 1.958,8 3.243,0 16,51 208,1 561,2 769,3 3,9 1.492,3 2.520,0 4.012,3 20,41997 1.059,1 2.099,3 3.158,4 15,81 92,9 575,1 668 3,3 1.152,0 2.674,4 3.826,4 19,11998 982,7 2.212,5 3.195,2 15,77 105,3 628,6 733,9 3,6 1.088,0 2.841,1 3.929,1 19,41999 981,6 2.363,2 3.344,8 16,26 101,1 668,9 770 3,7 1.082,7 3.032,1 4.114,8 20,02000 992,9 2.442,2 3.435,1 16,25 75,8 752,4 828,2 3,9 1.068,7 3.194,6 4.263,3 20,2

(a) from 1996 the pensions funds are not included in the series. Source: ISMERI EUROPA elaboration on SVIMEZ and Treasury data



2.1.4. Decentralisation and new local actors: the new economic policy in the south andthe routing from central to local government

Successive governments from 1993 have concentrated their efforts with regard to economicpolicy on changing the bodies responsible for distributing funds and the beneficiaries of theexpenditure. This was in order to have an impact on the expenditure itself, and to break thelocal interest groups consolidated on distribution of public resources-

The political objective behind the decentralisation coincided with the passing of responsibilityto the local political classes and was based upon the assumption that economic programmeswere more effective if decided in the institutions closest to citizens’ and operators’ needs,who would be given responsibility by the government’s own actions.

The subsidiarity principle used within the EU for the division of competence was appliedwithin central government, which undertook a process of institutional reorganisation alongfederal lines. Consequently a large number of instruments was put into use to implement thestrategy of institutional decentralisation, which had been regulated by a series of laws issuedby the Minister Bassanini.

Institutional devolution called for the competence over expenditure within the agriculture,industry, tourism, environment and health sectors to be handed over to regional authorities.The same was true for the transport sector (with the exception of the large networks) and for alarge part of the programme for depressed areas which had previously been managedcentrally. Decentralisation has also been extended to the active work policies sector(employment centres) and the training sector, control of which passed from centralgovernment to the regions and provinces. Furthermore, the new education reform saw morepower being conferred to local offices and schools.

In addition, “fiscal” federalism started to be implemented following the delegation of the1999 fiscal law, while local institutions were allowed to autonomously access the capitalmarket and to increase their autonomous fiscal capacity.

Within this new institutional model, which envisages the enlargement of local power, theRegions and Provinces are obligated to meet with town councils to identify togetherprogramming procedure and expenditure management to create an effective partnership oflocal bodies.

Without this partnership, decentralisation will only be illusory and jurisdictions will beblocked at the level of regional government, which is not yet equipped to carry outoperational functions in all the new fields. Moreover, this phase witnesses a wave of newregional laws to “regulate” spending procedures in these new fields, complicating an alreadyintricate legal and procedural web..

The decentralisation law has given a large part of the responsibility for defining policystrategy and organisation to regional and local institutions.. These have therefore beenconfronted by the problem; to acquire new jurisdiction on activities previously heldcentrally which needed to be carried out in radically new forms either directly or inoutsourcing . In other words, decentralisation presumed radical shake-ups in methods toensure efficiency by public administrations, which could not be realised with thepromulgation of one or more laws.



In reality, the reforms set in motion have at least on paper changed the organisation ofadministrations in a clear-cut way which after an initial paralysing impact will require radicaladjustment in the medium term. This devolution process which begun several years ago hasbrought to light the serious problems which regional and local administrations in the Southhave in adapting, and the need for their profound reorganisation to render them capable offulfilling the new roles. In the absence of such reorganisation differences in the level andquality of services will emerge in a much more pronounced way.

The main objective of the reforms is to encourage new actors and to make the decision-making mechanism more open to participation, involving local bodies and operators inprogramme choices through broadening contraction with central government and increasingthe role of the State-Regions Conference which is seen as the place where joint decisions aremade .

Beside the change in the expenditure decision-making mechanism with its profoundconsequences on the social groups made to emerge , market and competitiveness, onceneglected, were re- evaluated as criteria to determine expenditure decisions.

The most relevant reform of the “depressed area” national intervention is the introduction of aset of new aid schemes based on local plans, negotiated and decided trough a local partnershipwhere local institutions organize the participation of the social partners and of the other localinterest groups. The territorial pacts and the area pacts are the main instruments of “negotiatedplanning”.

These instruments incurred in a series of obstacles and difficulties in their implementationmostly due to the weakness of the local business sectors (law quality projects) and theinadequacy of their administrative management. Their future is linked to the ability of theinstitutions to overcome these obstacles.

There is no doubt that resistance to change caused delays in the reform of regionaladministration and limited the impact of these new instruments of local development.

Multi-level governance poses operational problems for local institutions to link localstrategies to the global market. The problems can be summarised with the followingquestions: How to set up a coherent strategy and to give sufficient quantitative dimensions toa series of bullet-pointed and sketched economic decisions, based on hundreds of localmicroplans and microagreements? How to avoid on a local level, the reproduction of theagreements merely finalized at the distribution of resources rather than at their development?Do the local public and private beneficiaries possess sufficient abilities to use the resources inan effective manner? Or is there local protectionist in the use of resources? And finally, towhat extent local development influence the decision makers in the key strategic sectors, thatis, energy and the utilities networks, telecommunications, information technology andtelematics, the new economy and finally finance, which absorb a large part of the growth ofindustrialised countries?

Therefore there is a real risk that local development may only have an effect on the economicactivities of the shrinking traditional sectors or on marginal production or producers, and noton the strategies which really determine economic development and the international division



of labour. Above all, there is the risk that local development is unable to succeed in attractingdirect investments which are the driving force behind increasing income per head.

2.1.5. Crisis in multilevel governance: the slimming of public authority bureaucracy

The long history of the Extraordinary intervention, was accompanied by a long list ofnational and regional laws and regulation, was supported by several sectorial and territorialoperational agencies and was apparently enriched by an extremely large and varied set ofinstruments from grants to loans, from fiscal incentives to social contribution exemptionThese instruments had over time bundled together a spider’s web of procedures andregulations in which most economic operators could easily remain entangled.

The excess production of laws together with the length and repetitiveness of the bureaucraticprocedure involved in implementing them had over time created wide-spread scepticismabout the whole way the intervention worked. This created entrenched habits within thecollective imagination of Southern society of bypassing the guarantees and transparencywhich the length and repetitiveness were supposed to ensure.

The governments which were in power after the reform of the Extraordinary interventiontried in their drive for reform to remove this obstacle, possibly the most insidious of all, as itwas rooted within all State administrations.

Conditional to the effectiveness of the decentralisation and programming at the lowestinstitutional levels were the slimming of bureaucracy and excessive legislation and regulationwhich had penalised and frequently stopped public bodies from functioning. In a phase inwhich the functionality of various economic systems was conditional to the efficiency of anarea and the businesses located there, the excessive legislation and bureaucracy were thefactors most responsible for blocking most reforms in the South.

Successive governments from 1994 tackled this using two types of action: firstly thedecentralisation of jurisdiction to the regions, provinces and municipalities, giving the first aco-ordinating role and the other two an implementing role. Secondly ,there was a streamliningof procedure by means of various law , aimed at reducing the cost, length and depth of theprocedures for permits, declarations and certificates, which constrained the relationshipbetween the citizen and the State.

The most important law in this field was that of the one stop shop, brought in withinboroughs for matters regarding permits for location or expansion for businesses. Previouslythere were dozens of bodies who had specific jurisdiction for these areas.

Currently the decentralisation process is in mid-flow and the situation is difficult. TheRegions are becoming the equivalent of the old ministries; centralised and bureaucratic andprobably more inefficient than the ministries. They have been smothered in a short time withjurisdiction and growing responsibilities for development spending, among other thingshaving also inherited a large part of business aid management, as well as labour andemployment policies, territorial pacts and community operational programmes.



The reforms in progress are necessary but only in the medium term will there be any results,given that the time-frame for change in terms of organisation and culture has shown itself tobe very long. It will probably require a change in generation.

Two problematic aspects in the functioning of public machinery which have a strong impacton economic development are highlighted in the rules which regulate urban planning and theadministration of justice regarding commercial and administrative relationships.

The chaotic situation in the process for land use within Southern municipalities meritsparticular attention, due to its impact on development. Urban management is entrusted to theregions and provinces for the co-ordination aspects, while the municipal authorities possessjurisdiction for aspects relating to decisions on the use of urban land and management ofrelative plans. Management has swung from great permissiveness (despite the regulations) toa complete block, imposed as a reaction to the permissiveness which in the South had createdmore abuse of buildings than conformity to the rules and had often had a devastating effect onthe environment. Currently it is difficult to find areas available for industrial or tourismdevelopment, due to the lack of urban masterplans. Few towns have areas equipped andorganised with adequate infrastructure for production, while the time-scale necessary toimplement infrastructure projects must be measured in terms of decades rather than months oryears due to the segmentation of competences

A second blocking factor of extreme seriousness due to its effect on economic activity is thejuditiary system. Today this is actually paralysing all economic activity and is creating a hugerisk. For example it takes several years to provide a definitive answer on a commercialquestion or on an administrative dispute with a public authority. These disputes occur withgreat frequency due to the excess of laws and regulations. The same law is made subject tonumerous possible interpretations. With every intervention which requires a decision by aPA, or a permission by the host of institutions which govern an area, any controversyparalyses indefinitely its execution. The same thing happens if any of interested parties donot want a public works scheme to go ahead.

The costs involved in these delays and uncertainty are enormous in terms of the investmentswhich do not take place, the plans that cannot be carried out or are blocked, the communityresources lost, and the market opportunities squandered. This aspect of inefficiency in publicadministration is in general underestimated, as the ever-present need for security must begiven precedence in the future reforms.


Ex post evaluation of the Ob. 1 – 1994/1999 ITALY 29

2.2. DESCRIPTION OF CSF

2.2.1. Main aspects of the strategy

The strategy of the CSF was strongly focused on the support to the existing productionprivate sector of the “Mezzogiorno”; the principal instrument to increase itscompetitiveness was the grants for material investment. The orientation to the attraction offoreign companies is poor; the infrastructure endowments are an important element tobalance the delay with advanced areas, but not as a fundamental element for increasingcompetitiveness.

The strategy suffered from the general weakness of national sectoral or regionalprogramming, which could not feed the CSF with specific and operational indications. CSFand the Operational Programmes (OP) were, and still are, the only real programmingexercises of development policy in the objective 1 regions. From its isolated condition someweak points of the CSF came to the surface, but it also revealed a great relevance whichwas amplified in 1994 by the increasing available resources.

The main weakness of the strategy is the integration process which should promote amultiplying effect from the simultaneous implementation of the different interventions.These matched real needs, but they simply overlapped in the CSF without an explicitindication of their existing or expected relationships.

2.2.1.1. The principal orientations and social demands during the programming

The 1994-99 CSF was approved with a decision of the Commission on 29 July 1994. TheCSF increased the European transfer to the Italian objective 1 regions by 65% of the 1989-93value3 producing an increase in the total cost equal to 72% of the previous value. Due to theextension of the programming period from 5 to 6 years the annual increases were inferior, butthey were still substantial: +38% the European funds and +44% the total costs.

The performance of the Italian 1989-93 CSF was poor in terms of efficiency and rapidity ofexpenditure (at the end of 1995 the expenditure had reached 72% of the total cost4), and theincreasing resources raised the problem of their absorption in the time compatible with thestructural funds regulation. The new framework of the national regional policy and thesubstitution of some main actors did not favour a clear perception of the problems ofimplementation in the programming phase, which consisted of a general review of thefinancial needs of all the administrations involved in development policies.

This work was done by consultants of the old Budget Ministry with the participation of theinterested administrations, but without a public debate, nor was it circulated among thedifferent actors or the national experts. Some new offices (“directing cabin” “production

3 In 1989-93 the European resource of the CSF were equal to about 9000 Mecu at 1994 prices.4 The following delays admitted by the Commission in the closure of the 1989-93 period of programming to Italyand other cohesion countries permitted to ameliorate the level of expenditure, but did not cancelled themanagement problems.



room” and “observatory of regional policy”) in the old Budget Ministry supported thisanalyses with specific studies and expertise, but always in a limited way.

Italy did not have, and still does not have, a national programming by territory or by sectors5

which would permit integration of Community plans with a clear and well-known grid ofpriorities and help the planners with a knowledge of the financial needs and implementationtime. In general, the background of the development plans consisted in an economic survey ofthe territorial needs, in an administrative investigation of the operational demands of eachadministration and in an analysis of the available financial resources in the sectoral regionalor national laws.

In this context the Development Plan of the “Mezzogiorno” and, after the negotiations withthe Commission, the CSF followed the tracks left by the “Intervento Straordinario” and theprevious 1989-93 CSF. They introduced some innovations and modifications in regionalpolicy required by academic and political debate and by social partners.

Academics and politicians agree upon the necessity of quitting the policy of forcedindustrialisation of the South promoted by the “Intervento Straordinario” by attracting largeenterprise, often public ones. This model was no longer adequate after the 1973 crisis and acontrasting model based on SMEs was triumphing in the north-eastern regions of Italy. At thesame time, the prevailing of income support as the main instrument to finance redistributionwas not compatible with an acceptable level of efficiency in public expenditure and with therenewal of the political environment at the beginning of the 1990s. More attention to localresources and opportunities, linked to transparent delivery mechanisms, would have sparedthe country the inefficiency and the waste of public funds. The marked supply orientations ofstructural policy match these considerations and sustain innovation in regional policy.

At the same time, social partners were worried about the sharp increase in unemployment inthe 1992-93 crisis, the abolition of cut rate social contributions for southern enterprises andthe opening of a new prolonged period of high taxation aimed at reducing the public deficit.All these elements concurred in depressing economic activities or increasing labour costs inthe objective 1 productive fabric. Hence, the social partners demanded a support to the levelof production and competitiveness, while waiting for the positive effects of the reformsregulating labour - and public markets in the long term.

The academic debate and the social partners’ preoccupations found a synthesis in the formulaof “endogenous development”. Under this theoretical umbrella6 the former could promote anintervention no longer focused on large infrastructures and big investments, but devoted tosmall actions connected to local needs or enterprises; the latter could ask for substantialsupport to local enterprises and employment.

For these reasons the slogan of “endogenous development” addressed CSF programming andit partially attempted to renew the previous orientation, but its influences were very limited. In 5 The existing Regional Development Plan approved by regions and the sectoral plans (i.e. the National Plan forTransport) approved by the central government have not a prescriptive relevance (in terms of resources ortiming), but only a political and indicative role on main strategic choices.6 “Endogenous development” is not a structured doctrine whit related policy prescriptions, but only a field ofinvestigation oriented to renew regional policy and focus the attention on the local economic and institutionalresources in the development process. At that time, Italian important contributions to this point of view havebeen E.Wolleb and G.Wolleb (“Divari regionali e dualismo economico”, 1990) for the economic dimension andC. Trigilia (“Sviluppo senza autonomia”, 1994) for the institutional dimension.



fact, the lack of involvement of administration in the programming, the unknown operationalproblems and implementing procedures of the new legal framework for national regionalpolicy (law 488/92) and the absence of a national sectoral programming led to theconstruction of a strategy without a solid factual bases.

2.2.1.2. The objective and the allocation of resources

2.2.1.2.1. The objectives: a strategy for increasing the competitiveness of the productivesystem

The entire CSF strategy is centred on the reinforcement of the competitiveness of localenterprises and is divided into 4 main sub-objectives in the document:

1) development of productive activities and productivity;2) amelioration of the economic environment strengthening the infrastructure

endowment;



Table 7 Main objectives of Italian objective 1 CSF by priority axesPRIORITY AXES MAIN OBJECTIVES

1 COMMUNICATIONS Transports Reinforcement of communication axes of TEN both in roads and in rail interventions. Focus of the interventions on traditionaltransport deficits (Salerno—Reggio, Ccalabria, ecc.)No objectives on airports and harbours are presented, despite the inclusion of these interventions in the initial CSF.Telecommunications Interventions for ameliorating services and the introduction of innovative services able to attract external activities.Physical indicators are included.

2 INDUSTRY Increase efficiency and competitiveness of the objective 1 enterprises and, in this way, support employment. Particular attention devoted toSMEs in line with the White Paper. Importance of integrating support for investments (ERDF) with training (ESF).Physical indicators are included.

3 TOURISM No clear objectives are expressed. General indication to reinforce tourist supply in terms of hotel reception, tourist services and facilities,regeneration and development of cultural and natural resources.Physical indicators are not included.

4. AGRICICULTUREAND RURALDEVELOPMENT

Increases in the competitiveness of objective 1 agriculture and the income of farmers, also from new rural activities, are the main objectives.Four sub-objectives are: 1) augmentation of efficiency and reduction of production costs; 2) integration of production with commerce andvalorisation of quality production; 3) development of complementary activities for farmers; 4) diffusion of technology through an efficient T.A.Physical indicators are not included.

5 FISHING Increasing competitiveness and productivity of fishing enterprises, specifically redefining a viable balance between fishing resources and fishingeffort on the one hand and employment level and sectoral modernisation on the other.Physical indicators are not included.

6. ECON. INFRASTRUCT. Water: a) guaranteeing water availability also for increasing demand; b) improving water network; c) reducing waste; d) increasing efficiencyin management and introducing private financing.Energy improving availability and quality of energy distribution (electricity, natural gas) and extending the use of renewable sourcesEnvironment a) viable management of natural resources; b) control of pollution and reduction of litter, c) reduction of consumption of notrenewable energies; d) valorisation of environmental resources; e) improvement of urban environmentResearch, development and innovation improvement of the university system and development of RTD actions with the following priorities:a) promoting a demand oriented policy, b) supporting technological transfers; c) innovating in traditional sectors and developing techn. parks.Health infrastructure interventions targeted only to situations with severe deficitPhysical indicators are included (with the exception of Health infrastructure)

7. HUMAN RESOURCES Two main national objectives: 1) defending and enlarging existing employment, through new strategies and active policies, integrated with thedevelopment programmes. In this field also the inclusion of disadvantaged people; 2) training for the development targeted to: a) qualification ofexisting productions; b) diffusion of entrepreneurial culture; c) new communication flow between training system and production system; d)promotion of high quality training.In these framework ESF has three main objectives: 1) extending the access to education and training for all the categories, including employees;2) improving competitiveness re-training adapting to deal with new technologies and organisations; 3) reinforcing intervention to include or re-include workers in the labour marketPhysical indicators are included (with the exception of Health infrastructure)

8 TECH. ASSISTANCE Reinforcing the ability of public administration in managing and promoting structural interventions



3) development of human resources and employment;4) amelioration of the quality of life through the improvement of services and local

infrastructures.

After a general presentation of the overall objectives, the CSF listed numerous objectives foreach axes. These objectives are summarised in the previous table.

Some elements in the initial CSF are worthy of attention:- the explicit proposition for a strong support to enterprises in all sectors;- the focus on water infrastructures among infrastructural interventions and the wish to

involve private resources in this sector;- the ambitious objective of reforming the system supporting human resources (instruments,

actors, relationships, etc.);- the increasing relevance attributed to education systems (primary and secondary schools,

and University), which was not significantly included in the previous 1989-93 CSF;- the increasing role of the environment, in preventing damage, but also as a resource for

development;- the decreasing relevance of the energy sector (a central point in the previous 1989-93

CSF) after the completion of a large part of the gas distribution network in the objective 1regions,

- an introduction of innovative development approaches (rural development) in theagriculture axis, balancing the traditional orientation to subsidies and grants.

The objectives of the CSF were reasonable and in line with the main orientations in thefield of different infrastructures or economic sectors. But, they are also vague and theirrational reveals some problematic areas:- the absence of the territory and institutions in the strategy. These elements come out

as neutral on the allocation of resources and the implementation of projects7;- the reference to a weak national programming, which offered only general

orientations, without specifying committed resources, priority projects and time fortheir completion8;

- the lack of a clear strategy for tourism, which probably springs from a more generalweakness in the territorial programming (point 1);

- an unclear relationship between instruments, objectives and quantified targets, alsoconsidering the difficulty of this exercise an his not detailed necessity in the CSF amore clear identification of the necessary instruments and their efficiency would havemade the plan more coherent.

2.2.1.2.2. The allocation of resources

The Italian 1994-99 objective 1 CSF initially allocated 34,4 billions of Euro (1994 price),which were divided into 78% of public resources (46% of structural funds and 32% of

7 This is common limit of the 1994-99 programming, also at Operational Programme level; only in 2000-06programming this aspect will be faced.8 The reference to national programming were to “General Transport Plan”, “Three Annual EnvironmentalPlan”, “Programme for Regional Development” for only some regions. The references to national expenditure inthe different axes were estimated on the basis iof tha additionality table in the same CSF and did not referee tothe national programming.



national funds) and 22% of private resources. Each structural fund contributed in thefollowing proportions:- ERDF covered 29,8% of the total cost with 9.660 Meuro;- ESF covered 8,4% of the total cost with 2.739 Meuro;- EAGGF covered 6,9% of the total cost with 2228 Meuro;- FIFG covered 0,7% of the total cost with 233 Meuro.

At 1999 prices the total cost of the initial CSF was equal to 35.389 Meuro with 16.193 Meuroof structural funds (10.526 Meuro of ERDF, 2984 Meuro of ESF, 2428 Meuro of EAGGFand 254 Meuro of FIFG) and 11.253 Meuro of national public contribution; privateparticipation was estimated in about 7.900 Meuro. (See table A.3.1 and A.3.2 in the annex tothis chapter for the detailed figures)

2.2.1.2.3. The priority axes

Following the Community model the CSF has been structured in 8 priority axes. Theyrepresented a sectoral approach to programming, but their overlapping on the territorial scaleof the intervention meant that a proposal of a strategic and operational integration ofobjectives and funds was necessary.

Axes 1 and 6 were devoted to infrastructures (communication, water, energy, R&D, equippedareas, etc.); axis 6 also included environmental interventions aimed at, both, prevention andvalorisation of resources. Axis 2 was dedicated to industrial intervention and used essentiallyaid schemes for material investments, but it also funded some less traditional interventions,such as grants for buying business services, guarantee funds and local stimulation activities.The crisis situation of some specific areas suffering from the decline of large industries(Taranto, Manfredonia, Crotone) changed the territorial boundaries of interventions towardsthe small territories where these firms were located (the so called “crisis areas”). In these axesERDF is practically the only financing structural fund (100% in communication and 96% ineconomic infrastructures).

Axis 3 concentrates on the interventions for the tourist supply and the development of existingtourist resources (regeneration of villages, small infrastructures, etc.); sometimes theseinterventions were similar to the environmental interventions in axis 6, but differed in theirmore evident aim of reinforcing tourist attractions. It is also important to underline thesupports for the valorisation of the cultural heritage (museums, restructuring of monuments,creation of cultural itineraries, etc.) promoted by this axis. In the 1994-99 period these actionswere of considerable importance, but often resulted scattered and not really strategic; only inthe 2000-06 period do they become relevant and more strongly integrated with the vocation ofeach area. ERDF funded 90% of the community contribution to this axis and ESF theremaining 10%.



Table 8 Initial objective 1 1994-99 CSF for Italy: composition by funds (%)PUBLIC FUNDS

EUROPEAN FUNDS

TOTALCOST

TOTALPUBLIC TOTAL ERDF ESF EAGGF FIFG

TOTALPUBLIC

NATIONALFUNDS

PRIVATEFUNDS

1 COMMUNICATIONS 100,0 62,4 41,4 41,4 21,0 37,62 INDUSTRY 100,0 71,1 36,4 34,9 1,5 34,8 28,93 TOURISM 100,0 78,7 40,9 36,8 4,2 37,8 21,34. AGRIC. - RURAL DEVEL. 100,0 81,5 53,8 1,3 1,3 51,2 27,7 18,55 FISHING 100,0 83,1 51,4 4,9 46,6 31,7 16,96. ECON. INFRASTRUCT. 100,0 87,1 47,9 44,3 3,6 39,2 12,97. HUMAN RESOURCES 100,0 95,6 69,3 1,9 67,4 26,3 4,48 TECHNICAL ASSISTANCE 100,0 100,0 70,0 47,6 22,4 30,0TOTAL 100,0 77,6 45,8 29,8 8,4 6,9 0,7 31,8 22,4Source: Ministry of Treasury (Structural Funds Service)

Axis 4 was devoted to the agriculture sector and essentially included three main types ofaction: a) renewal of existing productions and the introduction of new productions; b) inobjective 5a, improvement of financial efficiency of firms with direct support to income andincentives for reorganization; c) rural development (i.e. agri-tourism, territorialinfrastructures). EAGGF funded 95% of the community contribution to this axis and ESF andERDF funded the remaining 5%.

Axis 5 supported the reorganisation of the fishing sector promoting alternative productions(such as water culture), modernisation of structures and income support to reduce production.The community contribution to this axis is : FIFG for 91% and ESF for 9%.

Axis 6 included all the interventions for human resources in the fields of education andtraining. In education the interventions acted at two principal levels: a) at school level itsupported the technical secondary schools and the struggle against pupils leaving schoolduring primary school; b) at university level it promoted the technical short degrees andspecialisation courses (masters, etc.) in order to facilitate access to higher education. In thefield of training the programming continued along the lines of objective 3 (long termunemployment, young unemployed, disadvantaged groups, equal opportunity and women)and 4 (re-training employees). ESF contributed 97% of the total financing to this axis tocommunity funds, the remaining 3% was covered by ERDF.

Finally, axis 8 was created to support the implementation of the programmes (technicalassistance to administrations by means of outsourcing and direct accompanying, monitoring,evaluation) and the reinforcement of administrative and operations systems (training forofficials, studies, supports to decision making mechanisms and computerised systems). ERDFfunded 68% of the community contribution to this axis and ESF the remaining 32%.

In financial terms it is possible to identify three main fields of intervention in the objective1 CSF (see next table):- infrastructures, which gathered 35% of the total public resources essentially from axes

1 and 6;- grants and supports devoted to enterprises, which collected more than 35% of public

resources from axis 2 and partially form axes 3, 4 and 5- other interventions for developing local resources, which collected less than 30% of

the total public resources from axis 7 with reference to human resources and from axes



3, 4 and 6 with reference to small infrastructures and different kinds of support to localdevelopment and R&D.

The components of direct support to enterprises and local support activities grew withrespect to the previous 1989-93 period, while infrastructures reduced decreased (about40% of total public resources in the previous programming). Axes 2 raised its financialrelevance threefold with respect to the previous planning period.

Table 9 Initial objective 1 1994-99 CSF for Italy: allocation of funds by priority axes (%)PUBLIC FUNDS

EUROPEAN FUNDS

TOTALCOST

TOTALPUBLIC TOTAL ERDF ESF EAGGF FIFG

TOTALPUBLIC

NATIONALFUNDS

PRIVATEFUNDS

1 COMMUNICATIONS 16,1 12,9 14,5 22,4 10,6 27,02 INDUSTRY 31,4 28,8 24,9 36,8 5,5 34,3 40,63 TOURISM 6,5 6,6 5,8 8,0 3,2 7,7 6,24. AGRIC. - RURAL DEVEL. 13,4 14,1 15,8 0,6 2,1 100,0 11,7 11,15 FISHING 1,5 1,7 1,7 0,9 100,0 1,5 1,26. ECON. INFRASTRUCT. 20,8 23,4 21,8 31,0 8,9 25,6 12,07. HUMAN RESOURCES 9,8 12,1 14,9 0,6 78,4 8,1 1,98 TECHNICAL ASSISTANCE 0,4 0,5 0,6 0,6 1,0 0,4TOTAL 100,0 100,0 100,0 100,0 100,0 100,0 100,0 100,0 100,0Source: Ministry of Treasury (Structural Funds Service)

A less aggregated analysis of fund allocations (see next table) suggests some more detailedobservations:- grants for industry alone received 19% of the total public resources;- local development and industrial areas received 4,2% of the total resources, but many of

the actions included in this sub-axis are similar to grants for industry;- water infrastructures received the largest quantity of resources (8,9% of the total public

resources) among the different infrastructures, the second was roads and highways (5,6%)the third was rail (4,4%);

- R&TD received a significant quantity of resources (6,4% of total public resources), and sodid environment (5,3%)

- the largest part of funds for human resources are allocated to unemployed people (7,7% ofthe total public resources and 64% of the total of axis 7);

- the most innovative interventions in agriculture (rural development, services) receivedalmost 5% of total the public resources and almost the 20% of axis 4.



Table 10 Initial objective 1 1994-99 CSF for Italy: allocation of public resources by priorityaxes and sub-axes (%)

TOTAL PUBLIC FUNDS(European + national)

TOTAL EUROPEAN FUNDS

1 COMMUNICATIONS 12,9 14,51.1 Roads and highways 5,6 4,81.2 Rail 4,4 5,91.3 Other transports 1,3 1,01.4 Telecommunications 1,7 2,82 INDUSTRY 28,8 24,92.1 Grants for industry 19,0 16,42.2 Grants for handicraft 2,3 2,02.3 Grants for business services 2,1 1,82.4 Local development and crisis areas 4,2 3,82.5 Industrial and handicraft areas 1,2 1,03 TOURISM 6,6 5,83.1 Grants for tourist investments 2,3 2,23.2 Development of tourist resources 4,3 3,64. AGRIC. - RURAL DEVEL. 14,1 15,84.1 Agric. resources and infrastructures 4,7 5,74.2 Rural development 2,9 3,04.3 Services in agriculture 1,9 2,14.4 Objective 5a 3,5 4,04.5 On-going measures 1,0 1,05 FISHING 1,7 1,76. ECON. INFRASTRUCT. 23,4 21,86.1 Water 8,9 7,56.2 Energy 2,2 2,16.3 Environment 5,3 5,06.4 R&TD 6,4 6,66.5 Infrastructures for health 0,6 0,57. HUMAN RESOURCES 12,1 14,97.1 Education and initial training 1,7 2,07.2 Inclusion of unemployment 7,7 9,57.3 Continuing training 1,1 1,67.4 PA and systems reinforcement 1,1 1,37.5 Training structures 0,5 0,48 TECHNICAL ASSISTANCE 0,5 0,6TOTAL 100,0 100,0Source: Ministry of Treasury (Structural Funds Service)

The allocation of funds confirms the priorities identified in the previous paragraphs and inparticular underlines the importance assigned to grants in industry and in other sectors, therelevance devoted to the water and transport sectors among infrastructures (all together almost20% of the CSF), with particular attention to unemployed people within human resources.

2.2.1.2.4. The integration with the national policy

The comparison between the CSF and the national expenditure for development allows anadditional interpretation of financial allocation. The next table elaborates the data on“additionality” presented in the CSF in order to identify the main relationships between CSFand national policy.



The weight of the CSF proved all-important in human resources and productive environmentpolicy with about 45% of the total resources devoted to them, while the contribution toinfrastructures was limited to 17% of the total expenditure.

Table 11 Weight of CSF on the national expenditure for development in objective 1 regionsCSF (UE+nat.) National Total

1. Infrastructures 17,3 82,7 100,0Transport 15,0 85,0 100,0Telecommunication 99,1 0,9 100,0Energy 11,7 88,3 100,0Environment and water 51,1 48,9 100,0Health 6,8 93,2 100,0Housing 1,2 98,8 100,0Other infrastructures - 100,0 100,02. Human resources 43,6 56,4 100,0Education 12,6 87,4 100,0Training 75,4 24,6 100,0R&TD 45,1 54,9 100,03. Productive environment 47,5 52,5 100,0Agriculture, rural development, fishing 48,9 51,1 100,0Industry and services 44,8 55,2 100,0Tourism 70,0 30,0 100,04. Others 2,3 97,7 100,0Total 26,9 73,1 100,0Source: CSF

Within these general figures some specific specialisations stand out:- The CSF dependent priorities

• telecommunication priority was funded only by the CSF;• in water and environment the CSF resources were larger than those of national

policy,• training and R&TD are strongly dependent on CSF resources (respectively

75% and 45%); while education received a limited contribution;• CSF supported agriculture and industry policy for almost half of their

resources, but the support to tourism reached 70% of the total resources.- The National dependent priorities

• transport, energy and other infrastructure received very little support fromCSF,

• while education received a limited contribution from the CSF.

The financial allocations highlight choices guided by a complementary relationshipbetween the CSF and national policy: each is strongly specialised in several interventionsectors and their resources are integrated only in grants for industry and agriculture. Thismeans that, with the exception of this last field, the failure of one policy (CSF or national)will deprive the objective 1 of one strategic support.

In some relevant areas (for example training, R&D, rural development, environment)national policy depends on structural fund resources. Without European support theseareas would still be marginal or would require a reorganisation of national resources. Thisdependence is not only financial, but also strategic; as noted before the strategy for humanresources was strongly guided by European orientations, as well as the agriculturalpriorities.



2.2.1.2.5. The principal instruments of the CSF

In order to analyse the instruments adopted by the CSF, all the measures of the CSF havebeen classified by typology of policy instrument. The classification is based on the data of theMinistry of Treasury which included all the measures adopted throughout the implementationof the CSF and their financial values. In general the databank was consistent and reliable,nevertheless we identified some errors (in values, timing, distribution of resources betweenmeasures, etc.) and we tried to correct them in accordance to the documentation received fromthe management authorities. Hence the data, as well as our reclassification, should be handledwith care, however this data is very useful to identify the main “tools” of the CSF strategy.

As noted before, the main instruments is the direct support to enterprises (grants), whichreceived almost 40% of the total public resources and was present in all the axes, with theexception of communications and human resources. In industry (90% of the public resourcesof the axis), agriculture (49%) and fishing (67%) its role is fundamental, while it has asecondary utilisation in tourism and economic infrastructures.

Table 12 Financial weight of main instruments by priority axes in the initial programming(% of public resources)

PRIORITY AXES

INSTRUMENTS

1Communications

2Industry

3Tourism

4. Agric.- rural

dev. 5 Fishing6. Econ.Infrastr.

7.Human

resources8 Tech.Assist. Total

Grants 90,0 29,6 49,2 67,1 11,4 39,4Public works 99,9 4,4 60,2 23,2 61,4 3,5 34,8Local stimulation services 1,0 1,3 15,2 2,6R&D and other transfers ofknow-how 0,02 6,8 20,9 5,8Income support 3,2 24,7 0,9Incentives for hiring 3,2 0,4Training for unemployedpeople 0,7 72,4 9,3Training for employed people 3,3 8,6 2,3 8,2 5,9 10,7 4,7Employment services 0,1 0,01Services to reinforce systems 10,0 30,9 1,4Technical assistance 0,1 0,6 0,3 0,4 0,1 69,1 0,7Total 100,0 100,0 100,0 100,0 100,0 100,0 100,0 100,0 100,0Source: ISMERI EUROPA elaboration of Ministry of Treasury (IGRUE) data.

Public works is the second most important instrument absorbing 35% of the total publicresources. It is the only instrument in the communication axis and is all-important in tourism(60% of the total public resources of the axis) and economic infrastructures (61%).

Training for unemployed people is the most relevant training action with 9,3% of the totalpublic resources and 72% of the funds in the human resources axis. Training for the employedcame to 5% of the total resources and was present in all the axes, with the exception ofcommunications.

With regard to the human resources axis the use of incentives for hiring and employmentservices was practically nil. This depended on: the existence of more convenient automaticincentives for hiring in the national policy and the difficulty of defining the implementation



mechanism inside the CSF for the former; the absence of a clear strategy for an active policyand unemployment prevention for the latter9.

Among the traditional instruments of development policy, in the CSF the prevailing role ofgrants is coherent with the aim of supporting the private sector. At the same time, thischoice implicitly represented the attempt of bypassing the inefficiency of publicadministration in managing public works. In a more general sense, the CSF preferred“private goods”, instead of “public goods”.

2.2.2. Main components of the CSF

2.2.2.1. Regional and multiregional sub-frameworks

The CSF has been divided into 9 sub-frameworks: 1 multi-regional and 8 regional, one foreach region. The implementing responsibilities for the different sub-frameworks wereassigned to varies Ministries at multi-regional level and to Regions at regional level. In thefollowing table the distribution of total public resources of the initial programming by eachsub-framework is presented.

Regional interventions received 49% of the total public resources and multi-regionalinterventions the remaining 51%. This distribution was the result of sectoral choices, whichprivileged national or regional administrative responsibilities and competences, but also theoption for an increasing role of regional interventions. Regions increased their role withrespect to the previous programming period, when they detained 44% of the total publicresources.

The most centralised axes were Industry (76% of the public resources to multi-regionalprogrammes) and fishing (92%); the most regionalised axes were agriculture (91% to regionalprogrammes), tourism (82% to regional programmes) and human resources (58% to regions).The infrastructural axes (communication and economic infrastructure) divided their resourcesinto similar quotas. Technical assistance dedicated more resources to the multiregional level(65%).

Within the different administrative “specialisations” the following emerged:telecommunication interventions as well as education and Public administrationreinforcement were exclusively multi-regional; grants for industry were largely multi-regional(94%). The interventions for industrial areas, all the agriculture sub-axes with the exceptionof services, environment and training were concentrated at regional levels.

9 Employment services will become a fundamental priority in the 2000-06 programming.



Table 13 Distribution of public resources in regional and multiregional sub-frameworks.TOTAL MULTIREGIO

NALTOTAL

REGIONAL ABRUZZO BASILICATA CALABRIA CAMPANIA MOLISE PUGLIASARDEGNA SICILIA

1 COMMUNICATIONS 100.0 53,1 46,9 1,8 1,9 2,9 10,3 2,8 5,6 11,4 10,11.1 Road and highway 100.0 35,5 64,5 0,0 4,5 5,2 10,0 4,7 2,3 24,6 13,31.2 Rail 100.0 63,6 36,4 0,0 0,0 0,0 13,2 0,2 10,0 0,0 13,01.3 Other transports 100.0 33,0 67,0 18,0 0,0 6,8 15,0 6,6 12,0 8,6 0,01.4 Telecommunications 100.0 100,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,02 INDUSTRY 100.0 75,6 24,4 0,6 1,9 3,7 6,2 0,5 4,3 1,9 5,32.1 Grants for industry 100.0 94,1 5,9 0,1 0,6 1,2 0,8 0,1 0,7 1,5 0,92.2 Grants for handicraft 100.0 46,0 54,0 0,0 4,5 7,5 14,0 4,4 8,9 7,8 6,82.3 Grants for busin. Services 100.0 61,1 38,9 3,1 4,0 1,9 10,4 0,4 9,2 2,3 7,62.4 Local devel. - crisis areas 100.0 36,3 63,7 0,6 4,0 9,4 17,7 0,0 12,4 0,8 18,92.5 Industrial and handicraft areas 100.0 0,0 100,0 6,1 7,1 20,3 30,1 0,0 16,2 0,0 20,33 TOURISM 100.0 18,1 81,9 4,6 8,3 17,8 16,3 2,4 11,8 3,3 17,53.1 grants for tourist investments 100.0 6,8 93,2 3,5 13,5 22,5 18,7 1,1 9,1 9,3 15,43.2 Devel, of tourist resources 100.0 24,2 75,8 5,2 5,5 15,3 14,9 3,2 13,2 0,0 18,64. AGRIC. – RURAL DEVEL. 100.0 9,1 90,9 3,6 9,2 11,2 14,8 5,2 15,3 14,1 17,34.1 Agric. resources and infrastr. 100.0 7,5 92,5 3,0 7,6 8,3 30,7 2,8 9,3 21,6 9,24.2 Rural development 100.0 0,0 100,0 2,2 7,5 18,2 7,0 9,1 20,8 12,2 23,14.3 Services in agriculture 100.0 47,8 52,2 4,7 3,3 0,8 4,3 5,0 20,6 0,0 13,64.4 Objective 5a 100.0 0,0 100,0 4,5 16,8 8,8 8,7 6,5 13,0 16,1 25,74.5 On going measures 100.0 0,0 100,0 5,9 6,3 33,6 4,2 1,7 26,5 4,5 17,25 FISHING 100.0 91,6 8,4 0,0 0,3 0,5 3,1 0,0 0,9 2,4 1,26. ECON. INFRASTRUCT. 100.0 55,2 44,8 0,7 2,9 4,2 11,9 1,4 8,6 5,2 9,96.1 Water 100.0 77,8 22,2 0,0 1,6 2,0 5,4 1,2 5,7 0,9 5,46.2 Energy 100.0 50,5 49,5 0,0 0,9 4,3 6,4 0,0 10,4 20,1 7,26.3 Environment 100.0 6,0 94,0 1,5 2,3 8,5 33,0 2,7 17,3 6,4 22,26.4 R&TD 100.0 70,6 29,4 1,2 2,9 2,3 6,5 1,2 3,7 4,2 7,46.5 Infrastructures for health 100.0 0,0 100,0 0,0 35,2 18,7 2,3 1,6 22,0 15,1 5,07. HUMAN RESOURCES 100.0 42,0 58,0 1,4 4,5 6,6 11,5 1,5 10,3 7,2 15,17.1 education and initial training 100.0 100,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,07.2 Inclusion of unemployment 100.0 21,2 78,8 1,8 5,9 9,0 14,8 1,9 12,8 9,9 22,77.3 Continuing training 100.0 31,5 68,5 2,5 6,1 4,4 22,7 2,8 14,2 9,6 6,27.4 PA and systems reinforcement 100.0 100,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,07.5 Training structures 100.0 65,1 34,9 0,0 4,2 11,1 0,0 0,0 19,5 0,0 0,08 TECHNICAL ASSISTANCE 100.0 65,0 35,0 1,1 4,7 5,2 5,7 1,1 3,4 4,6 9,1TOTAL 100.0 50,9 49,1 1,6 3,9 6,0 10,5 1,9 8,2 6,4 10,6Source: Ministry of Treasury (Structural Funds Service)



The division of administrative responsibilities was not strictly applied when assigninginterventions. For example, water was largely dependent on regions and local bodies, but itstill remained with the (ex-)Ministry for Public Works, because it had managed theseinterventions in the past. Or, the Ministry of Labour continued to manage important resources,only because regions accepted its steering role also as an implementing role; the competencesin labour policy were still regional. In the absence of specific responsibility, all the decisionsto maintain important intervention at national level were dictated by the necessity of keepingregional projects under a multi-regional management or by the necessity of promoting multi-regional projects.

The distribution of public resources among regions was based on criteria related to the sizeand the population of the regions. In the case of Abruzzo the quota of allocated resources washalf of the previous 1989-93 quota, because of the near conclusion of its intervention (it wasno longer eligible and a special phasing out with the conclusion of commitments in 1996 andpayments in 1998 was defined). The other regions generally maintained their earlier quota,but the largest regions (Campania, Sicily) slightly increased their resources.

It is important to remember that this allocation of resources occurred in a phase of expansionof Community resources. This implies that allocation choices should have consideredfinancial absorption, but this did not happened notwithstanding the poor financial results ofthe previous programming period.

In analysing the regional distribution of resources by priority axes, a general similaritybecomes evident in the profile of their allocations, but some discrepancies have to beunderlined. In the following table the results of the comparison between total regionalallocations and single regional allocation are shown.

Table 14 Concentration or reduction of resources with respect to the total regional average(see table A.3.3. in the annex).

Priorities with concentratedresources

Priorities with reduced resources

Abruzzo other transport, tourism and agriculture(specially objective 5a)

Economic infrastructures (specially water andenergy)

Basilicata agriculture (specially objective 5a), tourism(specially grants)

Communications

Calabria Industry, tourism Communications, economic infrastructuresCampania Industry (specially crisis areas),

infrastructures, economic infrastructures(specially environment)

Agriculture

Molise Communications (specially roads),agriculture (specially rural development andobjective 5a)

Industry, tourism, economic infrastructuresand human resources

Puglia Rail, economic infrastructure (speciallyenvironment)

Communication, tourism

Sardegna Communication (specially roads), agriculture(specially agriculture resources andinfrastructures)

Industry, tourism

Sicily Human resources (specially training forunemployed people)

Agriculture

The distribution of resources among axes in Sicily and Puglia are very similar to that of thetotal regional sub-frameworks. The distributions of Molise and Sardegna resulted particularly



concentrated; both managed more than 15% of the total resources on communications (roads)and Molise on agriculture, which received almost the 40% of public resources.

These differences evidenced specific regional strategies:- Abruzzo, had a strong industrial basis and was preparing its exit from objective 1, was

reinforcing its internal areas (agriculture, tourism) and the functionality of urban areas(other transport);

- Basilicata, focused its resources on tourism, as a relevant development opportunity for asmall and well organised regional territory, and agricolture, in order to restructure farmsand the trade system under objective 5a

- Calabria stressed the importance of tourism and industry, in the latter case placingparticular emphasis on the local crisis areas (Crotone) and the opportunity arising from thecurrently growing business of Gioia Tauro;

- Campania reinforced industry, where it has important clusters of traditional and advancedenterprises and a relevant status in the whole southern industrial fabric, and reinforcedresources to the environment and railroads in order to promote the regeneration of themetropolitan areas of Naples and of the other urban areas;

- Molise concentrated its resources in reinforcing accessibility (roads), thus supporting itssignificant industrial basis, and in promoting agriculture, either through diversification(rural development) or through increasing the efficiency of the farms(objective 5a);

- Puglia, concentrated funds on the local crisis areas (Taranto, Manfredonia, Brindisi)which were affected by the closure of public companies and devoted a significant amountof resources to economic infrastructures with the aim of reinforcing and integrating agrowing and relevant industrial fabric. The focus on water resources had to guaranteesupplies in urban areas as well as in the large agriculture structure.

- Sardinia attempted to improve the integration of its different vocations (tourism,agriculture, rural areas, SME and handicraft) paying particular attention tocommunications in order to integrate the internal urban networks, and to agriculture inorder to support the weakest internal areas.

- Sicily concentrated on reducing unemployment with interventions for local areas andhuman resources and on improving competitiveness through improving the socio-economic environment (transport, water, urban infrastructures, etc.).

These choices matched specific regional needs. At the same time, they were not verymarked and underline a “conservative” programming approach of the Regions. In theprogramming phase the availability of public resources was still relevant and the Regionsthought to receive resources sufficient to face all the different development gap.

2.2.2.2. Regional and multi-regional Operational Programmes

The 1994-99 objective 1 CSF included:- 34 large operational programmes (24 multi-regional and 10 regional) and one small

operational programme (urban regeneration in Naples),- 18 global grants (7 multi-regional and 11 regional),- 1 large project (the harbour of Gioia Tauro),- 5 interventions of technical assistance defined with a decision of the Commission.

The Commission approved most of the regional and multi-regional programmes in 1994, butin 1998 other interventions were approved (OP Territorial Pact).



Table 15 The multi-regional and regional operational programmes of the 1994-99 CSF

Yearappr. Operational Programme

Total EUresources

%(1)

TotalPublic

resurces%(2)

Infrastructures 2655 34,3 4147 31,594 PO TRASPORTI FERROVIE 701 9,1 701 5,394 PO RISORSE IDRICHE 871 11,3 1742 13,294 PO TELECOMUNICAZIONI 377 4,9 377 2,994 PO INFRASTRUTTURE TRASPORTO STRADALE 249 3,2 498 3,894 P.O.ENERGIA 170 2,2 260 2,094 PO SVILUPPO/VALORIZ.TURISMO 128 1,7 248 1,996 P.O. INFRASTRUTTURE AEROPORTUALI 5 0,1 10 0,197 P.O. MULTIR."AMBIENTE" 48 0,6 100 0,897 P.O. "PROTEZIONE CIVILE" 60 0,8 120 0,997 P.O."SICUREZZA PER SVIL. DEL MEZZOGIORNO" 45 0,6 91 0,7

Education and training 938 12,1 1304 9,994 PO M.P.I. SCUOLA 254 3,3 394 3,094 PO M.L. EMERGENZA OCCUP.SUD OB.1 348 4,5 430 3,394 PO MAE FORMAZ.ITALIANIALL'ESTERO 20 0,3 29 0,294 PO M.L. ASSIST.TECNICA E AZIONI INNOV. 76 1,0 103 0,894 PO M.L. FORMAZ.FORMAT. E FUNZIONARI P.A. 188 2,4 278 2,197 P.O. "PARCO PROGETTI: RETE PER LO SVIL.LOC." 52 0,7 70 0,5

Agriculture and fishing 471 6,1 697 5,394 PO ATT.SOSTEGNO SERVIZI SVIL. AGRICOLTURA 162 2,1 231 1,894 P.O. SERV.VALOR.C.PROD.AGR.MERIDION.LI 72 0,9 90 0,794 PO PESCA ACQUACOLTURA .E.COMM. 233 3,0 368 2,897 P.O. "SOSTEGNO COSTIT. E ATTIV.PRODUT.ORT. 4 0,1 7 0,1

R&D, industry and local development 3516 45,5 6866 52,194 PO RICERCA E SVILUPPO TECNOLOG. 784 10,1 1190 9,094 PO INDUSTR.ARTIG.SERV.IMPRESE 2592 33,5 5443 41,398 P.O.PATTI TERRIT.PER L'OCCUPAZIONE 140 1,8 233 1,8

Technical assistance 22 0,3 31 0,297 P.O."ASSISTENZA TECNICA Q.C.S. 22 0,3 31 0,2

Others 132 1,7 138 1,0OTHERS MULT. INTERVENTIONS 132 1,7 138 1,0TOTAL MULTIREGIONAL Ops 7733 52,7 13184 54,6Regional plurifunds Ops 6350 91,4 10060 91,7

94 POP SARDEGNA 904 13,0 1478 13,594 POP PUGLIA 1148 16,5 1983 18,194 POP MOLISE 343 4,9 563 5,194 POP ABRUZZO 166 2,4 324 3,094 POP CAMPANIA 1323 19,1 2294 20,994 POP BASILICATA 583 8,4 953 8,794 POP CALABRIA 543 7,8 201 1,894 POP SICILIA 1340 19,3 2263 20,6

Regional monofunds Ops 349 5,0 522 4,894 PO MONOFONDO SVILUPPO RURALE ABRUZZO 108 1,6 150 1,494 PO MONOFONDO SVILUPPO RURALE CALABRIA 241 3,5 372 3,4

Others 245 3,5 383 3,5OTHERS REG. INTERVENTIONS 245 3,5 383 3,5TOTAL REGIONAL Ops 6945 47,3 10965 45,4TOTAL Ops 14678 100,0 24149 100,0

Source: ISMERI EUROPA elaboration on Treasury data (IGRUE)



In the initial plan, multi-regional interventions received 53% of the European funds and 55%of total public funds. It is possible to divide multi-regional operational programmes into 4large fields:- infrastructures (34% of the European funds to multi-regional level), which incorporated

all the main communication interventions on national transport and telecommunicationnetworks and investments for infrastructures in tourism, environment, water, civilprotection and security;

- education and training (12% of the European funds to multi-regional level), whichincluded interventions of The Ministry of Labour for promoting multi-regional projectsand of the Ministry of Education programmes for schools

- Agriculture and fishing (6% of the European resources to multi-regional level), whichincluded the programmes of the Ministry of Agriculture for diffusing business services tofarmers and the action for reorganising fishing;

- R&D, industry and local development (45% of structural funds to multi-regional level),which included operational programmes destined in different ways to reinforcingcompetitiveness of the productive structure (R&D devoted a large part of resources tohigher education too)

The national technical assistance OP and the other multi-regional interventions receivedrespectively 0,3% and 1,7% of the structural funds at multi-regional level.

It is interesting to note how in many fields (human resources, R&D, agriculture, etc.)multiregional programmes had to promote pluri-regional projects and, moreover, generatea systemic effect on the single regional interventions and territories.

This kind of action would require a high integration between national and regionalprogrammes and a systemic approach to the planning and management. Both were weakand the relationships between the national and regional programmes resulted occasionaland not established. In fact, where the national interventions were concentrated on onesector and based on a existing system, they better succeeded in implementing homogenousand well diffused projects (see education and university). On the contrary, where regionaland national competence overlapped and a strong and multi-actor co-ordination wasnecessary, the integration was poor.

The regional operational programmes can be split into pluri-funds (one for each objective 1region with resources equal to 91% of the European funds at regional level) and mono-funds(In Abruzzo e Calabria with resources equal to 5% of the European funds at regional level).The first group of programmes was devoted to all sectoral interventions, the second one onlyto agriculture. The other regional interventions (global grants, PO “Pianura-Napoli” inCampania and other small technical assistances) received 3,5% of the European funds atregional level.

In the annex to this chapter a synthesis of the main features of each programme andintervention can be found.

In the following table the number and the average values of the main interventions arepresented. Multi-regional programmes were smaller than regional ones in terms of measurenumber, but the single measures were bigger. This implies a greater complexity in managingand implementing the programmes at regional level rather than at multi-regional level.



Table 16 Number of measures and average value

Main operational programmes N. of measuresAverage value ofmeasure (Meuro)

P.O.PATTI TERRIT.PER L'OCCUPAZIONE 59 4,0PO TELECOMUNICAZIONI 32 11,8PO M.P.I. OB.1 30 13,1P.O. MULTIR."AMBIENTE" 14 7,2SFOP PESCA ACQUACOLTURA E.COMM. 14 26,3PO INDUSTR.ARTIG.SERV.IMPRESE 13 418,7PO M.L. ASSIST.TECNICA E AZIONI INNOV. 13 7,9PO RISORSE IDRICHE 13 134,0PO RICERCA E SVILUPPO TECNOLOG. 11 108,2PO M.L. EMERGENZA OCCUP.SUD 8 53,7PO M.L. FORMAZ.FORMAT. E FUNZIONARI P.A. 8 34,7PO SVILUPPO/VALORIZ.TURISMO 8 31,0P.O."ASSISTENZA TECNICA Q.C.S." 7 4,4P.O."SICUREZZA PER LO SVIL. DEL MEZZOGIORNO 7 12,9PO ATT.SOSTEGNO SERVIZI SVIL. AGRICOLTURA 7 33,1PO INFRASTRUTTURE TRASPORTO STRADALE 7 71,1P.O. SERV.VALOR.C.PROD.AGR.MERIDION.LI 6 15,0PO TRASPORTI FERROVIE 6 116,8P.O. PROTEZIONE CIVILE 5 24,1P.O."PARCO PROGETTI: UNA RETE PER LO SVIL.LOC. 4 17,5P.O.ENERGIA 4 65,1P.O. INFRASTRUTTURE AEROPORTUALI 3 3,3P.O.MULT."SOSTEGNO COSTIT. E ATTIV.PRODUT.ORT. OB1 3 2,5PO MAE FORMAZ.ITALIANIALL'ESTERO 3 9,8Total Multi-regional (includes all the interventions) 310 42,5POP PUGLIA 85 23,3POP SARDEGNA 59 25,1POP SICILIA 58 39,0POP ABRUZZO 57 5,7POP CAMPANIA 56 41,0POP CALABRIA 53 18,3POP MOLISE 50 11,3POP BASILICATA 48 19,8PO MONOFONDO SVILUPPO RURALE ABRUZZO 27 5,5P.O."NAPOLI-PIANURA" RIQUAL.AMBIENTE E QUART. 9 6,0PO MONOFONDO SVILUPPO RURALE CALABRIA 5 74,5Total regional (includes all the interventions) 554 21,2Total CSF 864 28,8Source: ISMERI EUROPA elaboration on Treasury (IGRUE) data

2.2.3. Expenditure planned and actual

The financial state of CSF in December 2001 is summarised on the following page. This datain not the final figure of the expenditure, but is the last available information on expenditure.It was collected in June 2002, but is still uncompleted for many reasons, principally:- some OPs, for example the Campania Operational Programme, received the permission to

prolong their activities (till September 2002);- some management authorities did not send in the updated information (Molise and

Basilicata Ops for all the funds, Sardegna and Puglia OPs for ESF) or sent it in incomplete(Calabria OP) in June 2002;

- practically all the programmes are still completing their accounts and will send definitivedata in the next months.

2.2.3.1. Commitments and payments of CSF by priority axis and fund



The next table shows a good performance of commitments for all the axes and for all thefunds. Payments results are less positive and amounted to 95% of the total cost. In particular,ERDF reaches a high level of expenditure (99% of the total cost) and the imminent closureaccount statements hint at a possible full utilisation of the available resources. EAGGF (85%)and FIFG (89%) record an intermediate position among structural funds and very likely willimprove their performance, because expenditure mechanisms in EAGGF favour a “lastminute” statement of accounts from beneficiaries.

ESF (77%) shows the worst performance and underlines the existence of serious problems inits programming and implementation. The very large number of projects and the insufficientefficiency of management structures, as well as the burdening procedures of controls,generated delays in payments. In addition, programming did not always reflected the localneeds and a weak control of the demand may have influenced the performance of ESFnegatively. In any case, its level of expenditure could increase significantly in these months,if the recent acceleration of controls and accounts activated in all the main OperationalProgrammes are successful10.

Table 17 Level of expenditure in December 2001 (partial data of June 2002; % valuescalculated on final total cost)

AXESCommitment on total cost

(%)Payments on total cost

(%)1 COMMUNICATIONS 126,6 97,32 INDUSTRY 103,7 97,53 TOURISM 120,5 98,94. AGRIC. - RURAL DEVEL. 106,0 85,35 FISHING 109,1 87,16. ECON. INFRASTRUCT. 130,2 100,77. HUMAN RESOURCES 102,8 78,58 TECHNICAL ASSISTANCE 101,5 61,5

STRUCTURAL FUNDSERDF 115,2 98,6EAGGF 105,7 84,7ESF 104,1 77,3FIFG 110,9 88,8

TOTAL 112,9 94,8Source: ISMERI EUROPA elaboration of Ministry of Treasury (IGRUE) data

The subsequent controls of the Commission on the eligibility of the presented expendituremay reduce the above levels; but this reduction should not be relevant and should not modifythe general results.

With regard to the previous 1989-93 period these results indicate a relevant improvement inthe financial implementation of structural programmes. In December 1995 at the closure ofthe 1989-93 CSF the payments amounted to only 72% of the total cost, while thecommitments reached 100%. The increase of 20% in the level of payment is a generic, butappropriate, indication of the improvements undergone in the management andimplementing system of structural funds.

10 For the ESF informal estimations suggest a final level of expenditure little over the 90% of the total cost.



The analysis of payments by sub-axes highlights some problematic fields of intervention. Inaxis 1 (communication) no relevant expenditure problems appear; only the rail sub-axis hasincurred some delays due to regional intervention.

Table 18 Level of expenditure in December 2001 by sub-axes (partial data of June 2002; %values calculated on final total cost)

AXES AND SUB-AXESCommitment on total cost

(%)Payments on total cost

(%)Roads and highways 126,1 96,3Rail 135,4 93,7Telecommunications 109,7 105,7Other transports 122,6 99,41 COMMUNICATIONS 126,6 97,3Grants for industry 102,1 99,8Grants for handicraft 116,3 110,3Grants for using business services 94,0 77,4Local development and crisis areas 102,3 73,7Industrial and handicraft areas 156,9 127,32 INDUSTRY 103,7 97,5Grants for tourist investments 109,6 88,6Valorisation of tourist resources 130,9 108,73 TOURISM 120,5 98,9On-going measures 100,8 100,2Objective 5a 103,1 86,5Agriculture resources and infrastructures 108,9 81,5Services in agriculture 98,1 71,8Rural development 111,2 92,54. AGRIC. - RURAL DEVEL. 106,0 85,3Fishing 109,1 87,15 FISHING 109,1 87,1Water 134,1 96,0Environment 128,6 101,8Energy 108,6 94,2Health infrastructure 144,0 117,1Research, development and innovation 138,5 108,46. ECON. INFRASTRUCT. 130,2 100,7Support for continuous training system 110,5 63,0Continuous training for large enterprise employees 95,8 72,1Continuous training for SME employees 83,1 42,5Training for long term unemployed 87,1 63,5Training for women and equal opportunities 81,0 51,3Training for disadvantaged people 97,1 76,1Training for trainers 101,7 48,3Training for public officials 101,4 76,2Training for young people (25 years) 105,8 80,2Training for professional schools 115,2 100,9Training for short degrees 149,6 131,3Training structures 105,6 91,7Incentive for employment creation (long term unempl.) 103,4 71,2Incentive for employment creation (young people 25 y.) 104,3 55,17. HUMAN RESOURCES 102,8 78,5Technical assistance ESF 101,8 46,6Technical assistance ERDF 101,4 68,98 TECHNICAL ASSISTANCE 101,5 61,5Total CSF 112,9 94,8Source: ISMERI EUROPA elaboration of Ministry of Treasury (IGRUE) data

In this axis the main projects are included in the investment plans of large bodies andcompanies (FS, Telecom, ANAS), which have competences in the field and which normally



do not come up against significant implementing problems11; at regional level theinterventions have been more fragmented and their implementation less quick.

Axis 2 illustrates the failure of grants for using business services and the interventionprompted by the industrial crisis and the local development comes to the surface. The limitedutilisation of business service incentives is connected to insufficient programming (absence ofimplementing procedure) and implementing (weak experiences of administrations), but alsoto a limited demand (the enterprises preferred the more convenient capital incentive-crowding out effect- and utilised business services only when pushed to do so by new rules onquality or labour safe-guard). In the case of the crisis areas delays depended on inaccurateinitial planning (utilisation of grants available also in other interventions and the inability toattract large new foreign investments).

The axis for tourism demonstrates good payments, with some delays in the grants sub-axis,which may be recovered in the current revision of accounts. The agriculture supports in axis4 show a related failure in services (only 72% of payments on total cost); here the utilisationof instruments different from the more traditional grants and aids, and are the principal causesof difficulty in the administrative capability and in the demand of firms.

Axis 5 (fishing) does not show any particular problems, also with regard to its relative noveltyin the scenario of national interventions. Economic infrastructures (axis 6) reach a good level ofexpenditure and recognize a partial, but not worrying, delay in water and energy.

Axis 7 (human resources) includes the ESF implementing problems. Moreover the level ofexpenditure was lower than 100% of the total cost for continuous training for employees inlarge enterprises, continuous training for SME employees, training for long term unemployed,training for women and equal opportunities and training for disadvantaged people and thiscannot help but lose European resources. In addition, important payment delays have occurredin continuous training (special for SMEs), equal opportunities and training for women,training for trainers, whose payments do not reach 55% of the total cost; all the other lines ofintervention are in difficulty, with the exception of training for professional schools and shortdegrees which exceed 100% of their total cost. These last interventions benefited from astructured management system in the Ministry of Education and University, which was spreadover the territory (secondary professional schools, universities), and sufficiently able inproject designing and helped by procedures integrated in the ordinary mechanisms offunding12.

Finally, in axis 8 ERDF and ESF technical assistance are significantly delayed, but theconcentration of expenditure acceleration recently should allow to catch up.

11 The wide stock of investment projects of these actors consent an easy substitution of the problematic projectswith similar and eligible projects.12 The selection of projects followed a system different from the classical call for tenders and often integrated inthe ordinary transfer of fund form the Ministry to its decentrated offices.



2.2.3.2. Commitments and payments of CSF by OP

The current available data on commitments and expenditure and this first view of thefinancial advancements of the CSF imply:- an important and generalised improvement of financial efficiency with respect to 1989-

93 programming;- a difference in the financial efficiency of different funds: high for ERDF, acceptable

for EAGGF and FIFG, low for ESF;- ESF difficulty sprung from the inefficiency of the management system and possible

weakness of the initial forecast;- a greater spending ability where national management systems are more experienced

and functional, a greater spending difficulty where the administration has to define themethods and procedures to implement the planned intervention

At December 2001 the financial progress of the regional and multi-regional OPs is similar(both around 95% of payments on total costs and more than 110% of commitments on totalcost), but there are significantly differences among the programmes.

Table 19 Financial advancement of the multi-regional Ops (December 2001; partial data ofJune 2002)

Commitmentson total cost

(%)

Payments ontotal cost

(%)

% of OP totalcost on CSF

total costP.O.ASSISTENZA TECNICA Q.C.S. 100,0 10,3 0,1P.O.PATTI TERRIT.PER L'OCCUPAZIONE 100,2 27,4 0,6P.O. SERV.VALOR.C.PROD.AGR.MERIDION.LI 100,0 41,3 0,3P.O.PARCO PROGETTI." 100,0 43,9 0,2PO M.L. ASSIST.TECNICA E AZIONI INNOV. 99,9 61,8 0,3P.O. INFRASTRUTTURE AEROPORTUALI 113,0 66,7 0,3PO M.L. FORMAZ.FORMAT. E FUNZIONARI P.A. 102,1 67,0 0,5PO M.L. EMERGENZA OCCUP.SUD 99,0 68,9 1,2PO ATT.SOSTEGNO SERVIZI SVIL. AGRICOLTURA 99,8 69,6 0,6PO SVILUPPO/VALORIZ.TURISMO 106,1 77,5 0,6P.O. MULTIR. AMBIENTE 109,7 77,6 0,3PO MAE FORMAZ.ITALIANIALL'ESTERO 100,3 85,5 0,1PO RISORSE IDRICHE 131,3 86,9 4,3P.O. PROTEZIONE CIVILE 125,9 87,3 0,7SFOP PESCA ACQUACOLTURA E.COMM.RELATIVI 110,9 88,9 1,1PO TRASPORTI FERROVIE 140,0 92,1 5,3PO M.P.I. SCUOLA 111,1 97,5 1,4P.O."SOSTEGNO COSTIT. E ATTIV.PRODUT.ORT. 99,4 99,4 0,02PO INDUSTR.ARTIG.SERV.IMPRESE OB.1 101,4 99,6 31,6P.O.SICUREZZA PER LO SVIL. DEL MEZZOGIORNO 101,4 100,0 0,8P.O.ENERGIA 110,3 104,0 1,2PO TELECOMUNICAZIONI 109,7 105,7 3,0PO INFRASTRUTTURE TRASPORTO STRADALE 154,8 113,0 1,3PO RICERCA E SVILUPPO TECNOLOG. 149,8 116,5 3,4Total Multiregional operational programmes 112,4 96,0 59,1Total CSF 112,9 94,8 100,0Source: ISMERI EUROPA elaboration on Treasury data (IGRUE)

At multi-regional level four programmes were under 50% of the expenditure in December2001 (the conclusive data is still lacking), but their volume of total cost was approximately1% of the CSF total cost. The expenditure level of other 11 programmes were between 62%



and 90% of their total cost and represented 10% of the CSF total cost. Finally, 9 programmeshad payments of over 90% of their total cost and represented 48% of CSF value.

In interviews several officials guaranteed the completion of practically all the programmes.Even if this did not happen, the multi-regional programmes showed a good generalperformance with some limited deficits. The principal difficulties were concentrated in someESF and EAGGF programmes and Territorial Pact programme, which, however, started in1998.

The well executed programmes were generally based on national aid-schemes or consolidatedpolicies. Nevertheless the Industry and R&D programmes, which amounted to about 35% ofthe CSF cost, did not have a clear procedural path at the approval stage because they werelargely based on the new regional policy (law 488). They had to define the implementationmechanisms during the implementation and succeeded in adjusting them to the financialtargets.

With the exceptions of the POP Calabria and Pianura OP, regional programmes achieved asufficient, but not complete, level of expenditure (see table below). Three regions (Abruzzo,Molise, Sardegna) declared payments higher than their total costs; the payments of otherprogrammes exceeded 90% of their total cost.

Table 20 Financial advancement of the regional OpsCommitmentson total cost

(%)

Payments ontotal cost

(%)

% of total coston CSF total

costP.O."NAPOLI-PIANURA" RIQUAL.AMBIENTE1 102,9 14,8 0,1POP CALABRIA 103,6 86,6 3,3POP SICILIA 113,4 91,3 8,3POP PUGLIA 115,0 91,5 6,5POP CAMPANIA 109,7 91,9 8,1PO MONOFONDO SVILUPPO RURALE ABRUZZO 100,6 92,7 0,5PO MONOFONDO SVILUPPO RURALE CALABRIA 113,9 97,9 1,3POP MOLISE 118,8 98,6 1,6POP SARDEGNA 119,1 102,1 4,7POP BASILICATA 124,4 102,7 3,3POP ABRUZZO 136,7 108,7 0,9Total regional OPS 114,3 94,0 38,7Total CSF 112,9 94,8 100,0Source: ISMERI EUROPA elaboration on Treasury data (IGRUE)

The global grants encountered absorption difficulties: 7 out of 18 did not reach 70% of thetotal cost, 6 did not reach 90% of the total cost and only 5 exceeded 90% (see table A.3.4 inthe annex to this chapter).

The delayed start of these programmes (many of them were approved in 1997) was one of themain reasons for these difficulties, but limited and insufficient programming and the not fullyadequate management body probably contributed to them. However, also in this case onemust judge with caution, because a concentration of payments in the last operational monthswould influence these numbers.

2.2.3.2.1. The Evolution of Commitments and payments



The evolution of financial indicators (see also the next tables) shows a similar progress ofcommitments and payments in relation to the total cost. In 1999 commitments jumped to115% producing an overbooking, which had to guarantee a high level of expenditure. It wasthe effect of the large reprogramming of 1998 and the large introduction of “sponda” (fundedon national policy) projects in the CSF.

Financial advancement of the italian 1994-99 obj.1 CSF (% on total cost)

0

20

40

60

80

100

120

140

1995 1996 1997 1998 1999 2000 2001

%

Commitments Payments

The payments did not follow the same trend and they recorded an important progress in 2001only . This was the feedback of the increasing in commitments of 1998.

This brief examination of financial trends suggests a persisting difficulty in assuring thenecessary levels of commitments and payments. This difficulty descends by the well-knownadministrative and organisational deficits. The final quota of “sponda” projects activated isunknown, but a rough estimation of the dimension of the projects directly implemented inthe CSF, and not dependent on extensive national aid schemes such as law 488/92,indicates about 30% of the total resources.

Notwithstanding the significant improvements, the implementation capability is stillinadequate.



Table 21 Progression of commitments and payments from 1995 to 2001 by priority axis (% values calculated on final total cost)1995 1996 1997 1998 1999 2000 2001PRIORITY AXES A B A B A B A B A B A B A B

1 COMMUNICATIONS 45,0 14,0 56,9 25,7 82,3 44,6 109,0 55,8 128,0 68,7 127,1 78,6 127,0 98,12 INDUSTRY 11,8 9,8 56,8 28,0 64,4 51,5 76,7 64,3 106,7 71,3 105,7 79,2 105,5 95,93 TOURISM 5,4 1,5 23,1 7,1 52,2 21,2 72,5 32,0 121,2 41,8 120,7 56,2 120,5 98,94. AGRICULTURE - RURAL DEVELOPMENT 7,4 4,4 24,0 13,6 39,2 23,7 63,2 36,5 106,1 50,1 106,2 63,5 106,0 86,65 FISHING 2,7 0,2 27,6 7,1 45,1 11,6 66,2 33,9 132,0 53,9 120,7 77,0 109,1 87,16. ECONOMIC INFRASTRUCTURES 8,3 1,7 20,0 7,3 37,5 18,2 54,1 33,9 132,9 49,3 132,2 67,6 130,2 100,77. HUMAN RESOURCES 17,2 4,7 36,8 16,3 55,9 27,8 81,5 45,2 106,0 55,3 105,0 64,3 102,8 78,58 TECHNICAL ASSISTANCE 0,5 0,2 4,0 3,3 26,9 7,4 42,2 13,8 91,5 23,6 91,5 34,4 91,5 51,5TOTAL 16,4 6,9 39,5 18,2 56,4 34,2 75,9 47,7 117,1 59,1 116,2 71,1 115,3 94,1A=commitments on total cost (%); B=payments on total cost (%)Source: ISMERI EUROPA elaboration of Ministry of Treasury (IGRUE) data

Table 22 Progression of commitments and payments from 1995 to 2001 by structural funds (% values calculated on final total cost)1995 1996 1997 1998 1999 2000 2001STRUCTURAL

FUNDS A B A B A B A B A B A B A BERDF 18,0 7,8 42,9 19,6 59,8 37,5 77,7 50,6 120,6 61,7 119,7 73,4 119,1 98,5ESF 19,2 4,9 39,0 16,8 56,9 28,3 80,9 44,2 107,2 53,6 106,3 63,6 104,1 77,3EAGGF 7,1 4,4 23,8 13,7 39,3 23,8 63,3 36,7 105,7 50,6 105,8 64,5 105,7 86,0FIFG 2,0 0,0 27,6 6,9 44,5 11,2 66,4 33,7 134,6 55,4 122,8 79,2 110,9 88,8TOTAL 16,4 6,9 39,5 18,2 56,4 34,2 75,9 47,7 117,1 59,1 116,2 71,1 115,3 94,1A=commitments on total cost (%); B=payments on total cost (%)Source: ISMERI EUROPA elaboration of Ministry of Treasury (IGRUE) data



2.2.4. Reasons for deviations from Plan

The principal and more frequent reasons for deviations from plans, difficulties in theimplementation which provoked reprogramming, have been:

ERDF - Public works – administrative delays in the concession of permissionsand in the launch of the call for tenders (influenced also by the changes intheir legal framework), necessity of modifying the original project,financial problems of the beneficiary and consequent block of the works,archaeological discovers, delays in the final tests of the opera.

- Grants – in general they did not encounter relevant delays. Problems wasconcentrated in support for business services (no existence ofexperimented procedures to implement them) and financial engineering(low demand and low ability of implementing them in publicorganisations). Delays was caused also by the time requested to defineimplementation procedures for new aid schemes (law 488/92, legislativedecree 297/99).

EAGGF - High financial fragmentation of the measures and necessity of continuingadjustments in order to optimise resources,

- Difficulty in the implementation of some rural development and serviceactions;

- time spending procedures of selection due to the large number of projects.ESF - Low efficiency of responsible administrations,

- absence of a defined timing and targets of the programmes,- time spending procedures of selection because of the large number of

projects,- legal mistake in the definition of the call for tenders or the project

selection- delays in the verification of the projects

FIFG - Lack of experience in managing structural funds

In addition, the high formalism of national administration and the legal climate followedinvestigations for corruption prevented the adoption of simplified procedures. We remind thatlarge works in Italy take often more than 20 years to be completed (for example, the Palermo-Messina motorway project started in the 1974 and it is still unfinished).

As underlined in the next paragraphs, the difficulties in the programme implementation arenot the unique reasons of reprogramming. In some cases reprogramming supported strategicadjustments (for example, the inclusion in the CSF of the security programme and territorialpacts programme); however, these motivations were financially and operationally marginal.



2.2.4.1. Reprogramming

Reprogramming involved all the programmes and was a generalised tool to assure theabsorption of resources, to remove errors in the initial programming or to bypassimplementing problems (measures abandoned and created, or changes in the financial profileof the measures). In some cases, reprogramming was of strategic relevance and availableresources were assigned to new programmes (security infrastructures OP, territorial pacts OP,Project Stock OP) aimed at new aspects of development policy (respectively: fights againstorganised crime and security, local development, new employment sources).

In order to estimate the volume of reprogramming in the next analysis two different rates ofreprogramming were calculated, putting in relation the absolute value of the public resourcesmoved in or out of a measure with the final value of its public resource during a definedperiod. The first rate of reprogramming is calculated on a period split into 3 phases (initialdefinition of the OP - December 1998 - December 1999), the second on a period split into 2phases (initial definition of the OP – December 1999). Increasing the number of phases, andconsequently the movement of resources considered, the rate can only increase or remainunchanged. This means that the proposed rates of reprogramming are only indicative, andvery likely underestimations of the effective reprogrammed resources.

On the whole CSF the transfer of funds between measures was equal to 38% in the case ofonly one comparison (initial and final) and 55% in the case of three comparisons. Theseestimations are only indicative and both are inferior to the actual amount of resources movedin the entire periods, but suggest a certain approximation in the initial allocation of resourcesand a diffused necessity of continued adjustments.

Analysing the rates by axis it is evident that reprogramming (see next table):- largely affected communications and fishing priority axes;- occurred on average in agriculture, human resources and technical assistance axes;- influenced in the industry and tourism axes in a limited way.

Among the structural funds FIFG was largely involved in the reprogramming, while ERDFwas little involved in it. EAGGF and ESF transferred resources equal to 50-60% of theiravailable resources during the implementation. All the rates calculated on the differentstructural funds are generally high in the different axes, with the exception of ERDF inindustry and tourism and EAGGF in industry.



Table 23 Italian 1994-99 CSF: rate of reprogramming by axis and structural fund

Priority axis and fundReprogramming rate on 3

periodsReprogramming rate

final-initial1 COMMUNICATIONS 86,1 37,7ERDF 86,1 37,72 INDUSTRY 31,1 17,2ERDF 30,0 15,9ESF 58,6 47,83 TOURISM 29,8 27,7ERDF 28,7 26,6ESF 48,2 45,44. AGRIC. - RURAL DEVEL. 63,7 54,0EAGGF 62,8 53,5ERDF 101,6 74,7ESF 61,0 58,35 FISHING 117,5 55,3ESF 91,5 91,5FIFG 118,8 53,66. ECON. INFRASTRUCT. 58,6 45,2ERDF 57,6 44,4ESF 81,0 65,57. HUMAN RESOURCES 66,0 57,3ERDF 66,6 65,0ESF 65,9 56,88 TECHNICAL ASSISTANCE 65,9 52,0ERDF 88,0 69,6ESF 28,3 22,0TOTAL 54,7 37,5- ERDF 49,9 30,6- EAGGF 62,3 53,1- ESF 65,3 56,0- FIFG 118,9 53,8Source: ISMERI EUROPA elaboration on Treasury data (IGRUE)

The highest values of the reprogramming rates are in ERDF in the communications and ruraldevelopment axes, FIFG in the fishing axis. The different behaviour of the same fund indifferent axes suggests that reprogramming was independent from a specific fund, but wasrelated to contingent implementing aspects.

The rate of reprogramming in the single Operational programmes were very different. Onaverage, regional programmes moved resources more frequently than multi-regionalprogrammes. At regional level the rate calculated only on initial and final programming isparticularly elevated; it highlights the significant divergence between the initial and finalplans.

At multi-regional level reprogramming was concentrated in some Operational programmes(CSF Technical Assistance OP, Rail OP, Training for Trainers and Officials OP, Fishing OP,Airports OP, Telecommunications OP) and characterised very different kinds of interventions,consequently it seemed to be more dependent on implementing aspects13, than on specificsectoral problems.

13 Not always these aspects were negative; as noted below, in many occasions some multiregional OPs receivedadditional resources from other OPs in difficulty.



Table 24 Italian 1994-99 CSF: rate of reprogramming by Operational programmeReprogramming rate

on 3 periodsReprogramming rate

final-initialP.O. "PROTEZIONE CIVILE"1 55,2 55,2P.O. INFRASTRUTTURE AEROPORTUALI 91,5 91,2P.O. MULTIR."AMBIENTE" 16,9 16,9P.O. SERV.VALOR.C.PROD.AGR.MERIDION.LI 23,5 19,2P.O."ASSISTENZA TECNICA Q.C.S." 134,0 134,0P.O."PARCO PROGETTI: UNA RETE PER LO SVIL.LOC." 40,5 40,5P.O."SICUREZZA PER LO SVIL. DEL MEZZOGIORNO" 69,0 69,0P.O.ENERGIA 101,7 0,0P.O.MULT."SOSTEGNO COSTIT. E ATTIV.PRODUT.ORT. 0,0 0,0P.O.PATTI TERRIT.PER L'OCCUPAZIONE 19,6 19,6P.O.STUDIO VALUTAZIONE TELECOMUNICAZ. 0,0 0,0PO ATT.SOSTEGNO SERVIZI SVIL. AGRICOLTURA 8,8 0,0PO INDUSTR.ARTIG.SERV.IMPRESE 20,0 5,0PO INFRASTRUTTURE TRASPORTO STRADALE 11,3 0,0PO M.L. ASSIST.TECNICA E AZIONI INNOV. 52,2 46,2PO M.L. EMERGENZA OCCUP.SUD 47,3 32,4PO M.L. FORMAZ.FORMAT. E FUNZIONARI P.A 111,8 105,7PO M.P.I. SCUOLA 76,3 75,6PO MAE FORMAZ.ITALIANIALL'ESTERO 60,9 60,4PO RICERCA E SVILUPPO TECNOLOG 61,3 55,0PO RISORSE IDRICHE 61,7 46,9PO SVILUPPO/VALORIZ.TURISMO 22,6 22,6PO TELECOMUNICAZIONI 84,9 35,4PO TRASPORTI FERROVIE 188,5 49,7SFOP PESCA ACQUACOLTURA TR.E.COMM.RELATIVI 118,8 53,6Totale Multiregional programmes 51,6 28,8PO MONOFONDO SVILUPPO RURALE ABRUZZO 23,6 23,6PO MONOFONDO SVILUPPO RURALE CALABRIA 3,9 3,9POP ABRUZZO 27,1 27,1POP BASILICATA 80,3 61,1POP CALABRIA 55,4 50,7POP CAMPANIA 62,1 43,4POP MOLISE 73,6 60,2POP PUGLIA 70,3 67,2POP SARDEGNA 47,9 28,5POP SICILIA 57,3 53,4Total Regional programmes 58,7 48,4Total Global Grants 46,1 13,6Total CSF 54,7 37,5Source: ISMERI EUROPA elaboration on Treasury data (IGRUE)

Reprogramming had a fundamental and positive role in spending, together with the inclusionof “similar” national funded projects in Operational Programmes. But a direct relationshipbetween level of reprogramming and success in payments did not exist; this implies that weakinitial plans and difficulty in managing required more frequent adjustments.



2.2.4.2. The “automatic” reprogramming

Within the general activity of reprogramming it is necessary distinguish two main kinds offinancial movements: within the same OPs among different measures; within the entire CSFamong different OPs. The first movement was analysed above, now we turn our attention tothe second kind of reprogramming.

In the 1989- 93 period reallocation of resources between different OPs occurred in the lastphase of implementation to maximise the absorption of European funds. In this period anautomatic method of reprogramming governed the financial allocation between OPs.

In 1996 the Treasury was engaged in an exceptional reduction of the public deficit andcommitment and expenditure of the structural programmes slowly progressed, generatingserious worries about their final absorption of the European Funds. These two trendscombined (necessary reduction of expenditure and loss of available resources) wereeconomically and politically unacceptable. For this reason the Treasury proposed anautomatic reprogramming aimed at guaranteeing structural fund expenditure and succeeded incoming to an agreement with all the national and regional authorities involved in the CSF.The Commission itself facilitated this process through a general agreement on managementmethods between the Italian minister and the Commissioner of DG Regio.

In practice, the automatic reprogramming worked in the following way: the SteeringCommittee defined yearly target levels of commitment and expenditure for all theprogrammes; if an OP did not reach both targets it had to free a part of its planned resources;other programmes with better performance and expenditure capability received thoseresources. In the first years the commitment targets were privileged, in the last years thepayment targets; these last were: 38% of the total cost in 1997, 55% in 1998 and 75% in 1999.

This method is similar to the financial rules adopted in the new reform of the structural funds.It is very simple in a technical sense, but complex in partnership terms. It required anagreement among a very large number of different institutions, often governed withconflicting political orientations, and the utilisation of a transparent and efficient flow ofinformation on the financial progress and its probable future improvement.

This mechanism was successful and its mix of competition and partnership supported theoverall financial expenditure. It succeeded in mobilising all the managing authorities in all theinstitutions involved orienting the administrative effort in a uniform manner; considering thetraditionally slow adjustments of our administration this result was impressive, butexclusively focused exclusively on expenditure without paying the same attention to quality.

The more systematic and wide adoption of “similar” projects in the structural fundprogrammes, completely funded by national policies, was the second pillar of the paymentimprovement. The effects of this second mechanism will be analysed in the next chapter.

The next table summarises the reprogramming in 1998 on the basis of the automaticmechanism.



Table 25 Results of “automatic” reprogramming in 1998 (Meuro and % in total variation)ERDF ESF EAGGF FIFG TOTAL

InitialIndex95-98

Variation Initial

Index95-98

Variation Initial

Index95-98

Variation Initial

Index95-98

Variation Initial

Index95-98

Variation Final

Variation (%)

PO M.L. FORMAZIONE ITALIANI ALL'ESTERO 20 4 4 20 4 4 28 40,0PO SOSTEGNO PROD. ORTOFRUTTICOLI 4 4 4 newSFOP PESCA ACQUACOLTURA 233 6 233 6 239 2,5PO PATTI TERRITORIALI 106 11 21 1 22 118 140 newPO INDUSTRIA E SERVIZI 2555 11 69 38 2593 11 69 2673 3,1PO SICUREZZA SVILUPPO DEL MEZZOGIORNO 72 24 72 24 95 newPO M.L. EMERGENZA OCCUPAZIONE SUD 356 -15 356 -15 341 -4,2PO M.L. FORMAZIONE FORMATORI 184 -26 184 -26 158 -14,1PO PARCO PROGETTI 52 52 52 newP.O. RISORSE IDRICHE 871 -65 871 -65 806 -7,5PO MPI SCUOLA 40 46 214 41 254 46 41 341 34,2PO TELECOMUNICAZIONI 377 377 377PO FERROVIE 701 90 701 90 791 12,8PO INFRASTRUTTURE AEROPORTUALI 5 8 42 5 8 42 55 1000,0PO SVILUPPO/VALORIZ. TURISMO 130 -17 130 -17 113 -13,0SG PARCHI LETTERARI 18 18 18PO RICERCA E SVILUPPO TECNOLOGICO 600 184 37 784 37 821 4,7PO PROTEZIONE CIVILE 60 33 60 33 93 newASSISTENZA TECNICA 1994-1999 (CE) 1 1 1 1 2 70,0total multiregional 5297 286 193 996 56 52 26 233 7 6526 375 245 7146 9,5POP Abruzzo 107 15 44 151 15 166 10,0POM Abruzzo 84 10 84 10 94 11,9POP Basilicata 227 29 21 141 30 215 583 29 51 663 13,7POP Campania 769 328 -69 289 10 1386 10 -69 1327 -4,3POP Calabria 406 174 -6 580 -6 574 -1,0POP Molise 124 10 48 6 120 292 16 308 5,5POP Puglia 537 285 -8 326 1148 -8 1140 -0,7POP Sardegna 415 220 -7 333 967 -7 961 -0,7POP Sicilia 558 157 427 -6 352 1337 151 1488 11,3SG AREA DI CRISI DI GIOIA TAURO 15 5 0 15 5 0 20 33,4total regional 3158 49 188 1667 -60 1719 20 6544 69 128 6741 3,0Residuals form the original CSF 373 -373 373 -373 0 -100,0“Earthquake” refunds 100 100 -TOTAL CSF 9660 335 8 2719 52 -12 2066 45 233 7 14860 544 0 15404 3,7 Source: ISMERI EUROPA elaboration on Treasury data (Structural fund services)



The 1998 reprogramming was the most important reallocation of resources, which took placeduring the implementation of 1994-99. It included the distribution of the resources that camefrom the 1995-98 indexisation (544 meuro of structural funds) and the residuals of the CSFinitial programming (373 Meuro of structural funds); in addition to these previously notallocated resources the reprogramming included about 800 Meuro of structural funds.

In 1998 reprogramming benefited multi-regional programmes, which increased their funds by9,5% with respect to initial programming; regional programmes increased funds by 3%,which was less than the global increase of 3,5%

At multi-regional level 4 new programmes were funded with this reprogramming (territorialpact OP, security OP, agriculture support OP, Project stock OP) and the financing of airportOP grew tenfold (from 5 Meuro to 55 Meuro of structural funds). Other multi-regionalprogrammes (school OP, R&D OP, training for emigrants OP, rail OP) appreciably increasedtheir resources, while employment emergency OP, water infrastructures OP and tourism OPdecreased them. These last programmes encountered several implementing problems andshowed that they were not based on very solid programming. In addition, these programmesoperated in fields where the greater part of administrative responsibilities were still regionaland the projecting and coordination capabilities of the Ministry were weak.

At regional level, Campania, Puglia, Calabria and Sardegna lost resources, while Sicily,Abruzzo, Basilicata and Molise increased them. Basilicata, Abruzzo and Molise weregenerally rewarded for their previous good performance in spending, while resources to Sicilywere devoted to funding two new measures ( the Palermo-Messina highway and urbanrecovery in crisis areas). Campania was most penalised, but the territorial shift of ESF waslimited moving its funds to the Ministry of University (R&D OP) and requesting it to investthe same resources in the universities in Campania.

In this reprogramming 100 Meuro of the structural fund was devoted to territories that do notbelong to objective 1, but which had been seriously damaged by an earthquake in 1997.

Finally it is important to underline the differentiated distribution of indexisation funds. It wasnot a compensation for inflation, but a tool for a new programming. As we noted before, itbenefited the programmes with greater absorption capability and some new initiatives.

After 1998 other reprogramming moments among OPs took place and followed the guidelinesof the automatic method. They were used as a fine tuning instrument by the CSF towards theclosure of the commitments in 1999, but were small and less important than the ones in 1998.

2.2.4.3. Main changes in the initial strategy

The reprogramming functioned more as a financial adjustment than as strategicadjustment; for this reason often financial priorities influenced the reprogramming choiceswith little attention paid to the local needs and the economic effects of the planningvariations.



Within this general context, some interesting considerations are prompted by the analyses:- reprogramming among measures of the same programme was very frequent and

diffused. This kind of reprogramming highlighted the limited quality of the initialprogramming; it contributed to the achievement of good levels of expenditure, butstrongly affected the content and the strategic value of each measure

- reprogramming among OPs revealed a slightly better functioning of multi-regionalinterventions with respect to regional interventions; the former received funds from thelatter

- within the two groups (regional, multiregional) programmes performed verydifferently: in both groups some programmes benefited and some others lost resourcesin relation to their performance,

The “automatic” reprogramming methods adopted by national authorities supported thetransfer of resources between programmes and strongly contributed to the reasonably goodfinancial results of the 1994-99 period. It was also an important example of partnershipand governance capability in this programming period.

The reprogramming influenced the initial allocation of resources in a limited way. Thevariations in the weight of the axes is not relevant, but it indicates some difficulties inimplementing (i.e. human resources, water, environment) and some areas of existingdemand for intervention (urban communications, local development) which were notconsidered properly in the initial programming.

The reprogramming reduced the internal coherence of the programmes, either because the“sponda” projects were not always perfect substituted of the planned interventions orbecause the allocation of resources between sub-axes and measures changed substantially.Some examples can help to assess this question: continuing training and system reinforcingwere strongly reduced favouring vocational training; water infrastructures reduced theirweight and environmental infrastructures increased their weight. The more complex andinnovative measures were generally penalised by the reprogramming.

The overall modification between regional and multi-regional interventions is limited(2,5% of the total public resources from regional to multi-regional frameworks), the variationswithin each axis are not significant, with the exception of human resources, which increasedthe relevance of multiregional interventions in the measure by 6%.

Multi-regional interventions increased their relevance with respect to regional interventions inall the axes, with the exceptions of tourism and technical assistance. Within each axes themost relevant changes in the sub-axes concerned:- grants for business services (reduction of 22% at multi-regional level and a consequent

equal increase at regional level);- Local development and crisis areas (augmentation of 24% at multi-regional level);- Energy (augmentation of 12% at multi-regional level)- Environment (augmentation of 17% at multi-regional level)- Training (augmentation of 3% in continuous training and training for unemployed at

multi-regional level and increase of 19% in training structures, always at multi-regionallevel)



Among regions, Campania lost the biggest share of public resources (-1,3% on total CSF) andBasilicata gained the largest share (+0,3%). The changes in the allocation of resources withineach axis were not relevant at regional level, but they were important in some sub-axes:- Other transports (increased relevance in Sardegna)- Business services (increased relevance in Calabria, Basilicata and Puglia and reduced

relevance in Campania);- Industrial areas (increased relevance in Basilicata and reduced relevance in Calabria)- On-going measures in agriculture (increased relevance in Basilicata, Campania and Sicilia

and reduced relevance in Calabria)- Energy (strong reduction of importance in Sardegna)- Environment (considerable reduction of relevance in Campania and Sicily)- Training (considerable reductions in Campania for training and in Puglia for training

structures).

The reprogramming introduced limited modifications in the structure of the priority axes ofthe initial CSF (see next table). The principal modification concerned the industry axis, whichincreased its weight by 1,2% with respect to the initial CSF; the main reductions occurred inagricultural development, human resources and, moreover, in economic infrastructures(reduced role of Water, R&D and Energy sub-axes). The Communications axis too increasedits relevance (+0.5%) because of the increased investments in rail and other transports.

The changes in the hierarchy of the priority axes at multi-regional and regional levels did notmodify their initial preferences, but requested important adjustments: at multi-regional levelthe strongest variation took place in economic infrastructures (-1,4%, with –2% in water) andin industry (+2%, with 1% in grants for industry and 3% in local development). At regionallevel the following became evident:- a considerable increases in communications (+1,4% in total), which was shared by all the

regions with the exception of Abruzzo;- the decrease of industry (-1,2%), but with very differentiated regional behaviour;- the increase in agriculture (+0,9%), specially based on the enlargement of the “agriculture

resources and infrastructures” sub-axis;- the considerable reduction of human resources (-1,3%), diffused in all the regions with the

exception of Basilicata.

The pergentage variation of the resources allocated in the axes14 (see next table) permits toidentify the most important modifications of initial plans. The reprogramming benefited: Railand other transport (specially local transport); grants for industry and local development-crisisareas; agriculture resources and infrastructures; environmental infrastructures; education andvocational training and training structures. At the same time, the reprogramming penalised:telecommunications; grants for business services and industrial areas; rural development andon-going measures in agriculture; water and energy infrastructures; continuing training andinclusion of unemployment.

14 The varion is calculated at current prices in order to avoid the influence of indexisation.



Table 26 The reprogramming and the modification in the allocation of total public resources by axisReprogramming Allocation of resources in the CSF

Axes and sub-axesReprogramming rate on

3 periodsReprogramming rate final-

initialPublic resources by axis

in 1994 (%)Public resources by axis

in 1999 (%)Variation 1999 on 1994

(current prices, %)1 COMMUNICATIONS 101,5 37,7 12,9 13,4 7,21.1 Road and highway 55,3 26,4 5,6 5,5 3,01.2 Rail 165,8 47,9 4,4 4,8 12,91.3 Other transports 80,5 62,1 1,3 1,6 27,51.4 Telecommunications 84,8 35,4 1,7 1,4 -9,92 INDUSTRY 33,2 17,2 28,8 30,0 7,82.1 Grants for industry 21,3 6,6 19,0 20,4 11,02.2 Grants for handicraft 101,8 48,5 2,3 2,4 5,82.3 Grants for busin. Services 92,9 52,5 2,1 0,7 -64,22.4 Local devel. - crisis areas 62,4 40,9 4,2 5,4 33,82.5 Industrial and handicraft areas 25,9 26,6 1,2 1,1 -6,53 TOURISM 29,6 27,7 6,6 6,3 -0,83.1 Grants for tourist investments 34,6 29,7 2,3 2,3 1,23.2 Devel, of tourist resources 26,9 26,7 4,3 4,0 -1,84. AGRIC. - RURAL DEVEL. 64,9 54,0 14,1 13,8 1,64.1 Agric. resources and infrastr. 65,2 52,5 4,7 5,0 9,34.2 Rural development 90,7 84,1 2,9 2,6 -5,34.3 Services in agriculture 59,4 48,8 1,9 1,9 1,04.4 Objective 5a 52,7 42,4 3,5 3,4 -0,54.5 On going measures 50,8 38,9 1,0 0,9 -7,05 FISHING 113,3 55,3 1,7 1,7 7,16. ECON. INFRASTRUCT. 59,0 45,2 23,4 22,6 0,36.1 Water 54,8 44,7 8,9 8,1 -5,66.2 Energy 109,0 35,8 2,2 1,7 -19,36.3 Environment 53,0 45,7 5,3 6,3 23,96.4 R&TD 60,0 51,4 6,4 6,0 -4,06.5 Infrastructures for health 25,9 22,1 0,6 0,5 -1,47. HUMAN RESOURCES 67,2 57,3 12,1 11,7 0,07.1 education and initial training 99,3 70,6 1,7 2,1 26,27.2 Inclusion of unemployment 58,9 47,5 7,7 7,0 -6,67.3 Continuing training 49,1 76,5 1,1 1,0 -4,17.4 PA and systems reinforcement 87,0 100,8 1,1 0,9 -18,57.5 Training structures 103,2 65,0 0,5 0,8 65,48 TECHNICAL ASSISTANCE 62,3 52,0 0,5 0,5 -4,8TOTAL 57,3 37,5 100,0 100,0 3,5Source: ISMERI EUROPA elaboration on Treasury data (structural funds services)



The shares of public resources devoted to different policy instruments did not change a lot inthe reprogramming. Grants remained about 39% of total public resources and public worksincreased from 35% to 39%. R&TD and “know-how” actions decreased from 5,8% to 4,6%.Other instruments maintained their weights: about 15% training and employment actions andabout 2,5% territorial stimulation and development service.

There was a direct correlation between financial modifications and implementationdifficulties or progresses. The allocation of resources among axes and different instrumentsdid not change radically, also because the large utilisation of national funded projectspreserved the initial financial targets.

However, there were some important effects on the overall strategy, that was “simplified”and some objectives and typologies of intervention were abandoned or strongly reduced(specially in the ESF programmes). The modifications of the plans moved the resourcestowards the less innovative and more experimented interventions, but also filled some gapsin the definition of the initial targets (for example, in the employment policy the initialallocation of resources did not reflected the effective implementing capability and in thecommunications axis local transports, airports and harbours were not sufficientlyinvolved).

2.2.4.4. The CSF leverage effects on private funds

It is difficult to estimate the leverage effects of the CSF on private funds because thecontributions of some public (or ex-public) companies such as Telecom, FS, Enel areconsidered as coming from private funds and because the estimation of private resources in“Industry” OP was not taken into account; this programme was based on incentives forinvestments and hence had the largest amount of private funds.

The funds of the large companies mentioned before were equal to about 40% of the totalprivate resources in December 1999, but it is important to remember that for many aspects(ownership, decision-making mechanism, aims, appointing of management, etc.) they werestill public. For this reason these funds should be detracted from the total CSF privatecontribution. Consequently the level of the initial private contributions falls from 22% to 13%of the total cost (from 32% to 19% considering private contributions in the most importantaid-schemes).

An further estimation on the private contribution in Industry OP was carried out usinginformation from the completed measures. Where this data was not available eligiblecontribution was taken into account. The result of this estimation can be seen in the rightcolumns of the table below.



Table 27 Leverage effect on private funds: initial and finale private financing on total cost(%)

Official CSF

ISMERI estimation(with law 488 private

resources)Priority axes Initial CSF Final CSF Initial CSF Final CSF

1 COMMUNICATIONS 37,6 36,4 38,4 39,02 INDUSTRY 28,9 9,6 50,0 49,03 TOURISM 21,3 27,6 27,6 26,94. AGRIC. - RURAL DEVELOPMENT 18,5 20,5 17,9 21,25 FISHING 16,9 12,2 19,7 15,36. ECON. INFRASTRUCTURES 12,9 13,6 15,0 10,17. HUMAN RESOURCES 4,4 1,9 4,4 2,7TOTAL CSF 22,4 17,3 32,2 31,7Total CSF – without public companies 13,2 10,2 19,0 18,9Source: ISMERI EUROPA elaboration in treasury data (Structural service and IGRUE).

In general, private contributions decreased from the initial to the final programming, but inboth calculations they were more relevant than in the previous 1989-93 period when theyamounted to only 9% of the total cost.

With the exception of the semi-public companies previously mentioned, it is necessary tohighlight the great difficulty of involving private capital in infrastructure construction; ithardly influenced the water sectors, where project financing was one of the mainobjectives, nor roads or some environmental infrastructures, which could be financed byenterprise consortia (water depuration and waste disposal for industrial scopes).

2.3. ASSESSMENT OF GEOGRAPHICAL SPREAD

The geographical allocation of resources did not follow the shares of population detained byeach region. Abruzzo was penalised because of its higher level of income and its next exitfrom objective 1. Molise and Basilicata received tree times the resources of other regionsbecause their small dimensions, when large regions (Campania, Puglia, Sicilia) received inthe regional sub-frameworks about 500 euro per inhabitant.

Table 28 Distribution of the CSF public resources by region (sub-frameworks, finalprogramming, euro)

Public resources(Final CSF - Meuro 1999)

Population in 1994(thousands)

Public resources per capita(.000 euro)

Abruzzo 443 1265 350Molise 505 332 1521Campania 2415 5726 422Puglia 2058 4070 506Basilicata 1097 610 1798Calabria 1472 2079 708Sardegna 1590 1658 959Sicilia 2569 5056 508Multiregional 13922 15740 884Total 26072 15740 1656Source: ISMERI EUROPA elaboration on Treasury data (structural funds services) and SVIMEZ data.



The concentration of resources in the small regions was justified by their previouscapability of expenditure, their limited capacity in utilising resources in multiregionalprogrammes and by the necessity of defining programmes with a decisive amount ofresources. The effects of this concentration of resources were sensible and small regionsgenerally recorded better performance (see then in the chapter on impact).

No detailed information is available on the expenditure of multiregional programmes in eachregion. In the case studies where some information was available (Industry and R&D) aconcentration of funds in the more industrialised areas (in Campania, Puglia) is evident. Thispolarisation of the incentives is a physiologic result of their demand and can, probably,support local synergies and multiplier effects.

The concentration of infrastructures is more dependent on public choice and, in many cases, isoriented to develop a local demand. The strategy in the transport programmes tended toreinforce the Tyrrenic axis, more than the Adriatic one. This orientation derived from manyjoined factors: strategic addresses of TEN, more evident infrastructural gaps and necessity ofrenewal existing infrastructures, a larger and increasing demand. On the Tyrrenic axis theconcentration of population is also superior then in the Adriatic axis, and it suggests a limitedeffects of the amount transport investments on territorial development.

2.4. CONCLUSION ON APPROPRIATENESS OF STRATEGY

The difficult programming context. The CSF as a bridge between different phases ofnational regional policy

The CSF tried to integrate the European programming with the national regional policies.This last exercise was difficult because of the concurrent changes in internal andinternational macroeconomic trends at the beginning of the 1990s and because of therecent drastic transformations in national regional policy.

In these difficult conditions, the CSF managed to move the regional planning from the old“intervento straordinario” to the new policy for the “depressed areas”. The strategies weredefined in a new institutional framework and the allocation of resources was devoted toinstruments that had never been experimented before. Both these challenges weresuccessful because the CSF was completed without great loss of resources.

The strategies adopted were appropriate to national needs, but insufficient to activate adevelopment process.

The CSF strategies addressed all the principal disparities of the Italian objective1 regions,but did this facing single problems (i.e. roads, industrial fabric, tourism, etc.) withoutadopting a general view of the development model necessary for the objective 1 regions.

This sectoral approach is in large part the result of sectoral programming, based on theneeds selected by each single administration without explicating the possible interrelationsbetween different requests and opportunities. Similarly the integration of the differentinstruments (for example, grants for investment and support to business services, orchanges in cultures and improvement of farms) is based on unclear hypotheses of theirefficiency.



The strategies were focused on private investment, but the effect on generalcompetitiveness of objective 1 regions was limited.

In brief, the principal rational of the CSF was to guarantee direct support to localenterprise, and by means of these transfers increase investment, productivity,competitiveness and employment. The infrastructure endowment was largely devoted tonational policy, with the exception of water and telecommunications to which the CSFdedicated significant resources. Attracting foreign investments became less relevant withrespect to previous strategies.

The recent trends in productivity and growth of objective 1 regions do not indicate asuccess of this strategy. The strong support to private investments alone did not lead areduction of the gap in productivity compared to Centre-northern regions or appreciablydecrease unemployment. Some local improvements did occur, but were restricted to SMEclusters and small industrial districts. Their dimension is still too small to influence themacroeconomic conditions of objective 1 regions.

The necessity of a more integrated approach to territorial infrastructure endowment.

Transport is a good example of this necessity: transport investments were divided into 3different operational programmes and one large project, in addition to many regionalmeasures. In this way the integration of the transport network and the necessaryinterventions on its knots were not addressed in a co-ordinated way.

Similar problems occurred between multi-regional and regional interventions (overlappingof investment grants, weak integration in water resources) and within regionalprogrammes. These programmes replicated the CSF sectoral approach either in the initialplans or in the management, avoiding cross-fertilisation and synergies.

Infrastructures were greatly affected by this difficulty which resulted in the fragmentationof the initiatives and the absence of a critical dimension of their results.

Things omitted: the territories, the institutions, the new market opening.

The characteristics of the territory were not considered in the initial programming. Theterritory still remained a neutral base on which to impose productive activity. Only atregional level did some preferences in programming indicate some attention to localvocations and priorities.

The managing capability and the role of the administrations was not specified in the CSF,despite the weak performance in the 1989-93 period. The administrative responsibilitiesguided the distribution of tasks and resources, without a clear definition of the necessaryimprovements in organisation and management.

The objective 1 regions were experiencing new conditions (unique markets, less attentionfrom the central-northern regions, the approaching “Euro”, increasing internationalcompetition from southern European countries and imminent new entries into the EU)which did not find sufficient echoes in the CSF strategies. Some of these events were new



or imminent, but they would have changed the development prospects of objective 1regions.

The underestimation of these problems weakened the programming strategies focusing theinterventions only on immediate needs (economic crisis of 1993, reduction of traditionalsupport to employment, etc.) without facing the more general development perspective.

The strategies were not always directly viable. The CSF is an isolated exercise ofprogramming in regional policy.

In many cases the lack of a sufficient number of feasible projects or the complexity of theimplementing procedures affected the original programming negatively (specially, but notonly, in water resources and environment).

Insufficient preparation (little involvement of actors and administrations, no surveys onexisting and feasible projects, no clear idea of the territorial demands, etc.), the necessity todefine new procedures for the new regional policy and for public works (“Merloni” law)and the weakness of the national sectoral and regional programming were the mainreasons of this shortcoming. The limits of the national programming were also recognisedby national authorities in the document “Mid-term review objective 1 1994-99 CSF”(Ministry of Treasury, March 1998).

CSF and the Operational Programmes were, and still are, the only real programmingexercises of development policy in the objective 1 regions. From its isolated condition someweak points of the CSF came to the surface, but it also revealed a great relevance whichbenefited from the increasing available resources in 1994.

Reprogramming as an instrument for financial absorption

Reprogramming was frequent and considerable either between measures of the sameprogrammes or between different programmes. Recurrent inclusion of national fundedprojects in CSF programmes and reprogramming were fundamental tools to increaseabsorption.

An automatic mechanism, similar to the rules of the new structural fund reform, guided thereprogramming between OPs at CSF level. The mechanism was a best practice for itsefficiency and for its administrative and institutional partnerships.

Reprogramming did not change the original strategies significantly. At national level somerelative small changes occurred in favour of the multi-regional programmes and the axeswith greater financial absorbing capacity (industry and communications); at regional levelchanges were slightly more important, but not dramatic and always ruled by financialoptions.

Innovations in on-going adjustments

Strategic problems were not managed with the same attention on financial absorption, andoften they were abandoned after the initial programming. Notwithstanding this generalorientation, some important innovations characterized the modifications of the initial plan.



In particular it is necessary to mention the creation of new OPs (security OP, territorialpacts OP, project stock OP) and new initiatives within existing OPs (youth inclusion andequal opportunity in “employment emergency” OP) devoted to broaden the concept ofdevelopment policy and experiment new instruments. In this way the CSF partiallymanaged to accompany the on going transformations in regional policy and in its actors.

The initial innovation planned in the CSF did not work: business services, continuoustraining, financial engineering, project financing of infrastructures and other innovativeinitiatives were reduced in financial and strategic terms. Managing difficulties, lack ofinnovative culture in the administration and poor knowledge of the existing demand werethe most frequent causes of these failures.

The CSF macro-economic relevance

CSF support was relevant in macroeconomic terms; its total annual expenditure was about1,3% of the total objective 1 internal demand, with a peak of 2,1% in 2001. With regard tothe pure investment component15 the CSF annual expenditure represented about 5% of thetotal objective 1 investments (8,4% in the 2001).

The deadweight of this expenditure was generally high: in grants for investments it reached80-85%16 of total interventions and in public works was affected by the introduction of alarge number of similar national funded projects, which reduced the added contribution ofCSF. The deadweight was limited in training.

Consequently, the CSF multiplying effects did not influence the objective 1 competitivetrends, which are still insufficient. The relevant financial transfer to objective 1 enterprisescontributed to reinforce some SME clusters and supported some large productiveinvestments, but did not launch a development process.

15 The investment component of the CSF considers only private investments and public works; training andexpenditure for services are considered current expenditure.16 Ministry of Industry “Survey on law 488/92”, in “Analysis of the national aid-schemes”; 2000.



ANNEX TO CHAPTER 2 – FINANCIAL TABLES



Table A.3.1. Initial objective 1 1994-99 CSF for Italy (Meuro, 1994)PUBLIC FUNDS

EUROPEAN FUNDS CONTRIBUTION NATIONAL CONTRIBUTIONS PER STR.FUNDS

PRIORITY AXESTOTALCOST

TOTALPUBLICFUNDS TOTAL ERDF ESF EAGGF FIFG TOTAL ERDF ESF EAGGF FIFG

PRIVATEFUNDS

1 COMMUNICATIONS 5.213,9 3.254,8 2.159,6 2.159,6 1.095,2 1.095,2 1.959,11.1 Roads and highways 1.501,1 1.401,1 707,7 707,7 693,4 693,4 100,01.2 Rail 2.158,5 1.102,4 881,5 881,5 220,9 220,9 1.056,11.3 Other transports 360,0 333,4 152,4 152,4 181,0 181,0 26,71.4 Telecommunications 1.194,3 418,0 418,0 418,0 776,32 INDUSTRY 10.197,8 7.253,8 3.707,5 3.557,2 150,3 3.546,3 3.482,2 64,1 2.944,02.1 Grants for industry 6.748,7 4.788,4 2.437,3 2.287,0 150,3 2.351,1 2.287,0 64,1 1.960,32.2 Grants for handicraft 917,8 586,8 293,4 293,4 293,4 293,4 331,02.3 Grants for busin. Services 761,1 523,4 261,7 261,7 261,7 261,7 237,72.4 Local devel. - crisis areas 1.474,2 1.059,2 567,1 567,1 492,1 492,1 415,02.5 Industrial and handicraft areas 296,0 296,0 148,0 148,0 148,0 148,03 TOURISM 2.107,1 1.659,0 862,1 774,6 87,5 796,9 759,6 37,3 448,13.1 Grants for tourist investments 984,0 584,2 324,7 237,2 87,5 259,5 222,2 37,3 399,83.2 Devel, of tourist resources 1.123,0 1.074,8 537,4 537,4 537,4 537,4 48,24. AGRIC. - RURAL DEVEL. 4.351,0 3.547,6 2.340,7 55,0 57,7 2.228,0 1.206,9 51,7 24,5 1.130,6 803,44.1 Agric. resources and infrastr. 1.588,7 1.193,9 841,2 39,0 57,7 744,5 352,7 39,0 24,5 289,2 394,84.2 Rural development 823,5 725,9 452,5 16,0 436,5 273,4 12,7 260,7 97,54.3 Services in agriculture 497,0 484,6 309,8 309,8 174,8 174,8 12,44.4 Objective 5a 1.137,4 890,3 594,9 594,9 295,3 295,3 247,24.5 On-going measures 304,4 252,9 142,2 142,2 110,7 110,7 51,55 FISHING 500,4 415,9 257,4 24,4 233,0 158,5 10,5 148,0 84,56. ECON. INFRASTRUCT. 6.755,2 5.883,6 3.235,9 2.992,5 243,4 2.647,7 2.543,7 104,0 871,66.1 Water 2.238,4 2.238,4 1.119,2 1.119,2 1.119,2 1.119,26.2 Energy 1.167,1 556,2 312,2 312,2 244,0 244,0 610,96.3 Environment 1.527,5 1.327,5 748,0 652,5 95,5 579,5 538,8 40,7 200,06.4 R&TD 1.680,5 1.619,8 975,1 864,1 111,0 644,7 597,2 47,5 60,76.5 Infrastructures for health 141,8 141,8 81,4 44,5 36,9 60,4 44,5 15,87. HUMAN RESOURCES 3.187,9 3.047,0 2.209,1 61,4 2.147,7 837,9 61,4 776,4 140,97.1 Education and initial training 425,7 425,7 298,0 298,0 127,7 127,77.2 Inclusion of unemployment 2.022,0 1.949,1 1.417,2 1.417,2 531,9 531,9 72,97.3 Continuing training 343,0 275,0 240,5 240,5 34,5 34,5 68,07.4 PA and systems reinforcement 274,3 274,3 192,0 192,0 82,3 82,37.5 Training structures 122,9 122,9 61,4 61,4 61,4 61,48 TECHNICAL ASSISTANCE 125,2 125,2 87,7 59,7 28,0 37,6 25,6 12,0TOTAL 32.438,6 25.187,0 14.860,0 9.660,0 2.739,0 2.228,0 233,0 10.327,0 8.019,5 1.028,9 1.130,6 148,0 7.251,6Source: Ministry of Treasury (Structural Funds Service)



Table A.3.2 Initial objective 1 1994-99 CSF for Italy (Meuro, 1999)PUBLIC FUNDS

TOTALCOST

TOTALPUBLIC TOTAL ERDF ESF EAGGF FIFG TOTAL ERDF ESF EAGGF FIFG

PRIVATEFUNDS

1 COMMUNICATIONS 5.681,6 3.546,8 2.353,3 2.353,3 1.193,5 1.193,5 2.134,81.1 Roads and highways 1.635,7 1.526,8 771,2 771,2 755,6 755,6 109,01.2 Rail 2.352,1 1.201,2 960,6 960,6 240,7 240,7 1.150,91.3 Other transports 392,3 363,3 166,1 166,1 197,2 197,2 29,11.4 Telecommunications 1.301,4 455,5 455,5 455,5 845,92 INDUSTRY 11.112,6 7.904,6 4.040,1 3.876,3 163,8 3.864,5 3.794,6 69,9 3.208,12.1 Grants for industry 7.354,1 5.218,0 2.655,9 2.492,2 163,8 2.562,0 2.492,2 69,9 2.136,12.2 Grants for handicraft 1.000,1 639,4 319,7 319,7 319,7 319,7 360,62.3 Grants for busin. Services 829,4 570,4 285,2 285,2 285,2 285,2 259,12.4 Local devel. – crisis areas 1.606,5 1.154,2 618,0 618,0 536,2 536,2 452,22.5 Industrial and hand. areas 322,6 322,6 161,3 161,3 161,3 161,33 TOURISM 2.296,1 1.807,8 939,4 844,1 95,3 868,4 827,7 40,7 488,33.1 Grants for tourist investments 1.072,3 636,6 353,8 258,5 95,3 282,8 242,1 40,7 435,73.2 Devel, of tourist resources 1.223,8 1.171,2 585,6 585,6 585,6 585,6 52,64. AGRIC. - RURAL DEVEL. 4.741,4 3.865,8 2.550,7 59,9 62,9 2.427,9 1.315,2 56,4 26,7 1.232,1 875,54.1 Agric. resources and infrastr. 1.731,2 1.301,1 916,7 42,5 62,9 811,3 384,4 42,5 26,7 315,1 430,24.2 Rural development 897,3 791,1 493,1 17,4 475,7 297,9 13,9 284,1 106,34.3 Services in agriculture 541,6 528,1 337,6 337,6 190,5 190,5 13,64.4 Objective 5a 1.239,5 970,1 648,3 648,3 321,8 321,8 269,34.5 On-going measures 331,7 275,5 154,9 154,9 120,6 120,6 56,25 FISHING 545,3 453,2 280,5 26,6 253,9 172,7 11,4 161,3 92,16. ECON. INFRASTRUCT. 7.361,2 6.411,5 3.526,2 3.261,0 265,2 2.885,2 2.771,9 113,3 949,76.1 Water 2.439,2 2.439,2 1.219,6 1.219,6 1.219,6 1.219,66.2 Energy 1.271,8 606,1 340,2 340,2 265,9 265,9 665,76.3 Environment 1.664,5 1.446,5 815,1 711,0 104,1 631,4 587,1 44,3 217,96.4 R&TD 1.831,2 1.765,1 1.062,6 941,6 121,0 702,5 650,8 51,7 66,16.5 Infrastructures for health 154,5 154,5 88,7 48,5 40,2 65,8 48,5 17,27. HUMAN RESOURCES 3.473,9 3.320,4 2.407,3 67,0 2.340,4 913,0 67,0 846,1 153,57.1 Education and initial training 463,9 463,9 324,7 324,7 139,2 139,27.2 Inclusion of unemployment 2.203,4 2.124,0 1.544,3 1.544,3 579,7 579,7 79,47.3 Continuing training 373,8 299,7 262,1 262,1 37,6 37,6 74,17.4 PA and systems reinf. 298,9 298,9 209,2 209,2 89,7 89,77.5 Training structures 133,9 133,9 67,0 67,0 67,0 67,08 TECH. ASSISTANCE 136,5 136,5 95,5 65,0 30,5 40,9 27,9 13,1TOTAL 35.348,5 27.446,5 16.193,1 10.526,6 2.984,7 2.427,9 253,9 11.253,4 8.738,9 1.121,2 1.232,1 161,3 7.902,1Source: Ministry of Treasury (Structural Funds Service)



Table A.3.3. Distribution of public resources within each regional and multi-regional sub-frameworks.MULTIREGIONAL TOTAL REGIONAL ABRUZZO BASILICATA CALABRIA CAMPANIA MOLISE PUGLIA SARDEGNA SICILIA

1 COMMUNICATIONS 13,5 12,4 15,2 6,5 6,3 12,6 18,8 8,8 23,2 12,31.1 Road and highway 3,9 7,3 0,0 6,5 4,8 5,3 13,7 1,6 21,4 6,91.2 Rail 5,5 3,2 0,0 0,0 0,0 5,5 0,5 5,3 0,0 5,31.3 Other transports 0,9 1,8 15,2 0,0 1,5 1,9 4,6 1,9 1,8 0,01.4 Telecommunications 3,3 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,02 INDUSTRY 42,8 14,3 11,2 14,2 17,9 17,0 7,1 15,2 8,5 14,32.1 Grants for industry 35,2 2,3 1,0 2,9 3,8 1,4 1,2 1,7 4,4 1,62.2 Grants for handicraft 2,1 2,6 0,0 2,7 2,9 3,1 5,4 2,5 2,9 1,52.3 Grants for busin. Services 2,5 1,6 4,1 2,1 0,7 2,0 0,4 2,3 0,7 1,52.4 Local devel. - crisis areas 3,0 5,5 1,5 4,3 6,6 7,1 0,0 6,4 0,5 7,52.5 Industrial and handicraft areas 0,0 2,4 4,6 2,1 4,0 3,4 0,0 2,3 0,0 2,23 TOURISM 2,3 11,0 19,5 14,0 19,5 10,1 8,4 9,5 3,4 10,83.1 grants for tourist investments 0,3 4,4 5,3 8,0 8,7 4,1 1,3 2,6 3,4 3,43.2 Devel, of tourist resources 2,0 6,6 14,2 6,0 10,8 6,0 7,1 6,9 0,0 7,54. AGRIC. - RURAL DEVEL. 2,5 26,1 32,9 33,4 26,3 19,8 38,6 26,4 31,2 23,04.1 Agric. resources and infrastr. 0,7 8,9 9,2 9,2 6,5 13,8 7,0 5,4 16,1 4,14.2 Rural development 0,0 5,9 4,0 5,6 8,7 1,9 13,7 7,3 5,5 6,34.3 Services in agriculture 1,8 2,0 5,8 1,6 0,3 0,8 5,0 4,8 0,0 2,54.4 Objective 5a 0,0 7,2 10,1 15,3 5,2 2,9 12,0 5,6 8,9 8,54.5 On going measures 0,0 2,0 3,8 1,6 5,6 0,4 0,9 3,3 0,7 1,65 FISHING 3,0 0,3 0,0 0,1 0,1 0,5 0,0 0,2 0,6 0,26. ECON. INFRASTRUCT. 25,3 21,3 9,9 17,3 16,3 26,4 17,5 24,6 19,1 21,86.1 Water 13,6 4,0 0,0 3,8 3,0 4,5 5,4 6,2 1,2 4,56.2 Energy 2,2 2,2 0,0 0,5 1,6 1,3 0,0 2,8 7,0 1,56.3 Environment 0,6 10,1 5,1 3,2 7,4 16,5 7,5 11,2 5,3 11,06.4 R&TD 8,9 3,9 4,9 4,8 2,5 3,9 4,2 2,9 4,3 4,56.5 Infrastructures for health 0,0 1,1 0,0 5,1 1,8 0,1 0,5 1,5 1,3 0,37. HUMAN RESOURCES 10,0 14,3 10,9 13,9 13,3 13,2 9,3 15,1 13,7 17,27.1 education and initial training 3,3 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,07.2 Inclusion of unemployment 3,2 12,4 9,1 11,7 11,6 10,9 7,7 12,1 12,0 16,57.3 Continuing training 0,7 1,5 1,8 1,7 0,8 2,3 1,6 1,9 1,6 0,67.4 PA and systems reinforcement 2,1 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,07.5 Training structures 0,6 0,3 0,0 0,5 0,9 0,0 0,0 1,2 0,0 0,08 TECHNICAL ASSISTANCE 0,6 0,4 0,4 0,6 0,4 0,3 0,3 0,2 0,4 0,4TOTAL 100,0 100,0 100,0 100,0 100,0 100,0 100,0 100,0 100,0 100,0Source: Ministry of Treasury (Structural Funds Service)



Table A.3.4. Financial progress of Global grants.Commitmentson total cost

(%)Payments ontotal cost (%)

% of total coston CSF total

costS.G. ZOOTECNIA (CAMPANIA) 100,0 7,7 0,2S.G."PROG.B.I.C.I.BUSIN.INN.COOP.INDUSTRIES" 69,9 14,7 0,1S.G.AREA DI CRISI BRINDISI (PUGLIA) 104,3 26,5 0,2S.G.PER LA COOP. TRA PMI NEL MEZZOGIORNO 74,5 47,3 0,01S.G. AREA DI CRISI DI TARANTO (PUGLIA) 90,3 60,9 0,1S.G. AREA DI CRISI DI SIRACUSA (SI) 122,4 64,5 0,1S.G. CENTRO ANTICO NAPOLI (CREDEM) 116,9 66,8 0,1S.G. BIC SICILIA 71,0 70,8 0,1S.G. OASIS ORCHESTRARE AZIONI SVILUPPO PMI 100,0 81,2 0,1S.G. "PROGETTO CARTESIO" 87,2 81,2 0,1S.G. AREA DI CRISI DI GELA 100,0 81,5 0,1S.G."PROG.SEPRI-SVIL.RISORSE IMPREN.LOCALI" 130,3 82,6 0,05S.G. BIC BASILICATA 100,0 88,3 0,03S.G. PROGETTO ALIMENTARIA MZ ITALIA 95,0 91,4 0,1S..G. AREA DI CRISI DI CROTONE (CALABRIA) 100,0 95,0 0,2S.G.PER AREA DI CRISI GIOIA TAURO (CL) 109,7 96,7 0,2S.G. PUGLIA (AREA CRISI MANFREDONIA) 100,0 101,1 0,1S.G.CREAZIONE"PARCHI LETTERARI" 127,6 114,4 0,1Total Global grants 102,5 68,3 1,8Total CSF 112,9 94,8 100,0Source: ISMERI EUROPA elaboration on Treasury data (IGRUE)

ISMERI EUROPA - Effectiveness


3. EFFECTIVENESS

The CSF 1994-99 effectiveness evaluation encountered limits in terms of data availability,reliability and significance. Regarding the availability of data, there were no indicators ofresults available, only physical indicators. This generally makes a microeconomic evaluationof a project difficult. But even physical indicators were not available for all the programmes.This incompleteness made data aggregation difficult and has meant that the summaryindicators regarding the programme as a whole are not very reliable.

Furthermore, the comparison between the values programmed and those realised was difficultas the majority of programmes lacked objective indicators. When these indicators do exist,their reliability is doubtful in that they could be referring to a pool of projects which wasradically changed during implementation due to the insertion of “sponda” projects.Sometimes a vast distance was discovered (in terms of both failures and excesses) betweenthe results obtained and the objective which had been programmed. Alternatively, it wasdiscovered in several cases that the value of the programmed objective had been modifiedseveral times following the various re-programmings. This led to an almost perfect matchbetween the objective programmed and what was implemented. Furthermore, only in a fewcases was an estimation produced of the employment impact of the programmes.

For the above reasons, Ismeri Europa’s effectiveness analysis has made great use ofindividual programme/project physical objectives as these were certain to be more reliable.The objectives realised have been concentrated on rather than those programmed. To gain anoverall picture of effectiveness a database of physical indicators for all the regional and multi-regional Operational Programmes was created. Due to the incompleteness of data mentionedabove, the use of the database required care.

The effectiveness analysis follows the succession of seven priority axes of which the 1994-99Italian CSF was composed. The actions financed with the ERDF will be examined first,followed by those financed by the ESF and then by those financed by the EAGGF

3.1. PROGRAMME OUTPUT AND RESULTS

3.1.1. Communications

The first priority axis included actions for the communications system. The priority axisprogrammed actions were aimed at improving and widening the railway and road network,the port and airport systems and the telecommunications network. Generally, each of theseareas for action could be part of centrally managed multi-regional programmes or bymeasures within pluri-funded Operational Programmes under the Communications axis.However, within these fields of action, the priority for the telematics network was onlycarried out within multi-regional programmes, the priority for ports only within regionalprogrammes and with an overall grant, while priorities on the road and rail networks wereimplemented both with multi-regional programmes and within regional OperationalProgrammes.



The main objective behind all of the actions was to bridge the gap in the infrastructure withinthe Italian Objective 1 regions and the rest of the country.

The infrastructura gap applies in almost all areas of the South albeit with varying degrees ofseriousness. The divide in 1997 with respect to the rest of the country is illustrated in the tablewhich follows through a summarised index which refers to various economic and social areas.

Table 29 Infrastructure Endowment in 1997 (Italy=100)Objective 1 Centre-North

Transport 80,4 113,4Communications 76,5 113,5Energy 43,6 133,5Water 46,0 130,6Education 78,8 117,2Health 76,5 113,5Social services 47,7 129,9Sport 63,0 121,2Culture 72,8 115,6Source: Confindustria

As far as the transport sector is concerned, the gap was particularly wide in the road andrailway networks. In terms of motorways, the difference between the North and South wasmore in terms of road quality. The South was also greatly behind in the field oftelecommunication services, although the Community Programmes in the 1989-93 period hadalready led to a reduction in the gap.

In terms of total cost, the Communications sector had absorbed 5784 million Euro, 15,5% oftotal CSF resources. The greater part of this was spent on multi-regional programmes. Withinregional POPs, the Communications priority received relatively less emphasis and wasgenerally around 12%.

The distribution of spending between the various means of communication reflected theObjective 1 regions priorities focusing on the railway system, where the gap is particularlywide.

Table 30 Distribution of expenditure on communications (%)Sub-axes %Railways 41.3Roads 29.1Telecommunications 21.7Other means of transport 7.9TOTAL 100.0Source: ISMERI EUROPA processing of Treasury data

3.1.1.1. Communications- Railways

The highest expenditure on railways was made through multi-regional OperationalProgrammes. The programme was composed of 6 measures:



Table 31 Measures within the railway programMeasures MeuroDouble –track railway 869Underground railway junction 270Variation on layout 190,558Network technology 283,365High speed 417,886Technical assistance 0,7Source: ISMERI EUROPA processing of Treasury data

During re-programming, the only major change was the halving of the resources dedicated tometropolitan junctions and the introduction of Measure 6 relating to the high-speed Rome-Naples line. The projects included in the Programme were already in existence and in theprocess of being implemented. Therefore the managing company, FS plc, did not experienceany serious problems during the implementation phase. The resources employed were inoverbooking compared to those programmed. Payments made should approach 100%.

The physical indicators of realisation available refer to 31 December 2000, a year prior to theexpiry of the payment terms. Therefore they indicate a general delay. Nevertheless theprojections for 2001 by the internal evaluator give the impression that there will not besignificant differences between the objectives programmed (Objective value: O.V.) and thoserealised (Realised Value = R.V.). As a whole, the programme led to an increase in theincidence of electrification of the network, double-track lines and of the TEN network.

Table 32 Physical indicators on railways (Km.) and incidence of intervention on railwaysystem (%)

Objective Value (Km) Realised Value (Km)Double –track railway 274 187New railway lines 335 166Ten 368 166Electrification of the line 264 217Advanced technologies 1.009 582

Without intervention(%)

Objective value(%)

Realised value(%)

Double –line railway 35,4 47 42,2TEN N.a. 9,3 4,2Electrification of the line 26,3 72,2 56,8Source: ISMERI EUROPA processing of management authorities data

The results of the programmes should be seen positively, even if they were not sufficient tobridge the infrastructure gap in the Southern regions, the obtainment of which will require along time.

3.1.1.2. Communication – National Roads and Motorways

Total expenditure on the road network in both multi-regional and regional programmestotalled 1638 Meuro.

The multi-regional projects concerned the big communication corridors (TEN) in accordancewith Community rules. These included a new stretch of the Messina-Palermo motorway and



the widening of various sections of the Salerno-Reggio and Bari-Otranto motorways and theCagliari-Sassari and Brindisi-Lamezia Terme fast roads. Therefore, the actions regarded thestrengthening and widening of the Adriatic and the Tyrrhenian axes and the two largestislands. In general, the financing covered road sections within the largest project. During theworks, “sponda” projects differing from those forecast were inserted. Following re-programming there was a shift in resources from the Messina-Palermo motorway to theSalerno-Reggio Calabria one. The projects for roads of national interest were managed byANAS.

The physical objectives expressed in Km were reached and exceeded in Salerno-Reggiowhere the measure was completed with a strong overbooking. However, the objectives werenot reached in Cagliari-Sassari nor in Brindisi-Lamezia Terme.

Table 33 Physical indicators on roadsO.V. (Km) R.V. (Km)

MESSINA-PALERMO 5 4,87SALERNO-REGGIO CALABRIA 25 45CAGLIARI-SASSARI 45 31BARI-ORISTANO 15 14BRINDISI- LAMEZIA TERME 43 30Source: ISMERI EUROPA processing of management authorities data

The action also included the implementation of 145 monitoring cabins for surveying traffic.Due to time limits this was not realised within the POP but should however be put intopractice using other sources of finance.

The expenditure by the regional authorities on road and motorway networks was 1076 Meuro,almost double the spending in multi-regional programmes. The regional programmes took theform of measures for the urban and long-distance networks.

The programmes did not experience any particular implementation problems in that “similar”projects were widely available.

The incidence of road network action varied across the regions. It occurred most in Basilicataand in Sardinia where there was a particularly large gap in the endowment of the roadnetwork. In Sicily the priority deals with several sections of the Messina-Palermo motorway.

Overall in the regions the action dealt with slightly more than 1% of the long-distancenetwork. 260km of new roads were built, half of which were in Sardinia. These data do notinclude rural roads constructed under EAGGF programmes.



Table 34 Long-distance network subject to pop actionKm % of regional net

Basilicata 147,7 3,1Calabria 109,0 1,1Campania 197,0 2,0Sicilia 8,0 0,04Sardegna 129,1 1,5Puglia 48,0 0,4Molise 33,3 1,1Total 671,8 1,1Source: SIIV (“Criticità del sistema viario nazionale”,2002)

The works carried out on the road network had positive effects principally on safety. Worksof expansion and improvement affected roads such as the Salerno-Reggio Calabria roadwhere there was a high incidence of accidents.

Considerable effort for enlarging the network with new roads has been nevertheless onlymade in the case of Sardinia. While in the other regions the priority has resolved severalurban congestion problems and problems regarding the connections between largecommunication centres, it has not changed the structure of the network. The use of many“sponda” projects also gives the impression that ordinary maintenance initiatives werefinanced within the Programme, which while certainly useful, only had marginal economicbenefits.

3.1.1.3. Communications – Telecommunications

In the Telecommunications field the original programming forecast a total cost of €1 076m ofwhich €377m came from Community funds. Following re-programming the total cost rose to€1 155 leaving unchanged the Community contribution. The Operational Programme,managed by Telecom Plc contained 4 sub-programmes.

The “Modernisation” sub-programme had the specific goal of transforming the analoguenetwork to a numerical one. The “Quality” sub-programme was dedicated to strengtheningthe network and above all to the introduction of fibre optics. The “Innovation” sub-programme was aimed at widening access to ISDN via broadband and narrowband. Thisprogramme was also aimed at installing a system of 2.5 GBit/s lines and high potential fibreoptic cables. The “Access” sub-programme had the goal of making multi-media andinteractive services accessible via the use of the fibre optic network. The distribution ofresources favoured the various sub-programmes for the diffusion of fibre optics.

Table 35 Distribution of resources between telecommunications sub-programmes (%)Sub-programmes %Modernisation 29,0Quality 35,7Innovation 28,0Access 6,0Source: ISMERI EUROPA processing of Treasury data

The programme did not experience any implementation problems and was brought to a closewithin the forecast timescale with satisfactory results both in terms of efficiency and



effectiveness. The physical objectives realised indicate a good performance and they are closeto the programmed objective, where these are available. In some cases they greatly exceededthem. These positive results were reflected in the reduction in the infrastructure gap betweenthe Objective 1 regions and the rest of the country registered between 1994 and 1999.Moreover the programme contributed to the diffusion of new technologies in thatapproximately half of the investments carried out were evaluated as having a medium or highlevel of innovation. The impact on employment of the programme was 20,000 man years.15,000 of these were for installation and 5,000 of maintenance.

Table 36 Physical indicators of telecommunicationsO.V. R.V.

Couple-copper cable (km) 627.043ISDN access (n°) 125.000 231.000Optics fibre (km) 137.000Radio-bridges (km/cto) 70.866.000Numerical number (n°) 1.893.000Source: ISMERI EUROPA processing of management authorities data

The programme’s success was linked to the quality of Telecom’s pool of projects and also tothe creation of a nucleus within Telecom which was specifically dedicated to theimplementation of the programme. The programme was financed by Community funds (33%)and Telecom (67%).

3.1.1.4. Communications- Other Means of Transport

The only region which invested in port structure was Calabria which constructed a newcommercial port, endowed the port at Tropea with infrastructure and completed the port inCirò Marina, as well as carrying out various minor priorities. Many of the regional portinitiatives were not part of the original pool of projects but were inserted as “sponda” projects.In addition to the actions managed by the regions, there was a Global Grant of €120m for theGioia Tauro port, which today represents the most important transhipment port in theMediterranean. The project was closed well in advance with regard to the terms due to thetotal absorption of the available resources.

The actions implemented on airport structure were marginal and concentrated in Sardinia.

3.1.2. Industry, Craftsmanship And Business Services

The Industry, Craftsmanship and Business Services priority axis was financially the mostimportant priority axis in the programme. The financial resources attributed to it in the 1994-99 CSF totalled €15,391 million of euro. This was equal to 40.2% of the whole CSF.

The measures which used incentive as a policy instrument showed a high capacity forabsorbing the resources of the programme. There was a high demand for incentives, aconsolidated implementation capacity and a law – Law 488 – which worked.



However, difficulties manifested themselves in the local development initiatives and inbusiness services, where the greater complexity of the action and the fact that it was notroutine led to delays and unused resources.

The action on industry was partly managed by a multi-regional Operational Programme whichabsorbed 70.8% of resources and partly by the POPs and the Global Grants which absorbedremaining funds.

3.1.2.1. Industry Operational Programme

The OP Industry and Services represents the core of the whole CSF 1994-99. It represents34% of the entire CSF Ob. 1: the total cost is 13.171,4 Meuro (2.649,9 ERDF, 38 EFS,2.9465 national, 7.537 private sector).

The OP Industry and Services is composed of the most important national aids to enterprises:the main objectives are to support investments, to foster industrial growth, to create newenterprises and to supply financial and real services. After the negative experience of the “Adhoc Intervention in the Mezzogiorno”, this Program was meant to rebuild industrial policy inItaly and in the depressed areas of the country.

The main targets were:- to support SME’s growth and investments- to favour the creation of new enterprises- to promote real and financial services- to support the development of the production system in the crisis areas

There are different kinds of policy instruments: a) aid; b) financial engineering techniques; c)actions to support services; d) technical assistance and monitoring.

The programme was composed of four subprograms:

1. “Incentives to industry, promoting young entrepreneurship, financial support toenterprises and handicraft”

2. “Aids to handicraft”, this subprogram has been abolished, and the measure relating toit has become measure 1.9

3. “Local development and crisis areas”4. “Promotion, technical assistance, financial support to enterprises and the creation of a

permanent information system on SME incentives”

The table shows the financial layout of the Programme (at 2001) – with specification ofsubprograms and measures - and the percentage value of the total cost.



Table 37 The O.P. IndustrySub-programmes and measures TOTAL

(Meuro)%

1. Incentives to industry, promoting young entrepreneurship, financial support toenterprises and handicraft

12.768,7 96,9

1.1. Investments support l. 64/86 e l. 488/92 10.430,7 79,21.2. Support to services’ demand 87,5 0,71.3. Young entrepreneurship 313,1 2,41.4. Training for Young entrepreneurship 50,7 0,41.5. Support SME to purchase tools and machinery 722,1 5,51.6. Financing programmes of technological and environmental innovation 81,3 0,61.8. Support to female entrepreneurship 58,6 0,41.9. Support to handicraft enterprise development 1.024,8 7,83. Local development and crisis areas 388,0 3,03.1. Support to handicraft enterprise development 380,2 2,93.2. Support to real services purchase 7,8 0,14. Promoting, technical assistance, financial support to the enterprises and creation of apermanent information system on SME incentives

14,7 0,1

4.1 Promoting, technical assistance, financial support to enterprises and creation of apermanent information system on SME incentives

14,7 0,1

TOTAL 13.171,4 100,0Source: ISMERI EUROPA processing of management authorities data

The Program performed very positively in terms of expenditure: it built on the system ofincentives to industry or, to be more precise, to industrial enterprises, craftsman enterprisesand services enterprises and to those enterprises functionally linked to production activity.

Generally, all the measures performed well.

There are some interesting cases:

- sub-measure 1.1.1 “Support to production investments – l. 488/92” is the largest measureof the entire CFS. It represents 80% of the Program and had a very good expenditureperformance. It has been re-programmed several times. It has proved to be a flexibleinstrument, able to respond to changing priorities, to operate in several sectors (industry,services, tourism, research), and to offer simple and efficient procedures that assure highquality in monitoring and controlling activities.

- Measures 1.2 and 3.2 – “Support to real services demand” – have met with somedifficulties. In the re-programming phase they lost resources to measures with a higherabsorption capacity (such as submeasure 1.1.1). The main causes for this failure were:delayed start of the measure (October 1997), not enough time to present requests forincentives (from the 16th of October to the 31st of December 1997), the way of disbursinggrants (80% of the entire grant was assured after a simple request) which favoured theproliferation of irregularities (the investigations of the Guardia di Finanza (CustomsServices) excluded 81 requests), weakness of the monitoring system, lack of technicalassistance to enterprises, limited role of the banks.

- Measure 1.5 “Support to purchase tools and machinery” was a partial failure because ofthe competitive effect of law 488/92 which offered a bigger and much more convenientincentive.



- Measure 1.6 “Financing programmes of technological and environmental innovation”was a partial failure and was re-programmed negatively: the main problems were linked tothe competitive effect of Law 488/92 in the Ob.1 region and to the lack of environmentawareness.

- Measure 1.7 “Support to partecipative loans” belonged to financial engineeringtechniques and was excluded on the European Commission’s request. In June 1997 a newmeasure was created “Support to certification laboratories” with an initial financialamount of 10 Meuro, but it was excluded in May 1998.

- Measure 1.8 “Support to female entrepreneurship” was very successful, and has beenpositively re-programmed. Its particular strength lies in the fact that it corresponds to areal need, the procedures were simple, and it operated in a sector – small loans - in whichthere is a great demand.

The strategic choices prompting the re-programming activity favoured those measures thatguaranteed support to development but at the same time supported the measures with greatexpenditure performance.

There are some general trends in the performance of the measures:- a good level of expenditure is assured by those measures which give bigger incentives and

with simple procedures- the measures that supported demand for services failed, because the enterprises preferred

measures that assured bigger incentives (e.g. L. 488/92)- the success of many measures was greatly influenced by the system of players who

attended to the process of preliminary investigationsi and disbursement of the aid.- the measures linked to consolidated incentive laws reached a good level of expenditure- the measures supporting the supply of real services were a failure: both because they were

a new unknown instrument and because they had to compete with more competitiveinstruments

- the performance of many measures was conditioned by a lack of efficient information anddissemination, especially with regard to the SMEs.

The effectiveness of the OP can be analysed with reference to the specific objective of eachindividual measure.

Aids to investment

Measure 1.1 financed already existing projects presented under the old Law 64/86, and re-presented in accordance with the new incentive instrument of law 488/92.

Sub-measure 1.1.1 – law 64/86 – financed production investments in the industrial sector andin the services linked to production activity: the incentives were both loans and prime rates.The sub-measure (at December 2000) had carried out 5.697 actions, most of which aimed at“enlarging existing plants “ (4.090 projects) and some aimed at “new initiatives” (1.251projects). The employment growth has been 36.770 (number of permanent employed people).

The sub-measure 1.1.2 financed 4.633 enterprises, in the sector of metal production andmanufacture, textile-clothing industry and mineral and metalliferous manufacture.Employment grew by 34.606 units.



The entire measure 1.1 exceeded the initial target number of actions ( 10.330 actions, 48%more than the estimated 4.975) and basically reached the target of additional employment(97% of the forecast).

Measure 3.1 – “Support to production investments” for SME in crisis areas (Crotone, GioiaTauro, Pozzuoli, Taranto, Brindisi, Manfredonia, Siracusa, Gela) was carried out inaccordance with the procedures of law 488/92, with some modification. The measure gaverise to 265 actions (260 forecast) and employment growth was about 3.250 units.(forecast of3.408).

The table shows a summary of the results with reference to aid to investment, comparisonwith objective and the achieved value.

Table 38 Aids to investmentObjective Value Realised Value

Firms supported 5.235 10.595Employment created 76.071 73.727Source: ISMERI EUROPA processing of management authorities data

Business services to enterprises

The Program provided for two measures of support to real services to enterprises: measures1.2 and 3.2 for the crisis areas (Crotone, Gioia Tauro, Pozzuoli, Taranto, Brindisi,Manfredonia, Siracusa e Gela).

The targets were:a) support SME needs in non-financial investments in the new technology sectorb) support investments to protect the environmentc) quality systemd) research for financial support to carry out investment programmes

Of the 1.947 projects presented, only 595 were financed. The initial prevision was of 941projects. There is no data on the impact on employment for these measures.

Young enterpreneurship

Measure 1.3 is composed of two sub-measures and supports young enterpreneurship, withactions both in the phase of support of new initiatives and in the phase of tutoring newenterprises. The number of actions carried out was much less than planned (339 against 978);nevertheless the employment impact was better than expected (5.312 against 3.567).

Measure 1.4 supported new enterpreneurship with training actions. Tutoring activity involved309 enterprises and 1,236 students. Training activity involved 132 enterprises and 341members of financed enterprises.

SME investments

Measure 1.5 is linked to a national instrument which supports SMEs in technologicalmodernisation and updating of tools and installations. Only 3113 actions were carried out(4923 planned).



Environment investment

The measure is linked to national legislation supporting new investments for machinery andtools and installation for the technological and environmental re-qualification of productionprocesses and for the reduction of waste pollution. The projects financed numbered 64 (453planned).

Female enterpreneurship

Measure 1.8 was very successful, exceeding the original targets. 717 enterprises were created(375 planned). Employment grew by 5.341 units against the original target of 1271.

Aids to craftsmanship

Measure 1.9 performed well: 27.289 actions (11.561 planned). The employment growthamounted to 20.960 units (planned 13.006).

Overall employment impact of the OP

The overall impact on employment of the O.P. on industry and services is shown in thefollowing table. The number of new employees came to 103.340 units, more than the targetvalue of 93.915. The incidence of industrial employment of Objective 1 regions, measured onthe 2001 stock, is over 7%.

Table 39 The employment impact of the O.P.Objective Value Achieved Value Total employed Industry sector in

Objective 1 (2001)Total employment 93.915 105.340 1.471.986

Source: ISMERI EUROPA processing of management authorities and ISTAT data

3.1.2.2. “Territorial Pact” Operational Programme

Of the Multi-regional Operational Programmes, “Territorial Pact” must be mentioned, morefor its value as a pilot action that for its financial weight (equal to €235.2 m). The TerritorialPact instrument was initially introduced in Italy within the field of negotiated programmingand was only afterwards adopted in the European Union. It was in this way that several“national” pacts became “European” and became part of the Operational Programme.

The “Territorial Pacts” pursued objectives that were strictly economic in character andobjectives of an institutional character. The economic objective consisted of the elaborationand realisation of an integrated strategy of local development by tackling areas at a sub-regional level. The institutional objective consisted in the construction of a network of publicand private figures capable of thinking and acting collectively. The success of the instrumentwas therefore evaluated on the basis of the programme’s economic results but also in terms ofits effects on the improvement in the governing capacity of the area. Its originality essentiallylies in this pairing of objectives.



The territorial pacts for employment (the “European pacts”) share the priority’s philosophywith the national pacts but move away from it in several key elements in procedures,forecasting greater technical assistance, more cogent rules and stricter time limits forspending. Due to these differences and perhaps also because the national pacts that becameEuropean pacts were those that were considered better even at the start, the performance ofthe European pacts has generally been judged more positively than the national pacts.

The European pacts experienced several problems during the implementation phase and theirspending capacity was very low, particularly at first. Nevertheless, the final results weresatisfactory in that in many cases the objective was reached of increasing the propensity forcollective action by local public groups. To be more precise, the instrument showed itself tobe slow at dispensing financial aid to businesses, but efficient at promoting co-operationbetween local bodies, overcoming parochial viewpoints and creating social capital.

3.1.2.3. The Regions’ Industrial Policy

The regions’ choice in terms of industrial policy was to support and strengthen the system ofbusiness incentives already in operation at national level. No significant effort was made toqualify their own priority in terms of giving privileges to certain sectors or locations. Thelogic was one of giving spread incentives to each business. The regions gave money inparticular to very small businesses and crafts businesses which had not succeeded or were notin a position to take advantage of the national system of incentives. The concentration onhelping small businesses reflected the size of businesses in the Southern industrial structure,where according to the 1991 Census, 96% of businesses had less than 10 employees and 48%had only one employee.

Business incentives in various forms represented approximately 63% of all the resourceswhich the regions had dedicated to supporting the industrial and craftsmanship sectors.

Table 40 Regional Programmes Of Industrial PolicyMeasures Value (€m) %Aid to services and firms 125,1 5,0Aid to artisan firms 1158,0 45,9Industrial incentives 314,7 12,5Local development and areas in crisis 637,9 25,3Equipped industrial areas 287,7 11,4Total 2523,4 100,0Source: ISMERI EUROPA processing of Treasury data

The number of businesses reached by the action was high. An attempt was made viaapproximation to isolate the measures specifically aimed at artisans businesses or very smallfirms. In addition there was also an attempt to evaluate the number of beneficiary firms inrelation to the number of industrial businesses and services with less than 10 employees ineach region. The average was 7%, with the highest number in Molise, followed by Sicily,Sardinia and Abruzzo.



Table 41 Number of firms supported on total firms with less than 10 employees %% of small enterprises

Abruzzo 8,0Basilicata 2,6Calabria 3,3Campania n.a.Molise 23,0Puglia 5,6Sardegna 8,1Sicilia 8,4TOTAL 7,0Source: ISMERI EUROPA processing of management authorities data

Although the number of artisan businesses helped by the action was high, the value ofinvestments and the average public contribution was generally low (with the exception ofBasilicata). This is shown in the table relating to the measure to support artisans in severalObjective 1 regions.

Table 42 Indicators of support to artisan enterprisesCalabria Sicilia Basilicata

Total cost (000 euro) 91.800 289.780 88.570Enterprises (n°) 2.882 16.826 763Average investment cost (000 euro) 31,8 17,222 116,08Average public contribution (000 euro) 17,8 6,888 81,26Source: ISMERI EUROPA processing of management authorities data

The lowest average investment (€17 000) was registered in Sicily where each of the 16.826beneficiary businesses received a public contribution of less than €7.000.

Business aid mainly took the form of investment incentives devoted to expansion orrestructuring of premises or to the purchase of machines and equipment. In several casesactions to support services demand were also activated. Relevant measures were used byfirms to help them conform to national and Community regulations for safety and theenvironment. In this case the unitary values of the investment and of the public contributionwere low, hovering between €40,000 and €30,000 for investments and €30,000 and €25,000for public contributions in the regions involved

Measures for incentivisation displayed a great capacity for absorption and a relative ease ofimplementation at a regional level too. This explains the massive use of the incentive as aninstrument of policy, especially when the Regions had the necessity and the urgency toincrease the level of expenditure.

Among the measures for business support, little weight was given to either initiatives to createnew businesses or to support young entrepreneurship. Among the incentive instruments,forms of contribution other than the traditional capital/interest accounts were also given anequally secondary role. Similarly, financial engineering instruments were also only usedmarginally.

A second part of the industrial policy action managed by the regions within the POP was thecreation, (or more commonly the completion) of area equipped for artisans and industry. Thisinitiative responded to a commonly heard need within the regions for the availability of places



at contained cost and with an adequate infrastructure. The programme displayed overbookingcommitments and payments which completely absorbed the resources. The physical results,expressed in square metres of equipped areas, cannot be compared with the objective valuesof the various programmes.

Table 43 Equipped Industrial AreasSqm. Equipped industrial areas

Sicilia 1.598.411Basilicata 1.622.766Abruzzo 1.739.031Puglia 39.530Campania 1.320.923Calabria 516.523Total 6.837.184Source: ISMERI EUROPA processing of management authorities data

3.1.3. Tourism

The tourism sectors represents a huge opportunity for the South to spark off an economic up-turn. The South contains a wealth of natural, cultural and monumental resources of suchvariety and richness that they constitute a great source of tourist attractions, despite theenvironmental damages caused by man’s stupidity over past decades.

Today these attractions are only partially exploited. Tourism in the South remains seasonaland seaside-based. However the climatic conditions and the variety of attractions would allowthe tourist season to be lengthened and the offers to be broadened.

In the second half of the 1990s, there was a huge revival in the tourism sector. The flow ofnational and international tourists grew again, and the number of arrivals and the length ofstays increased. The tourism industry tried to adapt to meet the growing demand. Overall inthe South from 1996 to 2000, the number of Italian holiday-makers rose by 15% and foreigntourists by 33% while the average length of stay grew by 21%. Growth in the South was morethan double that registered in the rest of Italy.

Table 44 Performance Indicators In Tourism1996 2000* Abs.variation % Variation

Italian arrivals 9.239.000 10.616.424 1.377.424 14,91Foreign arrivals 3.254.000 4.348.377 1.094.377 33,63Length of stay 55.128.342 66.899.902 11.771.560 21,35No. Of beds 856.000 937.000 81.000 9,46*2001 for number of bedsSource: ISMERI EUROPA processing of ISTAT data

The amount of accommodation on offer also rose, registering a rise of almost 10% in terms ofnumber of beds. Employment in tourism rose by 12.6% between 1995 and 1999, comparedwith 6,2% in the Centre and North.

Within the 1994-99 CSF tourism action was almost entirely managed by the regions withinthe POP for administrative reasons. It absorbed approximately 5,9% of the whole CSF and13% of regional programme resources.



Analysis of the measures which make up the action highlight the fact that an innovativemodel of tourism is emerging but it is still in its early stages of development. What shinesthrough is the knowledge that the attractiveness of an area depends on a combination ofconditions which together guarantee the quality of accommodation, variety ofaccommodation, endowment of complementary infrastructure, conservation and accessibilityof cultural heritage and suitable marketing. The 1994-99 CSF contemplated the action in allthese fields but has not yet made provision for their integrated management, simply allowingthe synergy of effects to emerge from the convergence of each individual action. The 1994-99CSF further neglected to integrate tourism, the environment and rural development, actionswhich would have required co-operation not only between those responsible for the differentpriority axes but also between the different Structural Funds. This type of co-operation hasnever been implemented.

Tourism initiatives were composed of investment support, complementary infrastructures,optimisation of cultural treasures and marketing.

The first of these initiative – the most traditional – took the form of incentives for therefurbishing, modernisation and expansion of hotels. The objective was to increase the qualityof Southern hotels (to increase the number of stars the hotels held). A second initiative wasspecifically directed at the diversification of the hospitality offer, supporting the offer of extrahotels. For example, in Sicily 1 443 beds were created within a measure to support ruraltourism. A third initiative was aimed at increasing sport and recreational facilities andincreasing the number of beds on boats in tourism ports. The fourth line of action was on theartistic heritage. In all the regions an aggressive restoration plan was carried out which tookadvantage of a pool of projects of high quality produced within the government departmentspecifically devoted to the care of Italy’s artistic and cultural possessions (Sovrintendenza alleBelle Arti). Finally, there were successful marketing campaigns to define a Region’s imagesuch as the one carried out in Calabria.

The implementation of tourism action in the field of aid to investment encountered difficultiesin several regions which stopped them from fully using resources. This relative lack ofsuccess was connected to problems of a procedural nature and perhaps to a high level ofprivate co-financing, which forced some businesses to give up projects that had beenpresented and approved.

Regarding physical indicators, the table which follows offers the results of aggregation workalso based a large number of creative estimations. The most reliable indicators are thoserelating to the number of restoration projects carried out and the number of beds created.



Table 45 Physical indicators on tourismIndicators

Beneficiary enterprises (n°). 1.803New enterprises (n°) 47No. Of bed (n°) 40.119Beds on boats 1.070Restorations (n°). 748Sport centres (n°). 159Marketing (n°). 567Didactic itineraries (km) 115Source: ISMERI EUROPA processing of management authorities data

The table shows that thanks to Community action just over 40 000 beds were created. In the1996-2000 period in the South there was an increase in the number of beds equal to 81 000.Therefore the hypothesis can be advanced that almost 50% of the increase was thanks to theCommunity contribution to the programme.

3.1.4. Economic Infrastructures

3.1.4.1. Water resources and the Environment

Water is possibly the most serious of large infrastructure problems in the South. Its lack is ahuge disadvantage both for economic activity and for inhabitants’ quality of life. At thebeginning of the 1990s, the synthetic index of infrastructural endowment relating to watershowed a value of 39 for the South. This did not change much in the years that immediatelyfollowed.

The 1994-99 CSF dedicated €2 208,09m to water, of which 75% was to be managed within amulti-regional programme and 25% within regional POPs. Community funds and nationalpublic funds each contributed €871m while private co-financing level accounted for €266,250m

The multi-regional programme encountered great difficulties in the implementation phase andlost resources, while the regional programmes revealed a good absorption capacity whichended in overbooking. In terms of final balances; therefore the expenditure on the multi-regional programme was more or less equal to that on the regional programmes.

The Multi-regional Operational Programme had the objective of increasing the availability ofwater resources, modernising water production and distribution networks and reduciing waterloss from within the network. The objectives were spelt out in two sub-programmes. The firstwas essentially composed of projects already in progress inherited from the precedingprogramming and aimed at completing the basic infrastructure. The second sub-programmehad the specific objective of supporting the transformation of the management structure in thesector and of co-financing projects and programmes which foresaw the financial participationof owners and managers of the water resources. As previously mentioned, the overall projectexperienced difficulties as it coincided with the introduction of new laws which re-ordered thejurisdiction over the control of water resources (the “Galli” Law 36/1994). Even the insertion



of projects “sponda” did not prevent the programme from only being partially implemented.This partial completion of the programme had repercussions for the physical objectives. Thefollowing table shows the principal physical indicators of the programme and their state ofrealisation in December 2000 (the last update).

Table 46 Physical indicators on water OPWater Infrastructures V.O. V.R.Water pipe (m.) 5.378.221 3.670.809Tunnel (m.) 63.451 34.456Reservoir (mc.) 913.701 281.706Civil Construction (n.) 376 172Electro-mechanic works (n.) 298 148Wells (n.) 19 9Piezometrci Torrini (mc) 6.889 2.115Control systems (n.) 107 64Civil Building (n.) 20 14Drain trunk line (m.) 1.066.530 713.734Source: ISMERI EUROPA processing of management authorities data

19 wells were planned to improve collection of which 9 were implemented. For warehousing,tanks with a capacity of 913 701 m³ were planned and only 30% of this was implemented. Forproduction and distribution the objective was to realise 5 378 222 metres of pipes as opposedto the 3 670 809 actually created. For water treatment the objective value was 1.066.530metres but 713.734 were made. Further, even for service works (towers, control systems)serious delays were registered. While these delays will obviously be reduced in the final yearin which works can be completed, in the opinion of the internal evaluator it will be difficult toclose the gap completely.

The regional programmes financed action on water and sewage networks at local level. Theseactions involved thousands of local council areas, improving their distribution networks andreducing the level of water loss.

The capacity for absorbing these measures was very high everywhere because works werefinanced which were part of the local bodies’s ordinary work. Therefore it was possible toinsert many “sponda” projects and finish the measures in overbooking.

The physical indicators of realisation reported in the table are not comparable with objectiveindicators. The most reliable indicators are those relating to the water network and the sewagenetwork. The depurifiers value was probably underestimated as the absence of indicators fromseveral regions did not necessarily mean that no action had been taken there. In any event theindicators do give an idea of the effort which each region made in terms of maintaining waterand/or sewage networks.



Table 47 Physical Indicators on water in POPWater network Sewer system Depuration plants Water reservoir

Km Km N. McBasilicata 357 85 56 1.345Calabria 597 517.673Campania 513 93 23Molise 337 30Puglia 243 183 28.960Sardegna 115 1.294.290Sicilia 1.268 9.445 2.243.388Total 3.430 9.836 79 4.085.656Source: ISMERI EUROPA processing of management authorities data

To sum up. The water problems were tackled at two levels; at central level with large workswith results below expectations. At local level with structuring and expansion works withinthe water and sewage networks where results were in line with expectations.

The regions then financed various other types of programme under the environmental remit.These included actions to improve abandoned areas, to increase or control rubbish tips,environmental monitoring, helping protected areas and reclaming urban areas. A measure ofthe effort put into this direction is given by the one common physical indicator, constituted ofsquare metres of re-defined areas, where the action carried on nature reserves in Sardiniastood out.

Table 48 Re-defined areasRegions Re-defined areas

m²Abruzzo 320.601Basilicata 7.375Campania 1.133.403Molise 20.941Puglia 18.927.000Sardinia 43.000.000Sicily 1.370.000Total 64.779.320Source: ISMERI EUROPA processing of management authorities data

3.1.4.2. Energy

The second widest gap in the South from the point of view of infrastructure endowmentregarded energy. The complete allocation foreseen for financing the energy priority was€1.010,92 Meuro. Just under half of this was given to multi-regional programmes and the restwas allocated among the various regional POPs. During implementation the multi-regionalshare increased to the detriment of the regional share.

The multi-regional programme had the objective of completing the methanisation of the Southalready begun in the previous programme and of strengthening the electricity distributionnetwork. A specific sub-programme was set up for each of these objectives.



Table 49 “Energy” O.P.Sub-programme Total cost

(Meuro% on total

programmeERDF

(Meuro)Gas 149,3 32,1 59,1Electrical power 315,8 67,8 110,5Technical assistance 0,6 0,1 0,2Total programme 465,7 100,0 170Source: ISMERI EUROPA processing of Treasury data

The programme, the part relating to electricity being managed by ENEL, did not encounterparticular problems and does not run the risk of losing resources.

The physical realisation data for the first sub-programme refer to 2001 and show that theobjective values were fully met. 81 communities were brought methanisation, and in 26 ofthese the initiative was fully completed. 1.160km of distribution network was constructed asopposed to the 1.008 initially planned and 48 connections rather than the 74 programmed.

For the second sub-programme the data refer to December 2000, one year prior to the expiryof the terms for the conclusion of work. 54 primary cabins were created as opposed to the 36programmed, 440.46 km of high tension lines as opposed to the 565.2 programmed, 4,766km of MT lines as opposed to the 3,111km programmed and 2,070 secondary cabins of the2,475 in the original programme.

Table 50 Physical indicators for energyIndicators Objective value Realised valuenatural gas network (km.) 1.008 1.160Links (n.) 174 48primary cabins (n.) 36 54Secondary cabins (n.) 2.475 2.070HT lines (km.) 565,2 440,46MT lines (km) 3.111 4.766,55Source: ISMERI EUROPA processing of management authorities data

The programme’s contribution to the methanisation of the South can be evaluated by referringto the stock data on the natural gas network in 1998 which was 23.371 km. The 1 160 kmconstructed with Community funds constituted 5% of the stock. Moreover it should beconsidered that Sicily and Molise used part of the POP resources for methane, constructing553km of network. Therefore the Community contribution rises to 7.3% overall.

Apart from methane, the regional initiatives on energy led to the strengthening of theelectricity network. It should also be noted that the original programmes in the POP containedvarious actions for increasing the production and consumption of alternative sources ofenergy. In this field results were disappointing because the initiatives either failed (forexample in Basilicata) or they obtained results well below expectations. In any case spendingon alternative energy sources was marginal.



3.1.4.3. Research & Development

Italy has a low level of expenditure on RTDI compared with other industrial countries. Thisshortfall is due to- a high level of traditional sectors where productivity improvements take the form of

incremental technical progress.- a high level of small and artisan businesses which do not invest in R&D- inadequacy of RTDI system- low propensity for investment in innovation by industrial firms

The shortfall is particularly acute in Objective 1 regions where all the above factors play amajor role and where the weight of the industrial sector in the economy is low.

Research and development action was set out on multi-regional and regional level withfinancial resources of €1.625,64m, two-thirds of which were managed at multi-regional leveland one third at regional level.

At multi-regional level, the Operational Programme “Research, Technological Developmentand Higher Education” 1994 – 1999 for Italian Objective 1 covers 8 regions and has afinancial value of around 1.300 MEURO. The European Union’s contribution to the initial OPwas co-financed by 600 Mecu from the European Regional Development Fund (ERDF) and180 Mecu from the European Social Fund (ESF). It is the first comprehensive policy toolmanaged by the Italian Ministry for Universities and Scientific and Technological Researchspecifically aimed at the Italian Mezzogiorno. It sets an ambitious overall objective: ofhelping to correct imbalances in the disadvantaged areas of Italy, taking action on highereducation and scientific and technological research, and on mechanisms and tools, so as totransform scientific findings into innovations with a high socio – economic impact.

The OP is made up of 3 sub-programmes which combine together to achieve the overallobjective of redressing the imbalance between the north and south of Italy. The overallobjective was pursued by a two fold strategy:- to strengthen infrastructure and human resources, by supporting research activities

undertaken by public policies.- to increase the ability to innovate in business by supporting industrial research and

technology transfer

To summarise, the OP was intended to achieve the following results:- an increase in the demand pull, by means of a strategy designed to sustain industrial

research and to apply the results of scientific research and technological innovation toproduction

- the strengthening of factors which encourage a technological push, mainly throughinvestment in the workforce and higher education courses and other measures

The programme strategy was apparently simple and based on two main kinds of measure:demand-oriented and supply-oriented. Technology transfer measures had to link the forces oftechnological push and demand pull creating mid-term synergies in intermediate objectives.

The initial framework was well balanced between demand and supply measures of support forresearch and innovation, and the strengthening of supply. Re-programming however produceda radical change in the original strategy: the allocation of resources to supply-oriented



measures has almost doubled, reaching 80% of total cost; the share of technology transfer anddemand-oriented measures has been reduced to 15% and 13% respectively. Implementationhas therefore significantly reduced the intended re-orientation of RTDI policy towards ademand pull strategy.

Analysis of the projects confirms our perceptions of the difficulties in pursuing the originalMOP strategy. The prevalence of public sector players and the vagueness of selection criteriahad an impact on project selection. The prevalence of public sector players enabled thefrequent use of direct negotiations between MIUR and proponents (without the need for apublic tender) and the vagueness of selection criteria enlarged the eligibility of projects, thusreducing the internal coherence of the programme. Projects selected through directnegotiations accounted for the majority of the total cost of the programme and the call fortenders or clear selection mechanisms (ranking methods, identification of strategic andtechnological priorities) accounted for only four measures. As we before, this selectionprocedure contributed to the inability of the programme to preserve demand-orientedobjectives.

The MIUR OP has greatly exceeded the expense objectives initially planned. Commitmentsexceeded the total cost of the programme, with a high level of over-spending of about 44% ofthe total cost financed by the Structural Funds (1.309 Meuro). At December 2001 the expensecertificate exceeded the resources assigned to the Programme (123%) both for the EDRF(123,8%) and the ESF part (125,7%).

Sub-programme 1 was composed of two measures.

Measure I.1 – Higher Education the objective of which may be summarised as theoptimisation of the education of qualified human resources to employ in research and relatedactivities.It is implemented in seven action lines:- University Diplomas- Doctorate scholarships- Post graduates and post doctorates- Language laboratories- Guidance activities- Research grants

Measure I.1 represents an important innovation in comparison to the previous programmingperiod, when a strategic role in higher education through autonomy and systematic planningwas not assigned to ESF action. The available physical data shows clear achievement of thetargets for the actions aimed at balancing the deficit in objective 1 regions in what universitiescan offer in science- and technology-oriented education.



Table 51 Higher EducationObjective 1

Indicators Targets ResultsUniversity Diplomas17 Students 3.750 10.186

Diplomas 125 373Doctorates Grants 3.808 4.149Post graduates and post-doctorate scholarships Grants 1.314 1.724Research grants Grant - 783Guidance Projects - 1 pilot projectsDistance learning Students - 9.130Language laboratories Users - 2.626Source: ISMERI EUROPA processing on MIUR data

Placement analysis (a sample survey of graduates taking a short degree) and local case studiesby independent evaluators confirm the positive employment effects of financed education,with some positive interaction between universities and business on a common definition ofeducation content and the absorption of high qualified personnel in production structures.18

Measure I.2 – Actions on university infrastructures have been oriented to the strengthening ofinfrastructures relating to scientific specialisation. Three different types of action are beingimplemented:- University for research and education- University residences- Language laboratories

Table 52 University InfrastructureIndicators Results

Projects Number 52University infrastructure Mq 410.928University residences Number 2Language Centres Number 17New beds Number 75Language laboratories Number 109Research equipped laboratories Number 283New placing Number 2.561Source: ISMERI EUROPA processing of Miur data

Results are in line with targets or above target, with the exception of the new beds created.

Sub-programme II included two measures.

Measure II.1 – Action on research centres, financed research projects and infrastructure.Actions were planned by direct negotiations between the Ministry and public research bodiesprior to definition of the programme. An analysis of technological and economic sectorsaffected by the projects demonstrated a concentration of activities in the high-tech sector andin the diffusion of advanced technologies in traditional economic sectors (mechanics, 17 University diplomas is a title established in 1991, in addition to university laurea as a further choice for young secondaryschool title holder. The study course (two or three years) was introduced with the aim of providing a more professionallyoriented education such as to favour earlier qualified employability; This measure co-finances university diplomas with thespecific requirement for the selected courses to have innovative character and to concern disciplines with good potentialemployability, both in public and private sector, such as environment, health and social services, cultural heritagepreservation, tourism, etc.18 The case ST Microelectronics-The University of Catania represents “best practice” where an increasing number of largehigh-tech businesses in the area directly promoted links with the Uniiversity



agricultural-industrial etc.). A project relating to the aerospace sector stands out from theothers, absorbing more than 40% of the measure’s financial resources.

Table 53 Research CentresObjective 1

Actions Indicators Results Actions Indicators ResultsR&D projects Number 81 Grants and contracts with

researchersNumber 1141

Product innovation Number 71 Employment activated years/man 1791Process innovation Number 111 Seminars, conferences,

workshopEditions 294

Registered patents Number 51 Publications Editions 3377New prototypes Number 230 Information points Number 15Technology transfer activities Number 123 Pilot Plants Number 4Enterprises involved (as partner) Number 391 Feasibility studies Number 6Research Centres and Universitiesinvolved (as partner)

NumberU.O.

274 Demonstrative projects Number 23

Source: ISMERI EUROPA processing of MIUR data

The table shows the number of research centres and businesses involved as a partner inresearch activities. The average data per project is three centres and four businesses. Thisdemonstrates that the measure can improve networking between the different actors involvedin the research field. Data relating to researcher contracts and scholarships shows a largeinvolvement effect of external human resources .

Measure II.2 – Industrial Research is aimed at promoting innovation and integrating newtechnologies into objective-1 businesses, particularly SME. The same measure financesexisting actions agreed between the Ministry and interested private and public actors, and isaimed at promoting the development of research by projects with a high level of complexity(these projects represent more than 40% of the measure’s total expenditure).The level of aid reflects the quality of local production structure so projects are concentratedin the advanced sectors traditionally present in objective 1 regions (electronics, mechanics,agriculture-food).

Table 54 Industrial ResearchObjective 1

Actions Indicators ResultsR&D projects Number 120Process innovations Number 53Product innovations Number 102Patents Number 7New prototypes Number 87Technology transfer actions Number 9Enterprises involved Number 53Research Centres and Universities involved Number 13Publications Editions 272Scholarship and research contracts Number 69Employment activated Years/man 5.091Source: ISMERI EUROPA processing of MIUR data

The table shows the results obtained for process and product innovations (more than 155 per120 projects), which is clearly in line with the aim of the measure.



The measure has not been able to raise the southern incentive share dedicated to R&D while ithelped to reduce the gap of southern businesses in R&D employment. The share raised from7.2% in 1990 to 8.6% in 1996 with a target of 9.0%.

Sub-programme III – Innovation diffusion and local development- has the objective toexperiment and implement tools for technology transfer (Table 27), and finance innovationprojects of objective 1 Science and Technology Parks (STP) (Table 28)..

Table 55 Technology TransferObjective 1

Actions Indicators ResultsProjects Number 12Technology transfer activitiesFeasibility study Number 62Demonstration projects Number 91Check-up Number 705Product innovation Number 4Process innovation Number 7Prototypes Number 10Pilot installations Number 46Information points Number 38Seminars conferences, workshop Editions 390Publications Editions 124 (as users) Number 3.417Enterprises involved (as partner) Number 244Research Centres and Universities involved (as partner) Number 102Employment activated Years/man 655Source: ISMERI EUROPA processing of MIUR data

Technology transfer projects finished in line with planning and evaluations carried out by anindependent evaluator confirm a good level of quality in financed projects; lack of targetvalues exclude a detailed analysis of effectiveness, although data from the businessesinvolved (about 3,500) are relevant.



Table 56 Science and Technology ParksObjective 1

Actions Indicators ResultsR&D projects Number 46Employment activatedExisting Researchers Number 512Additional Researchers Number 551Existing Technicians Number 879Additional Technicians Number 153Feasibility studies Number 11Technology transferA – prototypes Number 297B – patents Number 12C – new products Number 87D – new processes Number 101E – enterprises created (spin-off) Number 11F – pilot plants Number 55Dissemination and awarenessA – seminars Number 118B – demonstration days Number 205C – workshops Number 113D – conferences Number 9E – conventions Number 58F – publications Number 58Source: ISMERI EUROPA processing of MIUR data

Evaluation analysis, from a different point of view, shows that the projects have various typesof content: in many cases the proposed activities cannot be assimilated into the transfer butconsist in the acquisition of know-how, implementation of a data bank, feasibility studies;some projects were oriented towards production threading, generally agricultural-food, ortowards cluster enterprises.

The two measures dedicated to training in Sub-programme II and III (tables 29 and 30) areaimed at improving the qualifications of human resources so to improve their employability inthe field of R&D. Measure III.2 projects in particular must train qualified intermediariesbetween research systems and business.

Table 57 Science and Technology Parks EducationObjective 1

Indicators ResultsEmployed students Number 383Men Number 235Women Number 148Hours 80.380Unemployed students Number 99Men Number 40Women Number 59Hours 237.418Source: ISMERI EUROPA processing of MIUR data



Table 58 Industrial Research Education and Technology Transfer EducationObjective 1

Indicator ResultsIndustrial Research Education

Projects Number 31Students Number 371Men Number 162Women Number 209Hours 678.411

Technology Transfer Education Projects Number 2Students Number 3093Men Number 2269Women Number 824Hours 876.069Source: ISMERI EUROPA processing of MIUR data

Some of the ESF additional resources assigned to the programme have been utilised toexperiment new models of activities to stimulate co-operation between SME and publicresearch bodies and other research structures. The proposal is also aimed at trainingmanagerial profiles in the field of R&D in specific sectors such as the Italian cultural heritage,agriculture-food;

On the whole, the results achieved by the Multi-regional Programme can be summarised asfollows:- the programme has utilised all available financial resources- the programme has represented a unique planned action on R&D with specific reference to

the Mezzogiorno- the programme has not only financed work on infrastructures, as in the previous

programming period, even though it has apportioned a significant share to it.- the programme has financed a high number of research projects - on average of good

quality.- the programme has been very successful in supporting the Italian system of higher

education- the programme was not wholly successful in balancing supply and demand oriented

measures- the programme failed substantially as far as technological transfer and economic

applicability of research are concerned

The R&D priority carried out by the Regions in their respective POP was far less structuredand innovative. It generally consisted of financing research projects by universities, publicbodies and businesses, spending on related infrastructures, creating service centres, assigningscholarships and setting up courses. The physical indicators available were incomplete anddiffered for each region. Therefore, reporting them together would give a distorted view of thereal situation. In several regions (for example Sicily) a large number of projects were financed(254) for relatively low amounts (€133.000 is the average value)) and 70.866 m² of land wasequipped. In Calabria 6 research centres of notable scientific and economic interest werecreated or completed. In Basilicata 58 scholarships were awarded.

The general impression is that there was no precise plan to support research behind theseregional actions. The transfer of technology was sloppy and the link between researchinstitutes and businesses was not taken advantage of.



3.1.5. Development of Human Capital

During the 1990s conditions in the labour market in the South grew worse. The Communityhuman resources initiative therefore took place in the context of a rising trend ofunemployment which only began to reverse at the beginning of the new millennium.

The programmes for optimising human resources co-financed by the European Social Fundprogrammed an initial financial share of €3.179,74m, equal to 9.98% of the entire CSF. Thisquota had fallen slightly in the final balance due to the spending difficulties encountered inthe implementation phase.

The objective of the optimisation of human resources was tackled at central and regionallevel. The Ministry managed programmes accounting for 46% of resources and the rest wasentrusted to the regions.

The regional part of the evaluation was severely limited due to the lack of essential data.Firstly, all data relating to the employment of those trained were missing. For a fund whichhad job creation as one of its final objectives, this was clearly a large handicap. In many casesdata regarding the number of people who attended courses, the course characteristics, thenumber of courses and the number of hours was missing.

To arrive at reliable conclusions, three case studies were taken for which a homogeneous setof data was collected and estimates were used for missing indicators. The results obtained ledto easily generalised conclusions in that the training programmes for the various regions didnot differ in a significant way. (See Tables 32. 33 and 34)

For the various ESF regional programmes it would be inappropriate to speak of trainingstrategies as strategies did not exist. The programming documents processed training on offeron the basis of a very weak knowledge of the demand for labour. The offer of training and itsprecise composition for professional profiles were determined by demand. The regionscreated tenders with such broad boundaries that absolutely any training idea could qualify.Proponents justified their requests on the training needs for a particular professional group onthe basis of superficial considerations on the tendencies of the labour market.

A training strategy drafted from the bottom upwards encountered obvious limits. Firstly, thetraining structures operating in Italy did not have the group of skills necessary to carry outdetailed analyses of employees’ needs. Secondly, these structures did not have the ability tomake forecasts on trends in the labour market and on the professional groups emerging.

One of the fundamental questions which was not tackled in the Operational Programmes waswhich labour market the training supply should be anchored to, whether regional or national.If the local market were chosen, there would be a clear risk of an excess of training supply.There is the risk of producing a large quantity of trained people with no hope of finding a job.In the Objective 1 regions unemployment has a structural character and it is only partlyattributable to the inconsistency between demand and supply. If the national market werechosen, the risk would be that Objective 1 regions are training employees for the moredeveloped regions in the Centre and North and that the regions are financing the emmigrationof its best human capital. The appropriateness of a training strategy may therefore refer either



to the needs of the territory or to the needs of the individual worker. The two perspectivesmay lead to different policy options.

The initiatives of the individual regions in the 1994-99 CSF were translated into the creationof a very high number of courses with an equally high number of participants. It is notpossible to estimate the impact on employment of these courses and it is not possible to saywhether the training offered corresponded to the training needed. There is also no informationon the intrinsic quality of the individual courses. There were thousands of courses and attimes very few administrators materially capable of monitoring the initiatives.

However ,it was possible to measure the incidence of training on the variables of stock of theemployment market. (Table 31) The tables 32, 33 and 34 report pupil data divided bymeasure, by sex and (where available) by age in the three regions which made up our sample.The training by sector may have been taken up by both the employed and the unemployed,but from the figures there was no way of distinguishing between the two groups. SMEtraining was only available to the employed while the other measures were wholly aimed atthe unemployed. The training aimed specifically at the unemployed attracted a far greaternumber of pupils than that for the employed. Continual training for SMEs was marginal inCalabria and Sicily but not in Basilicata. The number of women who took advantage of thecourses was approximately 50%, distributed between the various measures without apparentuniformity. The number of pupils trained on the stock of unemployed was high in all theregions.(Table 31) In Sicily and Calabria the share oscillated between 15% and 20%. Thelimited case was Basilicata where the number of trainees exceeded the number ofunemployed. This could mean that a consistent number of employed people participated incourses and/or that several trainees followed more than one course. A similar incidence isobtained by calculating the relationship between female pupils and female unemployment andthe relationship between pupils under 25 and the young unemployed.

The number of pupils specifically affected by the measure dedicated to the long-termunemployed shows far more contained values for Calabria and Sicily – between 6% and 7%.But it was possible that the long-term unemployed were distributed across all types ofcourses.

Finally, the last indicator distinguishes among the pupils those who were definitelyunemployed. This indicator represents the minimum incidence in the extreme case in whichall the pupils from the sectoral measures were employed. In any event the incidence valuesremained significant – approximately 10% for Calabria and Sicily and almost 90% forBasilicata.



Table 59 Key indicators in trainingKEY RATIOS % %SICILY 1994 2000Pupils/unemployed 17,2 16,1Female pupils/female unemployed 20,9 17Long term unemployed pupils/long term unemployed N.A 7Unemployed pupils/unemployed 11,3 10,6CALABRIA 1994 2000Pupils/unemployed 19,23 14,04Female pupils/female unemployed 21 13,7Long term unemployed pupils/long term unemployed N.A 5,6Young pupils/young unemployed 29,8 28,2Unemployed pupils/unemployed 12,4 9BASILICATA 1994 2000Pupils/unemployed 158 154Female pupils/female unemployed 155 134,6Long term unemployed pupils/long term unemployed 173 196,7Young pupils/young unemployed N.A 38,7Unemployed pupils/unemployed 88 86Source: ISMERI EUROPA processing of MIUR data

Table 60 Training In SicilyMeasure pupils female pupils % female % measures 6.1 industry 10.826 3.642 33,641 17,616 6.2 tourism 2.839 1.893 66,678 4,620 6.3 agriculture 1.967 1.100 55,923 3,201 6.4 culture 1.388 740 53,314 2,259 6.5 health 1.703 1.509 88,608 2,771 6.6 fishing 55 16 29,091 0,089 6.7 research 343 191 55,685 0,558 total for 6 19.121 9.091 47,545 31,114 7.1 long-term unemployment 18.812 9.422 50,085 30,612 7.2 youth unemployment 12.018 6.391 53,179 19,556 7.3 disadvantaged groups 8.007 5.095 63,632 13,029 7.4 women 1.657 898 54,194 2,696 7.5 SME training 1.839 271 14,736 2,992 total for 7 42.333 22.077 52,151 68,886 TOTAL 61.454 31.186 50,747 100,000Source: ISMERI EUROPA processing of management authorities data



Table 61 Training in CalabriaMeasure pupils female

pupilsyoung people % female % young people %

measures 5.1 industry 2.774 1.385 1.308,00 49,928 47,152 10,23 5.2 tourism 1.038 535 434 51,541 41,811 3,828 5.3 environment 1.093 260 275 23,788 25,16 4,031 5.4 agriculture 588 260 275 44,218 46,769 2,168 5.5 health 2.434 1.143 481 46,96 19,762 8,976 5.6 fishing 131 13 15 9,924 11,45 0,483

total for 5.1 –5.6 8.058 3.596 2.788,00 44,626 34,599 29,717 5.7 long-term unemploy. 7.129 3.802 2.927,00 53,331 41,058 26,291 5.7 youth unemployment 9.406 5.316 8.074,00 56,517 85,839 34,688 5.7 disadvantaged groups 648 229 304 35,34 46,914 2,39 5.7 women 1.060 949 428 89,528 40,377 3,909

total for 5.7 18.243 10.296 11.733,00 56,438 64,315 67,278 5.8 SME training 815 333 246 40,859 30,184 3,006 TOTAL 27.116 14.225 14.767,00 52,46 54,459 100Source: ISMERI EUROPA processing of management authorities data

Table 62 Training in Basilicatameasure pupils female pupils young people % female % young

people% measures

6.1 industry 4.347 2.499 1.951,00 57,488 44,882 7,855 6.2 tourism 1.182 827 568 69,966 48,054 2,136 6.3 agriculture 1.622 901 498 55,549 30,703 2,931 6.5 environment 4.004 901 1.520,00 22,502 37,962 7,235 6.6 health 2.883 1.761 410 61,082 14,221 5,21 6.7 long-termunemployment

3.217 1.811 161 56,295 5,005 5,813

6.8 long-term unemp. aid 5.688 2.161 - 37,992 - 10,278 6.9 youth unemployment 16.184 11.213 11.591,00 69,284 71,62 29,245 6.10 aid for youngunemployed

3.603 1.541 3.603,00 42,77 100 6,511

6.11 disadvantaged groups 1.579 236 561 14,946 35,529 2,853 6.12 women 671 664 86 98,957 12,817 1,213 6.13 sme training 10.359 2.002 500 19,326 4,827 18,719 TOTAL 55.339 26.517 21.449,00 47,917 38,759 100Source: ISMERI EUROPA processing of management authorities data

3.1.6. Development and Diversification of Agricultural Resources and RuralDevelopment

The agricultural Axis represents 11.9% of the total resources of the CSF, the bulk of whichwas managed at the regional level within the POP or, as in Calabria, with a specific POM.

The programmes co-financed by EAGGF are composed of four main blocks, which can beconsidered the essential elements of the action strategy in the agricultural sector.

The first block is composed of measures which aim at:- diversification of production



- re-definition of the product- extending the calendar of production- processing and trading of agricultural products

Diversification of production implies the support of specific crops with good marketperspectives and the termination or restructuring of crops in excess supply.

Redefinition of the product means focusing production on high quality varieties. It also meansthe adoption of policies of certification, of marks of quality, of controlled areas of production.

Extending the calendar of production means diversifying supply with early and lateagricultural produce through the adoption of specific production processes.

Finally, processing and trading of agricultural goods means supporting the agro-industrysector, strengthening the links between local agro-industry (food) firms and local farms, andsupporting agricultural associations.

All of these intermediate objectives converge towards a common final objective, namely, tomove the composition of agricultural production towards the high value added segments,ensuring market sustainability of production and an adequate income for farmers.

The second block of measures, classified together as measures for rural tourism, includeactions on:- optimisation of typical products- environment protection and re-definition- support to agritourism firms- rural infrastructures

The optimisation of typical products implies support to production, processing and trading ofniche products for which the area has a special bent.

Actions on environment include both safeguarding and redefinition of abandoned areas andeconomic use of the territory.

The action on agritourism translates into the restructuring of rural buildings, creation of newsleeping accommodation and extra restaurant covers, a better economic use of farm premises.Action on rural infrastructures covers essentially actions on rural roads, water and energy. Itmay also include soft infrastructures such as the setting up of tourist itineraries

All of these measures are especially intended for internal areas and aim to diversify andintegrate farmers’ income. The final objective here is to block the ageing or exodus of thepopulation of internal areas, to prevent environmental abandonment and to redress theeconomic balance between depressed and advanced agricultural areas.

A third block of measures is specifically devoted to the support of individual agriculturalfirms. The main instrument is the so-called “business plan improvement”. The entrepreneurprepares a plan of tangible and intangible investments for which he requires financialsupport. The final objective here is to increase the competitiveness of the individual firmthrough a reduction in costs and an increase in productivity. Within this block occur actionsspecifically devoted to the creation of new firms by young entrepreneurs. The block also



includes the so-called “compensating benefits” which accrue to farmers of depressed areaswith particularly low incomes.

The final block of measures is financially less important but it may play an important role inoverall strategy. It includes agricultural services in the fields of research, dissemination,application of innovations and technology transfer.

The achievements of the Program can be related therefore to four final objectives:- Diversification- Redress of balance- Competitiveness- Dissemination

The first objective has been pursued by the Regions through actions of restructuring thecultivation of specific crops and of promotion of new crops as shown in the Table. Asignificant effort has been made in viticulture, in olive and in citrus cultivation, according toeach region’s specific composition. This has led to a rise in the average quality of theproduction of olives, oil and wine in several regions of the south.

Table 63 Crops object of Pop actionregional cultivation 1999 (a) supported hectares (b) (b)/(a)(ha) (ha) (ha) (ha) (ha) (ha) % % %olive viticulture citrus olive viticulture citrus olive viticulture citrus

Abruzzo 37.023 44.958 - 693 718 - 1,87 1,6 -Basilicata 28.350 11.371 7.441 - 70 - - 0,62 -Calabria 181.427 28.956 41.782 - 29 1.035 - 0,10 2,48Sicilia 157.588 158.170 106.998 1.446 4.817 - 0,92 3,05 -Source: ISMERI EUROPA processing of management authorities data

Some regions have made a particular effort in the re-structuring of greenhouses and ofnurseries as shown in the Table. This has been, generally speaking, a very successfulmeasure, and has worked towards extending the production calendar.

Table 64 Greenhouses object of Pop actionTotal greenhouses

(ha)EAGGF

(ha) InvolvedEAGGF on total

(%)Abruzzo 62,9 8,038 12,78Basilicata 75,3 1,100 1,46Calabria 185,8 0,180 0,10Campania 5.799,0 0,058 0,001Molise - 1,280 -Puglia 234,2 14,287 6,10Sardegna 685,6 N.A. N.A.Sicilia 8.970,0 677,422 7,55Source: ISMERI EUROPA processing of management authorities data

Finally, important results have been achieved in animal husbandry in some regions. Themeasure has aided thousands of firms to initiate the necessary changes to comply withnational and Community norms in hygiene and sanitary matters. This measure has also hadpositive implications for the environment.



As regards measures for rural development aimed at the reduction of internal territorialdisparity, it must be said that they form quite a heterogeneous mix of actions. The bulk offinancial resources has generally been devoted to rural, water and energy infrastructure and toworks of environmental reclamation. These actions have reached their specific targets butthey were not conceived as a part of an integrated set of actions to promote the attractivenessof an area.

The measures supporting agritourism (farm holiday) firms performed very well. Thepotential demand for this type of activity was underestimated and the endowment of themeasures was quite low in the original programmes. The success of the measures however ledto a financial increase and to overbooking.

A recent survey by the Official Institute of Statistics on agritourism has shown the territorialdiffusion of firms and the trends of growth. As the Table shows, agritourism firms areconcentrated in the central part of Italy, especially in Tuscany, and in the North East.Objective 1 regions account for a very small share of Italian agritourism firms. A spot checkshows also that in one year only, between 1997 and 1998, the number of authorised firmsgrew by almost 15%. In Objective 1 regions, the growth has been higher than the nationalaverage, even considering the low original stock.

All this means that agritourism is a very dynamic sector, that Objective 1 regions arebenefiting from this dynamism, that they have a very large margin of potential growth.

Table 65 Agritourism firms by region1997 1998 VAR. VAR.

number % number % number %Abruzzo 240 2,8 313 3,2 73 30,0Molise 17 0,2 21 0,2 4 23,5Campania 100 1,2 132 1,4 32 32,0Puglia 226 2,7 302 3,1 76 33,6Basilicata 204 2,4 238 2,4 34 16,6Calabria 113 1,3 113 1,2 - -Sicilia 119 1,4 146 1,5 27 22,7Sardegna 321 3,8 377 3,9 56 17,4ITALY 8.469 100,0 9.718 100,0 1.249 14,7North-west 1.311 15,5 1.390 14,3 79 6,0North-east 3.931 46,4 4.367 44,9 436 11,1Centre 1.887 22,3 2.319 23,9 432 22,9South 900 10,6 1.119 11,5 219 24,3Island 440 5,2 523 5,4 83 18,9Source: ISMERI EUROPA processing of ISTAT data

The following Table shows the Community Program’s contribution in terms of number offirms supported and new sleeping accommodation created. It should also be remembered thatthis estimate does not consider the number of firms supported and sleeping accommodationcreated as part of the measures of support for rural tourism financed with ERDF.



Table 66 Number of agritourism firms supported and sleeping accommodation created byPOP

Firms Bed placesABRUZZO 184 1.061BASILICATA 55 N.A.CAMPANIA N.A. 2.030PUGLIA N.A. 240SICILIA 198 2.328Source: ISMERI EUROPA processing of management authorities data

Lastly, within the set of measures for rural development there are actions that support typicalproduce or artisan products. Support to bee-keeping (apiculture) is the most widespread in theregional programs because of its positive environmental impact. However, the financialendowment of these measures has been marginal in the general framework

On the contrary, what has been of great importance in terms of financial resources has beenthe aid system for agricultural firms under objective 5a, aimed at increasing competitiveness.This includes business improvement plans, aids to young entrepreneurs, compensatingbenefits and other minor actions. This set of measures has represented the financially richestitem for most regions. Business improvement plans and aids to young entrepreneurs are twomeasures that boost investment and the creation of new enterprises. The compensatingbenefits are, on the contrary, a measure of assistance for financially weak farmers.

The number of firms supported by the aid system is shown in the table for those regions forwhich we have been able to find data. We have also estimated the average total investment(A.I) for each firm supported. The number of firms supported is high and the averageinvestment is low, with the exception of Basilicata. The same table shows the number ofpeople who have benefited from compensating benefits and the average benefit. (A.B.) Thenumber of people is high with the exception of Calabria. while the average benefit is very lowin Abruzzo and Basilicata.

Table 67 Firms supported by aid system and compensating benefitsSupported firms(*)

(n°)A.I.

(euro)Compensating benefits

(n°)A.B.

(euro)ABRUZZO 1.248 17.764 23.112 672BASILICATA 1.600 55.749 28.258 710CALABRIA 2.528 27.602 1.831 7.156SICILIA 2.671 21.282 36.777 2.412(*)business improvement plans and support to young entrepreneursSource: ISMERI EUROPA processing of management authorities data

It should be noted at this stage that the policy instrument most widely used in theimplementation of agricultural policies has been the financial incentive to firms. Consideringall measures, we have estimated that incentives have represented 60% to 70% of the total costof the regional programmes co-financed by EAGGF

The Table which follows is a heroic estimate of all agricultural firms which benefited fromincentives for investment excluding measures under rural development and compensatingbenefits. The danger for all regions is one of underestimation, in particular in the case ofsome particularly low values.



Table 68 Total agricultural firms supportedAgricultural firms in the region(n°)

(1)Agricultural firms supported

(2)(2/1)

Abruzzo 83.443 3.018 3,62Basilicata 82.438 1.349 1,64Calabria 198.420 6.256 3,15Campania 251.098 14.853 5,92Molise 34.105 10.000 29,32Puglia 354.720 409 0,12Sardegna 113.263 5.139 4,54Sicilia 366.948 18.495 5,04Source: ISMERI EUROPA processing of management authorities data

The final section of policies is made up of actions within the system of territorial services foragriculture. This is a system widespread in the territory which potentially plays an importantrole of information and diffusion of knowledge. The resources spent on supporting thissystem have been low. However, there have been individual projects in each region whichdeserve individual attention for their originality and innovative character. In Sicily, forinstance, an Information Service on Agricultural Meteorology has been created and is alreadyfunctioning. It was implemented by the Sicilian Agricultural Development Services made upof 1 regional centre, 9 provincial centres and 77 peripheral units. The Information Servicesoffer the following services:- a meteorological analysis of the recent past- a meteorological forecast- an analysis of the present stage of crop development- forecast of future crop development

Another interesting case is the Experimental Centres in Basilicata, which are an attempt tocombine research activity, the economic application of research and dissemination.

To sum up the main results of the Program evaluation:

The EAGGF programmes have in general undergone smaller re-programmings than theEDRF programmes. The use of “sponda” projects has also been less frequent and important.This implies that the original strategies maintained their internal consistency.

The objective of diversification of production and of product definition has been pursuedsuccessfully. In each region it is possible to identify specific areas (viticulture, olives,greenhouses, animal husbandry) where interesting results have been achieved.

The objective of reducing internal disparity has generally not been achieved. This does notmean that the individual measures were not successful or of use. The objective was veryambitious in itself and the measures were not integrated to produce enough strong synergies atgrass roots level. However action on agritourism has the merit of having opened up apromising field of economic activity.

The objective of increasing the competitiveness of the individual firms depends on the longterm effects of the investments. It is possible to say that the number of firms which benefitedfrom the incentives have been high and that, in several cases, the average investment was low.It is difficult, however, to say to what extent investment made by firms with the support ofthe Program will increase the relative efficiency of the system permanently. It is also a pitythat no data on the employment impact of the Program is available.



The objective of completing and integrating the production process has not been achieved.Many firms of the food industry have been financed but outside the framework of verticalintegration with agricultural firms or with trading firms. The Program has also not succeededin promoting farmers’ associations which are of crucial importance for trading in a systemcharacterised by very small farms.

3.2. PROGRAMME EFFECTS

3.2.1. Programme Contributions to Overall Social and Economic Changes

The assessment criteria of CSF efficacy depends to a great extent on the nature of EUprogramming, which tends to coincide with the entire national programming, at least forObjective 1 Regions. This role of substitution of EU programming made a concentration ofresources on a well defined strategy of development based on a few, well identified andintegrated objectives impossible. The programme as a whole cannot therefore be evaluatedwith reference to a specific strategy of development or on the achievement of some key targetvariables.

On the contrary EU programming was stretched to cover all possible areas of action and allproduction sectors. The programme was therefore aimed at moving forward on all fronts, inshorter or longer steps according to the size of the expenditure allotted to each action. It cantherefore be evaluated as a set of individual actions, most of which produced importantresults on economic and social fronts even though unable, taken together, to prime a specificdevelopment mechanism. On these criteria, the results of QCS 1994-99 were far fromnegligible.

The main results can now be summarised, with some simplifications and omissions, on apurely qualitative level. The results are shown in Tables below. At the end of the paragraphthe quantitative results of the whole programme are shown, on the basis of a data bankreferring to all the measures in the programme.

Type of action Content of action Economic result CommentsRailways - Electrification

- Double-track- Ten- New lines- Advanced

technology

Marginal reductions ininfrastructure gap

- No problems of implementationand of absorption

- Pool of pre-existing projects ofgood quality

- High competence of responsibleauthorities

- Gradual improvements within theexisting structure ofcommunication networks

TEN- Tyrrhenian axis- Adriatic axis- Main islands

Roads

Urban and long-distanceroads

Improvement of thequality and of thesafety of the transportsystem

Telecommunication - Numerical network- Fibre-optics- Access to ISDN

Diffusion of newinformationtechnologies



Regarding communications, significant action was made in the road and rail networks and inthe telecommunications system. As a result, the infrastructure gap with the rest of the countrywas reduced.

Type of action Content of action Economic result CommentSewage networks Improvement of the

sewage network atlocal level

Rubbish tipsRe-definition ofabandoned areas

Environment

Reclamation of urbanareas

Scattered results interms ofenvironmentalprotection andreclamation

- No particular problems ofimplementation and absorption

- Actions undertaken are part of theordinary work of local authoritiesand are not directly linked todevelopment projects

- High share of "sponda" projects- Environment is not an element of a

comprehensive strategy ofdevelopment

Water network and waterreservoir

Marginal increases inwater supply andreduction in thedispersion rate of thenetwork

Water

Depuration plants Marginal actions ondepuration plants

- Problems of implementation and ofabsorption led to a partial failure ofthe action

- Cause of the failure was theintroduction of a new law giving newregulations to the management of thesector

- High share of "sponda projectsNatural gas network Completion of the

methane networkEnergy

Electric network andAlternative energy

Strengthening of theelectric network

- No problems of implementation andof absorption

- Results in line with targetedobjective

- Weak results of the measures onalternative sources of energy

-

Regarding economic infrastructure the methane gas network was completed and theelectricity supply was improved. The water supply increased although not as much as hadbeen hoped or was necessary.

Environment action brought about the restoration of the sewer network in thousands of smalllocal areas, and many rundown areas were rebuilt and restored.



Type of action Content of action Economic result CommentVery high number of firmswhich benefited fromincentives

Financial aids tobusinessinvestment

Significant employmentimpact of the programme

Industrialequipped areas

Availability of space at lowcost and with basicinfrastructures

- Priority on the CSF in terms of totalcost

- High capacity of absorption ofmeasures based on financialincentives

- High leverage effects- Prevalence of the incentive as an

instrument of industrial policy- Crowding out effect of the law

488/92 relatively to other, lessadvantageous, incentive laws.

- Importance of a "well done" law forthe success of a measure

- Weak results of measures supportingdemand of services

- Weak results generally on innovativeand complex type of actions

- Industrial policy is based onindividual firms rather than onterritorial systems of firms orvertically integrated sectors

Industry

Localdevelopment

Support to firms within anintegrated local programmeof development

Interesting but emblematic results of localdevelopment policies (territorial pacts)

Support toresearch projectsand innovation

Results in terms of productand process innovation

Support to thesystem of highereducation

Upgrading of the system ofhigher education

University andresearch centresinfrastructures

Results in terms ofscientific infrastructure

Research anddevelopment

Support totechnologicaltransfer andindustrialapplication ofscientific findings

Improvement of thenetwork between actors ofthe R&D system

- The first comprehensive policy toolfor R&D specifically aimed atObjective 1 regions

- No problems of implementation andabsorption

- High number of research projects ofgood quality

- Very interesting results on the systemof high education

- Partial success in balancing demandand supply oriented measures

- Partial success in the technologicaltransfer measures

Industrial policy was dominated by Law No. 488 regarding national incentives which proved auseful and effective tool for companies. Regional authorities passed incentive bylaws tosupplement Law No. 488 for smaller enterprises and artisans in particular. Overall thebeneficiaries of action were numerous, the measures showed a high level of financialabsorption and a massive flow of resources reached small and medium firms.

In Research and Development, many research projects were financed nationally andregionally even though there is uncertainty about the economic application of their results.The improvement of training programmes was unequivocally a positive result. An importantand innovative result of the programme has been achieved in the field of higher education.

In tourism, action worked in three directions. These were the improvement of traditionalsupply, diversification into rural tourism and the improvement of ancient buildings, museumsand archaeological sites. The programme as a whole contributed to the positive performanceof the tourist sector in the second half of the nineties.



Type of action Content of action Economic result CommentHuman resources Training courses for

the employed,unemployed anddisadvantagedgroups.

- Very high number oftraining courses

- Very high number ofpupils and of hours ofcourse

- Very large spectrum oftopics covered by thetraining courses

- Improvement of humancapital

- Training courses based on anunsatisfactory analysis of demandfor labour

- Lack of a monitoring system ofthe quality of the courses

- Lack of a monitoring system ofthe employment impact of thetraining courses

- Lack of an integration betweencourses and possible workoutcomes

- Weak involvement of firms in theimplementation of theprogrammes

- The programme is in danger ofcreating an excess of traineeswithout a concrete hope offinding a corresponding job

The European Social Fund was used for thousands of training courses which were attendedby many people, particularly the unemployed and disadvantaged. It is not known what impactthese courses had on employment figures but they undoubtedly increased human capital.



Type of action Content of action Economic result CommentsDiversification and definitionof productionLengthening of the calendarof production

Development anddiversification of

agriculturalresources

Financial aids tobusiness investmentto diversify crops

Hygienic and sanitaryimprovements in animalhusbandry

- The objective of diversification ofproduction and of productdefinition has been pursuedsuccessfully (viticulture, olives,greenhouses, animal husbandry)

Environmentprotection and re-definition

Scattered actions withpositive environmentalimpact

Incentives toagritourism

Increase in bed-places in theagritourism sector

Incentives to typicalproduce

Optimisation of typicalproducts

Ruraldevelopment

Ruralinfrastructures

Marginal improvements inthe endowment of water,roads and energy in ruralareas

- Measures for rural developmentwere weakly integrated

- The objective of reducinginternal disparities was tooambitious and it has not beenachieved

- Very promising is however theaction on agritourism

Financial aids toimprove companyproductivity andreduce productioncosts

The number of firms whichbenefited from the incentivesin all EAGGF programmeswas very high

Objective 5a

Benefits for lowincome farmers

High number of low incomefarmers receivingcompensating benefits

- Strong prevalence of theincentive as an instrument of theagricultural policy

- The objective of completing andintegrating the production processhas not been achieved

- The objective of promotingfarmers' associations has not beenpursued

Agriculturalservices

Actions in the fieldsof research,diffusion,application ofinnovation andtechnology transfer

Individual projects have beencompleted with a potentiallyimportant impact on thecompetitiveness of thesystem

- This is a field of experimentationfor innovative projects addressedto the whole system of farms

Lastly, there were three main areas in action in agriculture. The first was the traditionalinvestment incentives in farms for company improvement. These incentives too were widelyand easily used. Thousands of companies benefited, although sometimes the publiccontribution was for very small amounts. The second area, again through financial incentive,was improvement and diversification of crops. This had clearly positive results particularly instrategic areas of agriculture in the South of Italy. The third area was rural developmentwhich consisted of improvement of abandoned areas, repairing or constructing rural roads,promotion of rural accommodation and support for typical local produce. Measures were tooweakly integrated to prime a mechanism of rural development in depressed areas. Action onagritourism met a strong demand.

An attempt to quantify these results has been made with the following tables, which reportthe physical output of the whole Programme. The figures shown should be treated with somecaution because of the difficulties met in gathering the "right" data. There are three mainpossible reasons for distortion.

The first is the lack of a physical indicator for an implemented action. There are actions forwhich no physical indicators have been gathered. There are also cases where similar actionshave been monitored with different physical indicators.



The second possible reason of distortion occur when the physical indicators refer to a yearbefore the completion of the action, that is before December 2001

The third possible reason is when the physical indicator is estimated on the basis ofcommitments rather than on the basis of actual payments.

The first two cause an underestimation of the outputs while the third may lead to anoverestimation of the outputs.

On the whole, the picture is likely to be biased downward.

The first table is a summary by sector, while the second is more comprehensive by axis.



Table 69 Summary of physical indicators by sectorSECTOR Physical Indicator unit of

measurementQuantity

Electricity network km 217,0Rail network km 537,7Rail network - double track km 186,6Advanced railway technology km 582,0Road network (new) km 253,6Road network (re-structured) km 493,6Motorway network (new) km 8,4Motorway network (re-structured) km 45,4Road works km 16,9

TRANSPORT -INFRASTRUCTURES

Projects n. 31,0ISDN access n. 231.239,0Couple-copper cable km 627.043,0Optic fibres km 137.797,0Numerical numbers km 49.952,0Numerical numbers n. 1.838.336,0

TELECOMMUNICATIONS

Radio-bridges - number km 4.469.760,0Re-defined areas * sq.m. 3.852.944.274,0Areas with infrastructure * sq.m. 502.659,0Breakwaters m 46.517,4Selling-off capacity sq.m./g 10.829,0Call lines n. 33,0Depurator plants n. 79,0Lifting apparatus n. 31,0Actions of promotion /optimisation n. 86,0Actions of restoration n. 118,0Works for protection km 10,4Tourist/didactic itineraries km 73,5Sewage network (new) km 20,4Sewage network (restructured) km 340,7

ENVIRONMENT

Water network (extension) km 9.445,0User connection n. 55.981,0Cabins mc/h 79.656,0

Mva 142,0Conduits m 4.186,0Installed power Mw 181,2Electricity network km 5.207,0

ENERGY

Methane network km 1.713,8Recipient businesses n. 105.695,0 - of which large businesses n. 351,0Businesses created n. 720,0Structures built n. 73,0Areas with infrastructure * sq.m. 9.928.621,0Equipped areas ** n. 64,0actions of promotion/optimisation n. 2.366.871,0

INDUSTRY,ARTISAN ANDSERVICES TOBUSINESSES

days Tech Assist /consultancy purchased n. 10.737,0Purchase of equipment and machinery n. 236,0Aid to young farmers n. 5.225,0Connection of utilities n. 114,0Pupils n. 27.219,0Areas with infrastructure * sq.m. 186.000,0Beehives n. 10.497,0Recipient firms n. 74.741,0Heads of livestock n. 239.768,2Courses n. 1.593,0days Tech.Assist/ /consultancy purchased n. 94,0Depurator plants n. 15,0Lifting apparatus n. 1,0Increm. production/commerc. capacity tonn 501.054,2

DIVERSIFICATIONOPTIMISATION

OF AGRICULTURALRESOURCES AND RURAL

DEVELOPMENT

Actions of promotion/optimisation n. 80,0



SECTOR Physical Indicator unit ofmeasurement

Quantity

Total hours n. 29.160,0Works for protection km 6.028,0Placings/workstations n. 149,0Beds n. 7.102,0Projects n. 649,0Electricity network km 314,0Water network (extension) km 421,5Road network (new) km 2.511,9Road network (restructured) km 27,0Reservoirs m3 2.405.443,9Greenhouses and nurseries constructed sq.m. 7.021.837,6Structures built sq.m. 43.530,0

n. 263,0Studies effected n. 349,0Surface areas involved ha 377.781,8Volume of construction m3 260,0Recipient firms n. 11,0Cold storage and normal storage m3 3.970,0Recipient firms n. 3.945,0Increm. Production/commerc. capacity tonn./year 197.132,3Incentivised motor power kW 23.347,8

FISHING

Reduction in motor power capacity kW 166.664,0Pupils n. 9.858,0Equipped areas * sq.m. 77.845,0Areas with infrastructure ** n. 79,0Re-defined areas * sq.m. 1.079.336,0Service and movement areas sq.m. 2.436,0Seminars and awareness-raising activities n. 16.145,0Service centres n. 421,0Courses n. 408,0days Tech. Assist. /Consultancy purchased n. 5.632,0Sports and recreational facilities sq.m. 348.733,0

n. 159,0Recipient businesses n. 926,0Businesses created n. 47,0Actions of promotion/ optimisation n. 447,0Actions of restoration n. 758,0Tourist/didactic itineraries km 97,9

n. 16,0Tourist ports and landing stages created n. 17,0Beds on boats n. 1.070,0Beds n. 31.963,0Projects n. 114,0Road network (new) km 11,7Structures built sq.m. 8.589,0

TOURISM

n. 99,0Courses n. 27.368,0Pupils n. 880.159,0Areas with infrastructure * sq.m. 30.450,0Sports and recreational facilities n. 2,0Recipient businesses n. 24.310,0Total hours n. 100.685.276,7Placings/workstations n. 10,0Social structures sq.m. 14.425,0

OPTIMISATIONHUMAN RESOURCES

(OB. 1, OB. 3, OB. 4)

n. 7,0Employment created n. 96.794,0EMPLOYMENTEmployment involved n. 9.287,0

Source: ISMERI EUROPA elaboration on programme data (monitoring, evaluation and implementation reports)



Table 70 Summary of physical indicators by priority axisAxis Physical indicator unit of

measure.Quantity

ISDN access n. 231239Areas with infrastructure sq.m. 2360000Re-defined areas sq.m. 2585000000Service and movement areas sq.m. 39648174Service and movement areas n. 10Wharves m 5535Couple-copper cable km 627043Optic fibre km 137797days Tech. Assist./consultancy purchased n. 1142Incidence of double track of whole route % 138Actions of promotion/optimisation n. 3Numerical numbers

km 49952

n. 1838336Road art works km 17Radio-bridges number km 4469760Tourist ports and landing stages created n. 1Projects n. 132Electricity network km 217Rail network km 538Double-track rail network km 187Road network (new) km 262Road network (re-structured) km 539Structures built sq.m. 1789Studies effected n. 1Advanced railway technology km 582

COMMUNICATIONSphysical cover: 85%financial cover: 91%

236Purchase of equipment and machinery n. 5225Aid to young farmers n. 114Connection of utilities n. 27219Pupils n. 186000Areas with infrastructure sq.m. 10497Beehives n. 49Organisations/bodies involved n. 25Activation of consortiums n. 37Activities of assistance, evaluation and monitoring n. 664Seminars and awareness-raising activities n. 48593Recipient firms n. 6Actions of technology transfer and dissemination n. 15Data banks n. 297Cabins n. 4017Experimental fields n. 239768Head of livestock n. 13Service centres n. 1593Courses n. 94days T.A./ consultancy purchased n. 15Depurator plants n. 1Lifting apparatus n. 19640Recipient businesses n. 6434Businesses involved n. 501054Increm. production/commerc. capacity tonn 77Actions of promotion /optimisation n. 3Actions of promotion/optimisations (marks of quality) n. 29160Total hours n. 722Employment involved n. 130Employment created n. 6028Works for protection km 149Placings/workstations n. 7102

DIVERSIFICATIONDEVELOPMENT

OF AGRICULTURALRESOURCES AND

RURAL DEVELOPMENTphysical cover: 63%financial cover:67%

Beds n. 649



Axis Physical indicator unit ofmeasure.

Quantity

Projects n. 314Electricity network km 422Water network (extension) km 2512Road network (new) km 27Road network (re-structured) km 2405444Reservoirs m3 7021838Greenhouses and nurseries created sq.m. 43530Structures built

sq.m. 263

n. 349Studies effected n. 377782Surface area involved ha 260Volume of constructions m3 39335Pupils n. 62Equipped areas n. 9456121Areas with infrastructure sq.m. 2Areas with infrastructure n. 472500Redefined areas sq.m. 5Organisations/bodies involved n. 34Activities of assistance, evaluation and monitoring n. 142Seminar and awareness-raising activities n. 41Recipient firms n. 27900Selling-off capacity tonn./year 841Call centres n. 53Service centres n. 83Recipient consortiums n. 1601Courses n. 10737days T.A./ consultancy purchased n. 6Plants for treatment of waste n. 21Sports and recreational facilities n. 91476Recipient businesses n. 14090Businesses involved n. 720Businesses created n. 36Increm. production/commerc. capacity tonn 2366871Actions of promotion/optimisation n. 16Actions of restoration n. 418228Total hours n. 8565Employment involved n. 96534Employment created n. 23

km 49Tourist/didactic itineraries n. 8Placings/workstations n. 1678Beds n. 170Hospital beds n. 1824Projects n. 30R&D projects n. 9Electricity network km 38Water network (extension) km 1183Road network (new) km 22Road network (re-structured) km 73Structures built n. 5690

sq.m. 20Social structures n. 21Studies effected n. 1369827

INDUSTRY,ARTISAN ANDSERVICES TOBUSINESSES

physical cover: 61%financial cover: 91%

Volume of construction m3 223Purchase of equipment and machinery n. 55981Connections of utilities n. 27453Pupils n. 70866Equipped areas sq.m. 5018066

INFRASTRUCTURESTO SUPPORTECONOMICACTIVITY

physical cover: 54%financial cover: 68%

Areas with infrastructure sq.m. 8




Quantity

Areas with infrastructure n. 3852944274Re-defined areas sq.m. 33Organisations/bodies involved n. 397Seminar and awareness-raising activities n. 2352Actions of technology transfer and dissemination n. 5Data banks n. 46517Breakwaters m 83Study grants /contracts with researchers n. 142

kW 79656mc/h 2124

Electricity cabins n. 10829Selling-off capacity sq.m./g 33Call centres n. 30Medical centres n. 6Service centres n. 17

km 715643Network collectors m 3674027Conduits m 491Courses n. 66Depurators n. 1300days TA/consultancy purchased n. 3Plants n. 79Depurator plants n. 31Lifting apparatus n. 10Plants for the treatment of waste n. 230Businesses involved n. 348Innovations introduced n. 86Actions of promotion/optimisation n. 118Actions of restoration n. 109Language laboratories n. 17753199Total hours n. 10Works for protection km 212Electro-mechanical works n. 74Tourist/didactic itineraries km 119Beds n. 329Hospital beds n. 113

kW 69Power installed Mw 573Projects n. 412R&D projects n. 5207Electricity network km 96Drainage network km 68Drainage network km 33Drainage network (new) km 273Drainage network (re-structured) km 12190Water network (extension) km 267Water network (new) km 1714Methane pipeline km 2108303

m3 25Reservoirs n. 410928

sq.m. 96Structures built n. 51Studies effected n. 385Pupils n. 11Recipient firms n. 58Courses n. 3970Cold storage and normal storage m3 3945Recipient businesses n. 197132Increm. production/commerc. capacity tonn./year 23348

FISHINGphysical cover: 57%financial cover: 89%

Incentivised motor power kW 5




Quantity

Projects n. 166664Reduction of motor power capacity kW 21Structures built n. 400Surface areas involved ha 9858Pupils n. 77845Equipped areas sq.m. 79Areas with infrastructure n. 1079336Re-defined areas sq.m. 2436Service and movement areas sq.m. 16145Seminar and awareness-raising activities n. 421Service centres n. 408Courses n. 5632days TA /consultancy purchased n. 348733

sq.m. 159Sports and recreational facilities n. 926

Recipient businesses n. 47Businesses created n. 447Actions of promotion/optimisation n. 758Actions of restoration n. 27090Total hours n. 98

km 16Tourist/didactic itineraries n. 17

Tourist ports and landing stages created n. 1070Beds on boats n. 31963Beds n. 114Projects n. 12Road network (new) km 8589

sq.m. 99

TOURISMphysical cover: 66%financial cover: 84%

Structures built n. 880159Pupils n. 30450Areas with infrastructure sq.m. 27368Courses n. 2Sports and recreational facilities n. 24310Recipient businesses n. 100685277Total hours n. 130Employment created n. 10Placings/workstations n. 14425

sq.m. 7

OPTIMISATION OFHUMAN RESOURCES

E(OB. 1, OB. 3, OB. 4)physical cover: 39%financial cover: 31%

Social structures n. 27Activities of assistance, evaluation and monitoring n. 23Actions of promotion/optimisation n. 4

TECHNICAL,PUBLICITY AND

MONITORINGASSISTANCE

Studies effected n. 231239

Source: ISMERI EUROPA elaboration on programme data (monitoring, evaluation and implementation reports)



3.2.2. Key Influences on the Effectiveness of the Programme

European and National Policy: The Place of EU Planning in National Programming

An important element in assessing the efficiency of CSF policy in Italy is the relationshipbetween regional and national planning on the one hand, and EU planning on the other.

National planning in Italy has never been successful. In the 1960s there were attempts to planpublic intervention but these were never put into practice. Plans for development were neveractually applied even though several were approved.

The same is true of planning at regional level. Particularly in Objective 1 regions, there wasno serious attempt to plan medium- or long-term public spending. Managers, recipients ofactions, details of projects, regulations on implementation and deadlines were never specified.

Thus, when European Community planning reached Italy it did not become a part of nationalplanning. More particularly, it did not become that part of regional and national economicplanning devoted to economic development. Instead it filled a vacuum and took the place ofnational and even more of regional planning. In the individual Objective 1 areas, the 1994-99POP constituted the only planning in operation. Almost all items of public expenditure, apartfrom staff expenses, do not have other sources of financing or other planning guidelinesoutside the POP. This led, we shall argue, to a dispersal of resources and a lack of integrationbetween measures as well as a lack of strategy for economic development.

This is an important point in assessing CSF efficacy during this period.

Dispersal Of Resources

An inevitable consequence of EU planning substituting national planning is that it has tocover all areas of public spending. In other words, it covers not only spending fordevelopment but has to include ordinary running expenses and cover all sectors. Infrastructureaction thus comes to include aqueduct and sewer repairs, forest maintenance, urban parks andgreen areas etc. These are of course all necessary but are only indirectly connected witheconomic development. The same type of all-embracing logic is found in action inproduction, where companies from each and every sector, size and geographical area allreceive benefit. Projects are not selected on the basis of a few well-defined strategicobjectives in this case either.

Low Level Of Integration Between Policy Measures

The dispersal of resources leads to a low level of integration between policy measures. Themost common situation is that individual initiatives are self-justifying. It is sometimespossible to identify links between different measures and to reassemble pieces of strategiesbut action has never been carried out in an integrated fashion. It is common for those incharge of a measure to know absolutely nothing about other measures even within the samesub-project. The substantial failure of monitoring activity has also meant that planningofficers for the regions or for national government did not succeed in co-ordinatingcommunity programmes. In addition, between the three Funds, not only has there been acomplete absence of co-operation but even communication has been lacking.



The Absence Of Development Strategy

The dispersal of resources and absence of co-ordination between different actions meant thatthere was no defined strategy for action in the 1994-99 CSF. The final objectives, theinstrumental objectives and the interaction mechanisms connecting different variables werenever identified. Planning objectives were generic and often excessively ambitious, and theways the different measures were to work were never specified. In rural development forexample, there is no indication of the variables to be given priority, nor an indication ofinteraction between the different measures in the sub-programme, and thus no indication ofthe development mechanism it is hoped to activate. The clearing of a large area of forest,constructing a small road through the countryside, action for a nature reserve, the constructionof a storage pond for water and help for small honey-producers are all measures from onesub-programme, which can be justified in themselves rather than being considered parts ofdevelopment design. Another example occurred in environmental planning, where againthere are many measures useful in themselves but not linked to any development objective. Awater purifying plant is built, sewers are repaired, an abandoned area is reclaimed but there isno underlying total development project. The same considerations which apply to actions ininfrastructure, apply to industrial policy. It is very doubtful that a ‘shower’ of financialincentives on tens of thousands of companies constitutes a development strategy. It is apolicy based on two unverified suppositions. The first supposition is that investing inbuilding or machinery, often on a small scale, can permanently modify the competitiveness ofa company. The second is that the competitiveness of an industrial system is the sum of thecompetitiveness of the individual companies. Industrial policy plans in the 1994-99 CSFwere not designed to strengthen area company systems nor to complete entire productionchains.

Policy and Management

These failings in strategy have been worsened by the exclusive concentration on the financialaspects of planning in the execution phase. Little attention has been paid to economicefficiency and strategic congruence of an action. Those responsible for the regional and multi-regional programmes showed surprise and embarrassment when questioned on economicresults and on strategies while they were ready to answer any questions on the financialperformance of the programmes. The long delays which built up in the starting phase of aprogramme brought about a continuous emergency situation where the problem became notto lose EU and national financing, often the only remaining opportunity for implementingaction. This meant, as we have seen, that the pool of projects was continuously modified onthe basis of how quickly they could be put into place and absorb resources.

How to Evaluate the CSF

The above considerations do not lead to the conclusion that the CSF was a failure. Theysimply mean that the Programme can be evaluated on the basis of the effectiveness of itsindividual measures and not with reference to a specific strategy of development.On these criteria, as we have seen, the CSF has led to important results in various fields ofeconomic activity.

Changes in Practice and Policy



It is important to note that there is widespread awareness of the weaknesses in the 1994-99CSF. The Finance Ministry’s guidelines for 2000-06 clearly attempted to strengthenintegration between measures. It also identified specific methods of carrying them out, suchas integrated area plans, production chain plans and integrated sector plans. The documentalso outlined a strategy of development and identified priorities for local growth for the socio-economic models of Objective 1 areas. These priorities are the so-called "break variables"used as quantitative targets of the Plan and include export capacity, degree of economicindependence, tourist attraction capacity etc. These quantitative macroeconomic targetsshould make possible an evaluation of the overall effectiveness of the programme and itsstrategy. So the 1994-99 CSF led to policy changes which, at least on paper, should solvesome of the problems of the past.

3.2.3. Success Factors

FACTORS OF SUCCESS- Pool of pre-existing projects of good quality- High competence of the staff responsible for the action- Presence of a staff specifically for implementation of EEC programmes- Routine actions easy to implement by competent authorities- Individual commitment to work and sense of responsibility- Incentive laws simple to use and clearly displaying the economic benefits for

beneficiaries

Many factors determined the success of the various projects within the Programme. Belowwe list those most frequently appearing in documentation and interviews.

- The existence of previous projects in the area of action and the presence ofcompetent operators. This was the case for Programmes in the Communications axis(roads, railways and telecommunications). The public authorities responsible for them(some of which have recently been privatised) often had experience in and consolidatedexperience of carrying out projects. They always have ‘work in progress’ and on-goingprojects or parts of projects can always be inserted into EU projects. Except in rare cases,there were no problems in carrying out action in this type of situation. There was a highlevel of absorption and objectives achieved matched those planned. This was the casealso for the actions in arts and ancient buildings which could use the expertise andprojects of the Italian Superintendent of Arts.

- Routine action constituting normal activity. Action in infrastructure is normally theresponsibility of local authorities. Sewer, drain and water supply maintenance, urbanand rural traffic measures are carried out regularly by local Comuni (council) authoritiesand there were no problems in absorption or execution.

- Incentive laws with simple procedures of use and selection and clearly displaying theeconomic advantages for beneficiaries. Firms had already learnt how to use Law No.488, which gave clear economic advantages and at most required the help of a consultantto be used. The selection process was semi-automatic and carried out by banks so that itwas quick to use. The law had a very high level of absorption and largely replaced lessbeneficial or more complicated incentive laws. Other local bylaws on incentives passedby regions to supplement Law No. 488 were quick to use and had a high level ofabsorption. Agricultural companies as well as industry benefited.



3.2.4. Obstacles

OBSTACLES- Long delays in the start of the programme- Absence of staff with a strategic vision of the Programme- Absence of a pool of projects ready to be implemented- Projects with a long time of execution- Innovative projects, the procedures of which were not familiar to the management

responsible- Poor quality of projects- Absence of a head for the individual measures- Failure of the monitoring system- Incentive laws clearly competing with other, more advantageous, incentive laws- High turnover in the personnel responsible for the management of the programme The next list shows those factors causing difficulty in projects.- The time period for the execution of the project was long. Because of the delay in the

starting phase of the Programme, it was often thought to be impossible to complete worksin time and they were replaced by projects with a faster capacity of absorption or evenwith projects already started or completed outside the Programme. This is one reason whycomplex projects met difficulties and were substituted by simple projects.

- There was no legal framework which would have helped a linear execution withouttime-wasting. This is of course an example of bad planning: the lack of the necessaryrequisites for implementing the action

- Bodies carrying out the projects were required to follow new untried procedures. This isa reason why innovative projects are substituted by routine projects

- Incentives laws were imperfectly structured. In tourism, for example, the requirementfor private co-financing was often too high and led to many projects being withdrawneven though they had been approved. An almost diametrically opposite situation occurredwhen firms could get financing too easily or too early with respect to the realisation of theinvestment. This led to financial irregularities. The law supporting demand of services metwith serious problems of this type. The failure of some actions was also due to incentivelaws which proved uncompetitive compared to similar laws. This was the case for manylaws when compared with the 488. The lesson of this is that a well structured law matters.

-

3.2.5. Fund Distribution and Effectiveness

Programmes financed by the ERDF

The main line of expenditure of ERDF, and that with a higher leverage effect, was theindustrial system.

In financial terms action supporting the production sector formed the central axis of the CSF.It was based primarily on a Operational Programme administered centrally, and secondarilyon actions administered regionally.



In support of the production sector, action hinged on the instrument of incentives for business.Incentives were not limited to particular sectors or geographical areas. That is, support wasnot aimed at the system of firms but at individual firms.

The scope of incentives comprised aids to investment, support of demand for services,stimulus given to enterprises run by young people and women, promotion of financialengineering techniques and support of investments with a positive impact on the environment.The part relating to aid to investment absorbed the major part of resources since it was basedon law 488/92 that proved to be advantageous and easy to apply. Measures to support demandfor services, techniques of financial engineering, and investments with a positive impact onthe environment had less success.

Overall, the operational programme had an impact on employment with the creation of morethan 100,000 new jobs, more than the objective value.

The choice of using incentives as an essential instrument in trade and industry policy wasrepeated in regional programmes. The regions concentrated in particular on financing arts andcrafts businesses, reaching a high number of recipients with a low amount of public money.The regions made almost no attempt to differentiate their own trade and industry policy eitherby sector or by geographical area or by applying more stringent priorities to their own aidsystems. On the contrary, the use of aid to arts and crafts businesses has proved to be aninstrument of enormous help to the regions in accelerating expenditure and absorbing CSFresources.

The effectiveness of the industrial policy measured in terms of number of firms involved,of amount of investment undertaken and of employment created has been very high. Themain merit of this result must be attributed to the national law 488/92 which has radicallyreduced the "waiting time" for the delivery of the grants. The effectiveness of the policy interms of increased competitiveness of the industrial system is more difficult to evaluate. Theunsolved issue is the extent to which widespread undifferentiated incentives to all businessesare able, when taken all together, to increase permanently the competitiveness of the systemas a whole.

The second line of expenditure of ERDF was on economic infrastructures: water,environment, scientific research and energy.

At the beginning of the 90s - and it is still the case today - the problem of water was the mostserious problem in many parts of the Mezzogiorno, as the drought that struck the area in 2002has shown. Water was, accordingly, the main objective of action within the axis on economicinfrastructure

Action on water was composed of multi-regional programmes and on various actions atregional level.

The multi-regional programme has had only partial success because it coincided with theintroduction of a new set of laws that have completely changed the management of the sectorstructures. This coincidence made the implementation of the programme particularly difficultand the objectives achieved have been well below the targeted objectives.



Action at regional level has improved the local situation by means of widespread actions ofmaintenance and reparation of the water and drainage networks. A very great amount hasbeen spent on this and results have been obtained. However, within the context of actionordinary maintenance and many “sponda” projects have been included.

At the end of the CSF the water problem is substantially unsolved.

On the environment, apart from drainage systems, work has been done on re-examiningsubstandard areas, reclaiming urban areas, expansion or inspection of rubbish dumps.Individual actions were successful but no objective of financial optimisation ofenvironmental resources was followed with CSF. Environment was not an element of adevelopment strategy in the 1994-99 period.

Energy was not a priority of CSF. The programmes implemented aided the completion of thenatural gas network and the development of the electricity network. Little was done on theproduction of alternative sources of energy.

With reference to support given to Scientific Research, the multi-regional operationalprogramme was the first systematic plan to support research and development in theMezzogiorno. The programme produced significant results in higher education in theMezzogiorno; it financed a large number of high quality research projects; it only partlymanaged to transfer the focus of operation from actions supporting supply and actionssupporting demand. The programme did not however obtain good results on technologytransfer and the financial application of research results. On the whole, the programmecontained many innovative elements and its effectiveness in achieving the targeted objectiveswas satisfactory.

Action on scientific research implemented at regional level was translated into financing amultitude of research projects with no systematic design and without any visible economiceffects. Action here seems to have followed the logic of a political distribution of resourcesamong universities and research centres.

The third line of expenditure of ERDF was Communication, comprising transport andtelecommunications.

The programme did not make exceptional efforts to solve specific problems in the structure ofthe communications system. It financed the continuation of programmes that were already atthe preparation or implementation stage. The central operation in this field did not encounterdifficulties because it has achievable quality projects with on-going technical support. Theresults are thus in line with the financial resources committed to it. In the main the definedobjectives for telecommunications and the rail and road networks were achieved (apart fromthe Messina-Palermo motorway). The two main axes of road communication - the Adriaticaxis and the Tyrrhenian axis- were strengthened; the east-west transversal line (Brindisi-Lamezia) was improved; the road system of the two mayor islands was upgraded.Improvements were also achieved in the railways system of Objective 1 regions in terms ofnew lines, electrification of lines and of increase in the share of double -track railway. Thegap with the rest of the country in this field remains however unacceptably high. Quality ofservice, speed of journey, coverage of the network and safety are still low to the south ofRome.



Action at local level on the other hand was broken up into many operations to improve townand country roads. This was certainly useful in solving particular problems of congestion butbelonged more to the area of normal maintenance than a true operation of economicdevelopment.

A final use of ERDF was to support the tourist sector.

A logic of integrated action emerged in the sector of tourism, with the various measuresseeming to complement each other. Aid to investment in hotels, diversification of theaccommodation available into rural tourism and bed-and-breakfast inns, sports and free timefacilities located in tourist areas, and optimisation of Italy’s cultural heritage are all actionsthat are potentially complementary and mutually reinforcing.

The integration however only seemed so since the management of the various measures werein watertight compartments. Furthermore, actions concerning the environment and certainmeasures of rural development, which would also form an integral part of action aimed attourism, were considered without reference to the optimisation of tourism itself. Under theheading “Environment”, for example, local bodies restructured their drainage systems whileunder the heading "rural development" they repaired country roads.

Actions to aid investment of businesses engaged in tourism encountered difficulties inimplementation that reduced their impact. This was mainly due to the high private co-financing required. Very promising were the results of rural tourism and bed-and-breakfastinns (financed by Eaggf funds) where high demand was seen. Results for the optimisation ofItaly’s cultural heritage were extremely positive, full advantage being taken of the wide rangeof pre-existing projects at national level.

The results obtained in tourism are also comforting when viewed in relation to the trends inthe sector over the last few years. European community actions have helped to increase anddiversify the facilities and services on offer and to deal with the growing demand in the1990s.

An overall evaluation of the ERDF can be made on the basis of two distinct criteria ofjudgement.

The first criterion, the more rigorous, is the impact of ERDF on promoting a well definedstrategy of development. The 1994-99 CSF cannot however be evaluated on the basis of thiscriterion because it did not contain a comprehensive and coherent strategy of development.The programme was made up of sub-programmes and of measures weakly integrated in theirconception and even less integrated in their implementation. The programme was not abletherefore to prime a mechanism of internally generated development

The second criterion is the economic usefulness of the individual actions undertaken by theProgramme. The set of results achieved by the Programme on the various fields of action issatisfactory, as the physical indicators displayed in par.5.1 have shown. The Programme hasallowed investments by thousand of firms in the industrial and the tourist sector, even in areasof relative deprivation; it has allowed local authorities to undertake public works for whichthey did not have the necessary financing; it has improved the infrastructure endowment ofthe southern Regions reducing the gap with the rest of the country.



A final positive note relates to the contribution of the ERDF to promote employment. Thedirect impact of the ERDF on employment has not been negligible, as roughly estimated inpar.5.1. The main mechanism in achieving employment creation has been direct aid toinvestment.

Programmes Co-Financed by ESF

The Regions’ strategy on training was not based on an adequate analysis of training needs ineach region. For this reason the range of training options was determined by training bodiesand other organisations operating in this field. Training on offer was basically translated intoa multitude of courses for employed and unemployed people covering a vast range ofprofessional skills. The number of courses that were held, the participants who weretrained and the total number of hours were extremely high. There are cases where thenumber of trainees in the six years of the planning period was higher than the number of theregistered unemployed

The link between training and employment, however, is weak and not explored.

In many cases the courses contained the implementation of initial training but few coursessaw the involvement of businesses from the planning stage or their full integration inimplementation. On-going monitoring of courses either during or after they ended did not takeplace. Their impact on employment has not been monitored and it is not possible to evaluatethe correspondence of mix of courses held to the needs of the labour market.

The underlying suspicion remains that such a large range of training options aimedexclusively at the local job market, in Regions where unemployment is not due to a mismatchbetween supply and demand, is destined to produce qualified jobless.

The aims of ESF to create employment or to remove constraints on economic developmenthave probably not been achieved. The achievement of the aim of reducing problems of socialexclusion is of difficult evaluation. The opportunity given to thousands of disadvantagedpeople to participate to training courses has been an important factor of social inclusion. Thefact however that at the end of the course the majority of them has remained unemployed mayhave been a factor of frustration. Finally, the aim of improving the overall level of humancapital has on the contrary been achieved, given the high number of courses and of pupils.

Programmes Co-Financed by EAGGF

The main objectives of the EAGGF were:- Diversification of production and definition of the product- Reduction of internal disparities- Increase in the competitiveness of agriculture-related businesses

Generally speaking the EAGGF programmes have seen smaller changes in the re-programming phase than the EDRF programmes, so that their original strategies haveremained true to their internal coherence.



The objective of diversification of production and of product definition has been successfullypursued. In each region specific sectors can be identified where significant results have beenachieved (viticulture, olives, greenhouses, animal husbandry). The European communityprogramme has thus contributed to the adoption of policies aimed at changing thecomposition of production.

The objective of reducing internal disparity by promoting rural development has not beenachieved. The objective was probably too ambitious and the various actions were notintegrated enough to produce mutual reinforcement. This does not imply however that theindividual measures of rural infrastructuring and territory re-definition were unsuccessful or afailure. Action on bed-and-breakfast inns have opened a promising field of economic activity.

The objective to increase the competitiveness of individual businesses depends on the long-term effects of the investments. It can be said that the number of businesses which benefitedfrom the incentives have been high and that, in several cases, the average investment was low.It is difficult however to say to what extent investment made by businesses with the supportof the Program will permanently increase the relative efficiency of the system. Lack of dataalso prevents an evaluation of the impact of aid on employment.

One objective that has not been achieved is the completion and vertical integration of theproduction process. This is a new approach more in keeping with the new CSF. With the1994-99 CSF many businesses in the food industry were financed but were not integratedwith agricultural or trading businesses. Neither was the Program successful in promotingfarmers’ associations, which, in a context where small farms are the norm, are of crucialimportance for the sale of agricultural products

The issues of small businesses and the fragmentation of land property, considered two mainweaknesses in the Italian agricultural system, were also outside the strategy of the Program.

Programmes Co-Financed by FIFG

For the first time a policy for fisheries has been entered under structural funds, which hascreated certain administrative problems both at community and national level. In fact, theimplementation of programmes has encountered its greatest difficulties in translating themanagement mechanisms of community funds into the Italian system, and the GeneralDirectorate of Agriculture and Fisheries has also had to create an internal legal base as areference point.

The main objectives pursued by actions were:- an objective relating to the environment and biology, to be pursued directly through

financing a plan for swordfish fishing, and favoured indirectly by the end of the war inBosnia. There are also measures favouring the establishment of protected marine areas;

- an objective relating to production, following the steady development of the hydroculturesector.

From the financial point of view, heavy overbooking was recorded (around 52 million euro),but there were also multiple re-programmings (1994, 1998, March 1999 and December 1999),which aided the measures’ absorption capacity. The measures that were penalised to thegreatest extent by re-programming were the definitive suspension of fishing activities,



renewal of the fishing fleet, protected marine areas, the working of fish products andmarketing, while the measure that gained the most was that in support of swordfish fishing.

Physical results showed that the national programme achieved - and often exceeded -objectives, generally succeeding in supporting the re-organisation and diversification of thefishing industry. After the action southern Italy will have a more up-to-date fleet with thewithdrawal of old fishing boats (12,771.3 gross tonnage and 51,075.5 kW power), moremarket-oriented companies (9 mixed companies to a total of 12,888.20 kW power and5,764.95 gross tonnage), an increase in hydroculture (6,781 metric tons of bass and gilthead),and another protected marine area (off Abruzzo). Actions in support of re-organising the fleetseem however to have predominated over those which are more environmental in character,such as protected areas.

ISMERI EUROPA - Efficiency


4. EFFICIENCY

4.1. DESCRIPTION OF PROJECTS

4.1.1. Brief description of projects

INDUSTRY

Two projects were examined within the sphere of the PO ‘Industry” both funded inaccordance with the law 488/1992.

LAMINATI SOTTILI SPA- Project of extension: The setting up of a new plant with innovative features to make rolled

aluminium.- Location: Caserta - Campania- Production increase from 36.000 to 54.000 tons.- Reduction of unit cost from 0,72 € to 0,59 €- Employment created - 20 units.

SGS THOMSON MICROELECTRONICS- Project of extension: Extension of one of the units of the group, reorganisation and

improvement of the already existing processing areas.- Location: Catania – Sicilia- Production increase of silicon sheets of 8” from 3500 units per week to 5000 units per

week.- Employment created – 174 units.

TRANSPORT

There were four projects analysed in this sector, three concerning the construction of railtracks and one related to the construction of a stretch of motorway.

Railway

HIGH SPEED TRACK ROME – NAPLES, PO “TRANSPORT - RAILWAY”MEASURE N°6

- New construction: Construction of a 48- km-long high speed track with related works andfour interconnections with the existing network.

- Location: Campania

SECOND RAIL TRACK FROM MESSINA TO VILLAFRANCA AND FROMTERME VIGLIATORE TO PATTI, PO “TRANSPORT - RAILWAY” MEASURE

N°1.- New construction: Expansion of the network by circa 34 km. Along the stretch Messina –

Villafranca, the construction of a new two line stretch for 16 km, of which 13 km in atunnel. Along the stretch Vigliatori- Patti, the construction of 18 km and the constructionof a new two line stretch.



- Location: Sicily.

SECOND RAIL TRACK FROM LESINA TO APRICENA, PO “TRANSPORT -RAILWAY”.

- New construction: Construction of a 16 - km-long second track and the construction ofstations at Lesina and Apricena and a stop at Poggio Imperiale.

- Location: Puglia.- Shortening of about 2,5 km of the original stretch and increase of travel speed to about

180 km/h.

Roads

COMPLETION OF MOTORWAY MESSINA – PALERMO, PO“INFRASTRUCTURE OF MOTORWAY TRANSPORT” - PRIORITY AXES OF

INTERVENTION N.1 COMMUNICATION- New construction: Building of a 4,9 km stretch of road.- Location: Sicily.- Reduction of travelling time between Messina and Palermo by about 15 minutes, increase

in safety.- Average number of units employed per year - circa 207.

WATER RESOURCES

CONSTRUCTION OF THE WATER PIPE ACERENZA – GENZANO, PO “WATERRESOURCES”, SUB-PROGRAMME 1, MEASURE 5

- New construction: Construction of a pipe connecting the storage of Acerenza andGenzano to exploit fully the use of irrigation resources.

- Location: Basilicata- Area affected by this investment equals circa 31.000 ha.- A “sponda” project.



4.1.2. Final beneficiaries

Table 71 Final beneficiaries of the case study projectsPROJECT FINAL BENEFICIARIES

Laminazione Sottile SPA Laminazione Sottile SPASGS Thomson Microelectronics SGS Thompson MicroelectronicsHigh speed rail track Rome – Naples, PO “transport -railway” measure n°6

Current railway users travelling from North to Southand other users who at present do not use railways

Construction of a second rail track Messina –Villafranca and Terme Vigliatore – Patti, PO “transportrailway” measure n°1.

Users of the Messina – Palermo line

Construction of a second track from Lesina –Apricena, PO “transport - railway”.

Users of the Bologna – Ancona – Bari line

Completion of motorway between Messina – Palermo,PO “infrastructure of motorway transport, priority axesof intervention n.1 communication

- Inhabitants of the Tyrrhenian coast betweenMessina and Palermo

- Car users travelling North – South approximately9.740 passenger vehicles and 1.660 commercialvehicles per day

Construction of the water pipe Acerenza – Genzano,PO “water resources”, subprogramme 1, measure 5

Irrigation users of the Alto Bradano

Source: ISMERI EUROPA elaboration

4.1.3. Changes to plan

As can be seen from the table related to the effective and the programmed costs, allinvestment projects underwent some financial variations. The reasons for them differaccording to whether you are analysing infrastructural projects or projects inserted in PONindustry. In the former projects (railways, roads, water resources) the main causes for delayduring the execution phase were:- Problems of a geological nature- Numerous archaeological emergencies- Some variations or new laws introduced at a Community level whose application caused

delays- Various problems going back to the financial condition of the contractor firm- Use of technologies not estimated in the projecting phase.

In the case of those firms which made their investments in accordance with law 488/92 thereal problem that led to an adjustment of the project was the nature of the investments. Theuniqueness of the Laminazione Sottile SPA project and the highly innovative nature of theSGS Microelectronics project did not make a precise programming of future costs possible. Inneither case were there any relevant bureaucratic problem



Table 72 Planned and effective costs of the case study projectsProgrammed

Cost(meuro)

EffectiveCost

(meuro)

Variation(%)

“Laminazione Sottile SPA” 17,0 19,3 13,3“SGS-Thomson Microelectronics” 286,2 299,2 4,6“Construction of the Campania stretch of the high speedline Rome-Naples”

- 417,9 -

“Construction of a second track of the railway lineMessina-Villafranca and Terme Vigliatore-Patti”

351,0 444,4 26,6

“Construction of the second track of the railway lineLesina-Apricena”

49,0 51,7 5,5

“Completion of the motorway between Messina-Palermo”

100,0 75,0 -25,0

“Construction of the water pipe between Acerenza-Genzano”

19,6 19,6 0,0




Table 73 Summary of main project assessmentsProject Priority axis Initial cost of

project (Meuro)Final cost(Meuro)

Plannedduration

Final duration Plannedoutputs

Final outputs

Laminati sottili Industry AndServices

17.0 19.3 5 years 5 years 50.000 metrictons/year

54.000 metrictons/year

SGS ThomsonMicrolectronics

Industry AndServices

286.1 299.2 5 years 5 years 5,000 chips perweek

5,000 chips perweek

High speed track Rome –Naples, PO “TransportRailway” Measure n° 6

Communication(Rail)

/ 417.4 5 years 10 years (1st lotoperational)

13 years (2nd lotoperational)

48 km 48 km

Second Rail Track fromMessina to Villafranca andfrom Terme Vigliatore toPatti, PO “Transport –Railway” Measure N° 1

Communication(Rail)

351.0 444.4 7 years n.a. 34 km 16 km

Second Rail Track fromLesina to Apricena, PO“Transport – Railway”

Communication(Rail)

49.0 51.7 8 years 11 years 16 km 0 km

Completion of MotorwayMessina – Palermo, PO “Infrastructure of MotorwayTransport” – Priority Axes ofIntervention n° 1 -Communication

Communication(Road)

100 75 5 years 7 years 4.9 km 3.9 km

Construction of the WaterPipe Acerenza – Genzano, PO“ Water Resources “, Sub-programme 1, Measure 5

Economicinfrastructure

(Water)

19.6 19.6 n.a. 12 years 16 km 16 km




4.2. UNIT COSTS

The following table shows the subdivision of the funds into the different headings it is madeup of. It is evident that in the case of Laminazione Sottile SPA and SGS –Thomson privatecontribution is prevalent. This is due to the selection mechanism of law 488 which rewardsthose projects in which their own contribution is greater.

Projects involving the construction of railway lines allow private subjects to participate in theinvestments. In this case the private subject is the ‘Ferrovie dello Stato SPA’. In theremaining projects 50% is made up of state contribution, especially the project related to thecompletion of the motorway Messina – Palermo which imposes heavily on the ANAS, whilethe water pipe Acerenza – Genzano is borne by the Board for the Development of Irrigation inPuglia, Irpinia and Lucania.

Table 74 Total cost and co-financing of the case study projectsExpenditure

(meuro)

Communitycontribution

(meuro)

Nationalpublic

contribution(meuro)

Privatecontribution

(meuro)“Laminazione Sottile SPA” 19,3 5,0 14,284

“SGS-Thomson Microelectronics” 299,3 140,3 158,973

“Construction of the Campania stretch ofthe high speed line Rome-Naples”

417,9 146,3 271,626

“Construction of a second track of therailway line Messina-Villafranca andTerme Vigliatore-Patti”

444,4 177,7 266,61

“Construction of the second track of therailway line Lesina-Apricena”

51,7 20,7 31,0

“Completion of the motorway betweenMessina-Palermo”

75,0 37,5 37,5

“Construction of the water pipe betweenAcerenza-Genzano”

19,6 9,8 9,8


4.2.1. Actual Unit Costs compared to those Planned

Aided by the table it is possible to analyze the most relevant unit costs for the individualinvestment project. To calculate the unit costs public contribution has been used as areference point.

Looking at the projects inserted in PO Industry you can see that both projects achieve theirpre-set objectives quite easily.

In the Laminazione Sottile project it is quite evident how the new investment contributed to aconsiderable re-dimensioning of the unit cost of the product, more so than planned. As far asthe employment data is concerned the units created were inferior to expectations and this,together with the increase of the resources needed to complete the investment increased thecost of the work unit, in this case to 250.956 euro per employee.



“Laminazione Sottile SPA”Actual Planned Achieved

Cost per kg of finished product (€) 0,72 0,65 0,59Reduction of the cost (%) - -10 -18Production (tonn. /year) 36.000 54.000 54.000Variation of production (%) - 50 50Employment created (n.) 20Public contribution per new employed 250.956

This cost is much lower if compared to that of the SGS which amounted to 806.068 euro, butone must remember that the SGS operates in a high capital intensity productive sector. TheSGS too achieved its planned productive increase from 3.500 silicon sheets per week to5.000.

“SGS – Thomson Microelectronics”Actual Planned Achieved

Production (slice of silicon in a week) 3500 5000 5000Variation of production (%) - 43 43Employment created (n.) 174Public contribution per new employed 806.068

The Campania stretch of the high speed rail track , 48 kms long, was completed. The publiccontribution per Km amounted to about 3 Meuro. This relatively low data is due to publiccontribution which amounts to around 35%, while on average in railway projects it liesaround 40 to 50%. The average overall cost would be around 8,05 Meuro. The average annualemployment figure induced by the investment in the course of the six-year-period amountedto about 1.100 units.

“High speed rail Roma-Napoli: Campania stretch”Planned new track (km) 48Constructed new track (km) 48Cost per km (public contribution per km) (€) 3.047.083Total cost per km: Tunnel* 17.600.000Total cost per km: Bridge* 12.900.000Total cost per km: normal track* 3.500.000Temporary Employment (n. in a year) 1.100 Temporary Employment (man/yars) 6600*calculated on the all line Roma-Napoli

Only 47% of the investment under examination was put into effect; the cost per km amountsto 5,22 Meuro. Data on employment is not available.

Second rail track between Messina-Villafranca and Terme Vigliatore-PattiPlanned new track (km) 34Constructed new track (km) 16Cost per km (public contribution per km) (€) 5.227.647Employment created (n.) n.a.



It is not possible to calculate the unit cost because no kms of rail network appeared to havebeen completed by 31/12/2001. Furthermore, data relating to employment is not available.Basing our assumptions on the interviews carried out during the examination of the specificcases it may be presumed that the unit cost will be about 5 Meuro, about 1,29 Meuro of thatbeing public cost.

Laying of a second track between Lesina – ApricenaPlanned new track (km) 16Constructed new track (km) 0(€) Cost per km (payments/km) 1.290.000 *Employment created (n.) n.a.* Estimation on the actual advancement

The project concerning the completing of the motorway Messina- Palermo is characterised bya good degree of efficiency during the carrying out phase , equal to 80% of the itinerary. Ofthe projected 4,9 km of tunnel 3,9 km have been completed at a cost of about 19 Meuro perkm. The employment impact of the project was good and involved on average 207 .

Completion of the motorway Messina – PalermoPlanned Achieved

Tunnel 3,9 3,9Km of road Not in tunnel 1 -Cost per km ( public cost/km) (€) 19.230.769Temporary employment (n.) 207 per yearTemporary Employment (man/years) 621

The water conduction project Acerenza – Genzano was included in the PO Water resources asa “sponda” project which explains its excellent financial performance and physical progress.The project foresaw the building of a 16-km-long water conduct, which was completed at acost of circa 1,225 Meuro per km. The investment employed temporary jobs equal to about550 man/years.

Construction of water conduct Acerenza – GenzanoProjected new net-work (km) 16Constructed new net-work (km) 16Cost per km ( public contribution/km) (€) 1.225.000Temporary Employment (man/years) 550



Table 75 Summary of unit costs (total cost, values in Euro)

Cost per: (euros) Laminati sottili SGS ThomsonMicrolectronics

High speed trackRome – Naples,PO “Transport

Railway”Measure n° 6

Second RailTrack fromMessina to

Villafranca andfrom TermeVigliatore to

Patti, PO“Transport –

Railway”Measure N° 1

Second RailTrack from

Lesina toApricena, PO“Transport –

Railway”

Completion ofMotorwayMessina –

Palermo, PO “Infrastructure of

MotorwayTransport” –

Priority Axes ofIntervention n° 1

-Communication

Construction ofthe Water Pipe

Acerenza –Genzano, PO “

WaterResources“, Sub-

programme 1,Measure 5

New employed (unit) 965,000 1,720,000

Temporary employed(man/year) 63,318 - - 120,773 35,636

Km road - - - - - 15,306,122 -

Km rail - - 8,706,250 13,070,588 3,231,250 - -

Km net-work - - - - - - 1,225,000




4.2.2. Actual Unit Costs compared to available benchmarks

Average unit costs deriving from the analysis of the whole programme were used asbenchmark. The data refer only to the public funding quota. Going on to examine theindividual projects one can see that Laminazione SPA benefited from public contributionamounting to 5 Meuro which is much greater than the average of the programme, about427.000 euro.

The cost per employee is considerably higher than the average, nearly 251.000 euro, butlower than the maximum of 275.000 euro.

Also in the case of SGS Thomson Microelectronics data considerably higher than the averageis recorded. As a matter of fact the contribution amounts to about 140 Meuro and the cost peremployee is around 806.000 euro.

Looking closely at the costs related the construction of the high speed track between Romeand Naples the cost per km amounts to about 3 Meuro which seems anomalous as it is onlyslightly higher than the average cost per km of a normal railway track and is actually lowerthan the cost per km of a two-way track.

The cost of building a second track between Messina-Villafranca and Terme Vigliatore-Pattiis in line with the costs of the Programme, and is actually lower than the average by about500.000 euro.

The difficulties in calculating the unit cost of the project related to the construction of asecond track between Lesina-Apricena which was not completed, have already been pointedout. According to our estimate, the public cost of the investment is considerably lower thanthe average and even below the minimum costs of a two track railway.

The cost of completing the motorway Messina – Palermo amounts to 19,2 Meuro for each kmbuilt. This is higher than the average cost for the building of a new road network which,however, includes all types of new roads, not only motorways. It is still considerably lowerthan the maximum cost and this indicates that the cost of the project was not excessive.

The construction of the water pipe Acerenza – Genzano is 1,225 Meuro per km. Compared tothe average data it turns out to be lower than that for the water networks in the axes“infrastructure support to economic activities” but higher than that relative to ruraldevelopment. The water pipe was intended for irrigation purposes and should therefore becompared with the second number.



Table 76 Unit costs elaborated on the CSF dataPhysical indicator Unit of

Measure

Average unit cost(thousands of euro)

Min. Max. Standarddeviation

N. ofMeasures

ComunicationRail network Km 2608,3 28,4 6118,6 2256,4 6Rail network – two track Km 5742,5 2765,2 13470,5 5172,5 4Road network (new) Km 13349,9 1258,5 51295,2 19055,2 7

Industry, handicraft and serves to firmsBenefiting firms N. 427,3 1,6 6019,1 961,5 58Employment created N. 43,3 1,9 275,7 56,6 25

Infrastructure of support economic activitiesWater network (new) Km 1890,5 234,2 5877,0 2667,7 4

Rural developmentWater network (extension) Km 300,1 172,0 483,8 157,1 5Source: ISMERI EUROPA elaboration

4.3. CONCLUSIONS

The projects funded with the law 488/92 were very efficient in maintaining their date linesand in fulfilling their pre-set objectives.

The projects related to infrastructures, with the exception of the high speed track and thewater pipe Aderenza – Gerenzano, were always delayed in the carrying out phase. Thisoften impeded the fulfilling of the pre-set objectives. The water pipe was inserted as a“sponda” project and was started in 1989. The reasons for these delays can be imputed todifferent kinds of phenomena - of a geological nature, a number of archeological finds,some changes and innovations in laws on the Community level and the use of technologiesnot foreseen in the planning phase.

Also projects inserted in the Industry OP underwent funding remodelling due to thetechnological evolution ingrained in the investment projects. This feature has not made iteasy to programme costs, even if the financial alterations were charged to the beneficiaries.

The critical variable for almost all the projects lies in the quality of the planning whichmust be improved in order to reduce the possibility of leaving it unfinished.

Furthermore, in unfinished projects financial problems often arose and in some cases thecontractor firms went bankrupt, thus demonstrating the need for a more efficient methodof selecting these firms.

Finally, it is necessary to speed up the distribution of these incentives to cut down the timebetween the planning and the carrying-out phases to avoid meeting with technologicalchanges which could lead to an increase in the initial budget.


143

5. IMPACT ANALYSIS

5.1. EVOLUTION OF NATIONAL, REGIONAL OR SECTORAL CONTEXT FROM 1994

We will concentrate on some key variables, which in the CSF strategy are considered as break-evenpoints for the development process of Objective 1 Regions. How far the results of our analysis ofthese macro-variables can be directly correlated to the 1994-99 CSF impact is more difficult toevaluate and needs some comments.

As we have observed, the weight of CSF expenditure on the total national expenditure in thedifferent field is different and varies. It is minor in some fields (energy) and greater 80% in areaswhere the CSF virtually coincides with public intervention (training).

However, apart from the relative importance of the CSF expenditure, the general objective of theCSF, the measure of its success, is one of sustaining the overall growth of Objective 1 Regions,independently of the specific fields of intervention; in fact, the fields of intervention where CSFexpenditure is not relevant should equally benefit from the CSF both in terms of the synergies withother CSF intervention, or as a result of the allocation of a larger share of the national financialresources.

We must therefore examine the changes undergone by the most relevant crucial strategic variablesof the two areas of the country to verify the extent to which they bring about a significant change inthe dynamics of development of Objective 1 Regions.

Finally, we must be aware that the impact of CSF cannot be considered fully put into effect sincefor many investments (education, infrastructures, training, R&TD, private investments) thecomplete positive impact can only unfold in the long term rather than in the short term.

Productivity and market competition of SME in manufacturing

The CSF main priority lay in productivity, in particular of manufacturing, considered a necessarycondition to achieve increased exports and employment of SME in traditional sectors, whichrepresent by far the bulk of the manufacturing production structure of the area.

This priority has been pursued through direct aid given to firm investments, specific infrastructuresand services provided to improve the context, space, human resources and R& TD, in which theyoperate.

Both regional and multiregional OP converged to assure most resources to direct and indirect formsof assistance to the private manufacturing sector. The financial resources allocated by themultiregional O.P. to industry, craftsmanship and business services was around 40% of the totalCSF under measure 1.1. The CSF reached 10.500 firms, the SME technological aid scheme 3.100,craftsmanship aid reached more than 27.000 firms. Also the Regional O.P. devoted a significantshare of resources in favour of small businesses and craftsmanship aid, reaching a very high numberof businesses, on average 7% of the total number of firms under 10 employees.

The results are not clear-cut and on the whole remain unsatisfactory, although some positivephenomena could pave the way for future improvement of some importance.


144

The manufacturing productivity (value added per unit of labour) decreased slightly during theperiod 1995-2001 falling to about 81% in the Mezzogiorno from almost 83% in the initial year; thiswas the result of a cumulated increase of 4,8% against 6,7% of the centre-north.

The productivity gap during the six-year period remains around 19% and mostly concerns smallfirms with 1-20 employees; firms with more than 20 employees, being branches of national ormultinational firms, have a slightly lower productivity level than those of the centre-north.

Table 77 Added value per Unit of labour of Mezzogiorno in % of Centre-North (=100)Sectors 1995 1996 1997 1998 1999 2000 2001

Manufacturing industry 82,8 81,8 81,6 82,1 80,7 81,2 81,3Food, Drink and Tobacco industry 81,0 84,1 85 88,5 86,8 86,4 86,0Textile, Clothing, Leather, Shoe industry 62,1 64,2 63,9 66,9 70,8 71,2 70,8Paper, Printing and Press Industry 78,6 79,9 79,2 78,7 78,1 77,5 77,8Cookery, Refinery, Chemical and Pharmaceutical 127,2 111,2 112,2 110,9 88,1 87,4 95,6Non-metallic Mineral goods 64,3 67,1 68,4 69,3 70,1 70,3 70,6Metal goods 86,6 81,2 77,9 76,7 78,5 80,5 79,9Machinery and Electrical Machinery and means of transport 83,7 83,6 83,7 83,5 84,7 85,1 83,2 Wood, Rubber, Plastic and others 75,0 74,2 75,3 77,5 78,9 79,4 78,8Source: Ismeri Europa elaborations of CER-SVIMEZ data, "Rapporto sull'Industria meridionale".

This cumulative result is however the sum of very different sector productivity changes whichreveals a pronounced upsurge of some traditional sectors where the CSF intervention wasparticularly intensive: textile-clothing, foodstuff, and non metallic minerals, which respectivelyregistered a very positive performance (+26%,+13,5% and +6%). These are sectors where smallfirms operate almost exclusively.

On the other hand the sectors characterized by large firms, like chemicals and machineryequipment, vehicles, electrical devices, registered a strong productivity decrease which more thancompensates the increase of the traditional sectors.

When we examine the evolution of competitiveness (Cost of Labour per Unit of Product), we noticea general decrease in competitiveness due to a worsening of competitiveness in the sectors whichregistered a bad productivity performance and a moderate improvement in those which registered agood productivity performance, as a result of a sustained increase of labour costs

This labour cost increase was caused by the abolition of labour cost incentives decided at thebeginning of 1994 within the frame of a competition policy, whereas the dynamic of salariesremained slow throughout the whole period.

The conclusion is therefore that the sectors registering a high productivity increase managed toabsorb the shock of the policy change in labour cost incentives, while the others did not.


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Table 78 Productivity, 1994-2000 cumulative rate of growth.Variables Mezzogiorno Centre-North Italy

Agricultural productivity (1) 10,4 7,5 8,5Manufacturing productivity (2) 4,8 6,7 6,4Industrial productivity (3) 4,7 3,7 3,9(1) Added value on ULA(2) Period 1996-2001(3) Period 1995-2001 (Added Value/Employed)Source: Ismeri Europa elaborations of Istat and SVIMEZ data.

5.1.1. Research &Technology Development

The CSF devoted a multiregional O.P. to research and technological development. The Regionsintervened on R&TD with measures of limited financial dimension. On the whole 1.625 MEURO,around 9% of the total public resources have been allocated to the multiregional P.O. and toregional ones.

The total expenditure of CSF for R&TD is equivalent to 45% of the national expenditure forR&TD.

The impact of this intervention had positive results on the performance of Universities and of highereducation establishments, measured in terms of the increase of students with degrees and diplomasin scientific, disciplines and in the increase of the supply of such degrees.

Its impact on the physical structure of the Universities is great in terms of renovation of buildings,creation of new facilities and provision of equipment. Less clear appears the impact on SME, whichappear reluctant to give grants and other forms of aids to research and technology transfers. Despitethe quality of most projects and scope of such actions, which touched more than 3500 business, itsimpact on the business sector in terms of competitiveness and new product or process developmentdoes not yet appear evident in the available macro data. The macro data on total expenditure andtotal employment in the R&TD sector also appear very disappointing for the whole country and forthe Objective 1 Regions.

Expenditure in R&TD of public and private firms does not increase from 1995-1999, and remains0.15 of the GRP of Objective 1 Regions; expenditure of the P.A. decreases from 0,46% of GRP in95-97 to 0,25 in the final years; employment in R&TD, activities in total employment remainconstant around 1,2 per 1000 inhabitants in the whole period.

5.1.2. Agricultural productivity

The EAGGF fund devoted a relevant part of its financial endowment to increase agriculturalproductivity. This target was pursued by increasing private agricultural investments, increasingservices and assistance to farmers, by inducing a more efficient and rational use of land.

From 1995 – 1999 in Objective 1 Regions utilized agricultural land increased by 2% andproductivity increased by 10,4%. In the Centre–north productivity increased by 7,5% in the wholeperiod, while the area of agricultural land utilized remains the same.


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The productivity gap between the two areas of the country remains constant, around 30%, duringthe period 1995-1999; in the same period there are variations throughout the different years butthere is no clear trend suggesting an improvement of the relative position of Objective 1 Regions.

The evolution of the sector during the period is characterized by a marked fall in employmentaccompanied by a low growth of value added.

5.1.3. Tourism

The second priority of the CSF was the development of the Tourist sector, through the aid to touristprivate investments aimed at creating new potential for reception in hotels and agro-touristestablishments and at upgrading of existing structures. CSF funds were also devoted to investmentsin road infrastructures in towns and in relevant tourist sites, the revitalization of cultural heritagebuilding, the renovation of historical sites and finally to the reinforcement of marketing services.

The overall impact of these investments benefited from the buoyant dynamic of the internationaltourist demand during the period 1995-2000.

The impact of these investments was highly positive both in terms of increase of the supply –sleeping accommodation and rooms in hotels - and of demand - arrivals and days of sojourn-.

In the period 1995-2000, hotel reception capacity increased by 9% and 13% respectively fornumber of rooms and sleeping accommodation. This increase has to be compared with the increaseof 0,5 and 5,7% in the Centre-north during the same period. As for other establishments, theincrease in sleeping accommodation amounted to 38,6% in the Centre-north against 12% inObjective 1 Regions.

We must keep in mind that the comparison with the Centre-north in tourism does not allow us tofully appreciate the remarkable improvement of tourism in the south, since the Centre-north is aleading tourist area in the international market and maintained a fast development pace during thewhole period.

Table 79 Tourism variables, cumulative rate of growth, 1994-2000Variables Mezzogiorno Centre-North Italy

Arrivals in reception structures 29,1 20,6 22,1Presences in reception structures 28,3 20,1 21,6Number of hotel structures 3,4 -4,8 -3,5Sleeping accommodation in hotels 13,0 5,7 7,3Sleeping accommodation in extra-hotel 12,1 38,6 31,2Source: Ismeri Europa elaborations of Istat data.

The dimension of the Tourist sector in Objective 1 Regions, although not insignificant, remains afraction of the national Tourist sector in terms of capacity and of demand.

An obstacle to its growth, given that its potential is at least equal to that of the rest of the country, ispresented by the quality and quantity of the reception structures and of the access, as well as themarketing policies which are too fragmented and have not managed to establish a product image ofany strength. This penalizes the area especially in relation to tourist arrivals and days of sojourn.Objective 1 Regions have about 25% of the internal market and only attract 15% of the foreigntourism.


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However the increase in tourist demand in Objective 1 Regions for the period 1995-2000 wasconsiderable especially after 1994. The cumulated increase reaches +32% in the period for botharrivals and days of sojourn, against the 22% increase in the Centre-north.

This evolution led to an increase of about 2% in the relative weight of the objective 1 tourist sector,both in terms of supply potential and demand.

A particular effort has been devoted to the development of the agro-tourist segment in terms ofsupply. Most regions financed specific laws including financial aids to farmers and owners ofimportant buildings in rural areas. The number of sleeping accommodation in agro-touristestablishments more than doubled between 1996 and 2000 in Objective 1 Regions, from almost5.500 to 12.500 in the year 2.000; this has to be compared with the 65.000 beds in the Centre-north.Their total number for the whole period amounts therefore to 19% of the sleeping accommodationin similar establishments in the Centre-north; keeping up with the growth of the Centre-north ishowever no mean achievement, especially as the establishments in the Centre-north also receivedfinancial aids.

Table 80 Number of sleeping accommodation in agri-tourist establishments, 1996-2000 cumulativerate of growth

TERRITORIAL AREAS 1996-00Mezzogiorno 95,3Centre-north 113,5ITALY 109,3Source: Ismeri Europa elaborations of Istat data.

The conclusion on the evolution of the tourist sector is that the improvement undergone in theObjective 1 Regions is too slow to cause a real inversion between the relative growth of the twoareas, however it must be considered a success to have kept the pace and indeed overtake the rate ofgrowth of an area which leads in the world market for tourism.

5.1.4. Environment and Water Resources

The environmental policy was one of the priorities of the CSF alongside with the endowment ofwater resources.

The environmental policy is in practice finalized to improve, through air, noise and water pollutioncontrol, the environmental conditions in urban centres, to protect the land and the coast fromerosion and from other downgrading phenomena, to increase and protect the naturalistic areas andthe areas of biodiversity and, finally, to save non renewable energies.

Most financial resources have been allocated to environmental and energy actions; however somepositive environmental activities were financed by the EAGGF, which supported investments inforestry and biological productions.

The purpose of this intervention is to improve the quality of living conditions, increase the safetyand the health of the citizens, and improve conditions to attract activities and tourism.

Both the regional and multiregional PO devoted important resources to the environmental andenergy policy with specific emphasis on urban waste recycling, differentiated collection , energysaving, water cleansing etc.


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The environmental expenditure of CSF amounts to almost 50% of the total national expenditurewhile the total energy expenditure of CSF amounts only to 12%.

The impact of environmental expenditure in the period 1995-1999, concerning increased selectedsolid waste collection appears limited; its weight over the total waste collection in Objective 1Regions, although doubled from 1% to 2% of the total waste collected, remains scarcely significant.In the Centre-north, on the contrary, it doubled from 9% to 18,6% of the total.

Table 81 Environment variables, cumulative rate of growth 1996-1999.Variables Mezzogiorno Centre-North Italy

Number of incineration plants (urban waste) 17,9 24,8 20,3% of urban waste discharged in different mode 74,4 77,7 77,4Production of urban waste 4,8 11,3 9,0Source: Ismeri Europa elaborations of ANPA data.

The number of incineration plants decreased from 4 to 3 from 1996 to 1999; the quantity of urbanwaste discharged in discharge plants increased from 38% to 40% of the total national wastedischarged in plants.

The CO2 emission from 1996 to 1999 in Objective 1 Regions increased from 1,7 to 1,9 tons perinhabitant against an increase from 1,9 to 2,0 in the Centre-north.

The KMs of polluted coastline and therefore unsuitable for tourist utilization has decreased from1995 to 2000 from 8,5% to 6%, however in the Centre north it diminished by 3,5% to 4%.

Table 82 Natural parks, 2000 per typology and region (Italy = 100)

Territorial AreasNationalProtected

Area

State Wildelife habitat

RegionalProtected

Area

RegionalWilde life

habitat

Othersprotected

areasTotal

Mezzogiorno 69 42 35 25 13 50Centre-north 31 58 65 75 87 50ITALY 100 100 100 100 100 100Source: Ismeri Europa elaborations on Ministry of Environment - Natural Preserve Service, EUAP, 2001.

As far as protected areas are concerned we can observe that the extension of national parks inObjective 1 Regions is 70% of the total national, whereas the regional parks are only 35% of thetotal; the national reserves amount to 42% of the national total whereas the regional reserves are25% of the total national reserves. On the whole the total amount of protected land of the two areas,Objective 1 Regions and the rest of the country is the same.

In this context the success of the EU reg. 2078/92, which does not show any substantialimprovement in Objective 1 Regions in relation to the rest of the country, should be mentioned.

In 1998 Objective 1 Regions had 72% of the total national biological farms and of the totalbiological agricultural land . In this context the incidence of the biological land following the EUreg. 2078 is over 60% .

On the other hand, in the year 2000, the number of ISO 14001 certifications of objective 1 firmsvouching for environmental quality in agricultural production, was 157; only 24% of the totalnational certifications, and important agricultural regions like Sicily and Sardinia have a very lownumber of such certifications.


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This shows that the reg. 2078 can have a relevant impact on improving the market position ofagriculture in the south, helping to achieve competitiveness through quality and productdifferentiation in high value added market niches; however this last step has not yet been fullycarried out by southern firms.

The intervention to increase the water endowment of Objective 1 Regions, despite the resultsachieved, must be considered insufficient in relation to the needs and to the nature of the problems.First of all, the expenditure on water during the period was only around 30% of that spent in 1985;it is therefore an area of infrastructure intervention where the cut of public expenditure has beenmost pronounced.

The water supply index in the south remains still 1/3 (35%) of that in the Centre-north in 1997despite the increase which Objective 1 Regions experienced, from less than 30% in 1987.

In terms of the quality of the service, from 1993 to the year 2000 the number of families exposed toan irregular supply of water decreased from 34% to 24% in the continental Objective 1 Regions andfrom 41% to 37% in the islands. In some regions like Sardinia however they reach the peak of 47%.Whereas in the Centre-north on average it is less than 10%.

The water supply problems are of a structural nature and are not linked to scarce rainfalls. They arelinked to insufficiently maintained and badly managed distribution networks which are toofragmented (more than 2400 operators, mainly public, in the south) and do not have sufficientfinancial margins (too low tariffs) for investing to improve the supply.

Once again the improvements undergone help the area to keep pace with the Centre-north but areinsufficient to reduce the gap.

5.1.5. Main Trends in Public Works

It is useful to analyse the data of public works started and executed to appreciate if the resourcesdevoted to the CSF objective 1 significantly increase the volumes of expenditure in public works inthe different policy fields, in absolute terms and in relation to the Centre-north.

We therefore analyse the public works approved per year and those carried out, in fields such asroads and airports, railways, public buildings, waterworks, drains, water cleansing plants, electricalplants, hydraulic works.

For the period 1994 – 1999 these two series can be used as proxy for the level of activity in the areaand the comparison between the two areas can tell us if there is a visible change in the trend ofexpenditure.

The cumulate growth of expenditure 1994-2000 in the objective 1 is 58% against 55% in theCentre-north; the slight advantage of Objective 1 Regions is caused only by the hydraulic andenergy plants ( +258% in 1998-99). Its growth is however due to the reorganization of the electricalproduction sector after the reform and the start of the privatisation process of ENEL.

During the period 1994-99 we can observe that the total expenditure on public works carried out inthe Objective 1 Regions varies from 28% to 30% of that in the Centre-north.


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Table 83 Public works carried out by category of work, 1994-1999 (cumulative rate of growth)1994-1999

Territorial Areas Roads andairports Railways Public

building

Hydraulicwork andelectrical

plants

Health,waterworks,

etcDrains Total

Mezzogiorno 61,9 24,1 66,0 198,5 54,7 3,7 58,6Centre-north 100,6 26,6 44,2 134,3 42,6 57,8 54,9ITALY 87,9 25,7 50,7 151,9 45,2 27,0 55,3Source: Ismeri Europa elaborations of ISTAT data, Annuario Statistico Italiano 2001.

Apart from expenditure in hydraulic and energy works, which in some years shows a significantlybetter performance in Objective 1 Regions, the other expenditure items in strategic sectors such asrailways, roads and airports are significantly higher in the Centre-north.

In terms of expenditure per head in a peak (1999) year where CSF expenditure in the objective 1was at its highest level, we observe that total public works carried out amounted to 200.000 europer capita in the Centre-north and 152.000 euro in Objective 1 Regions; similarly, expenditure inroads and airport amounted to 21.700 euro against 35.000 in the Centre-north, expenditure in acrucial sector such as railway was 7.750 euro in objective 1 and 18.000 in the Centre-north; the gapwas less pronounced but still significant in health and waterworks (drain water distributionnetworks, water cleansing etc.) where expenditure was 22.700 euro in objective 1 and 34.000 euroin the Centre-north.

It is useful to notice that expenditure per head on railways and other means of transports and inhealth and water works was consistently more than double in the Centre-north compared toObjective1; the expenditure on roads and airports was more balanced.

When we look at already committed public works expenditure we can notice an increasing share ofObjective 1 Regions from 17% in 1994 to respectively 37% and 32% in 1998 and 1999, the peakCSF expenditure years.

We can notice the positive impact of the expenditure of the CSF whose increase until the peak yearsof 1998-1999 brings with it a corresponding improvement in the share of the Objective 1 Regions.

In conclusion, despite the positive CSF impact on expenditure engaged, public works investmentsare unbalanced and favour the Centre-north regions.

5.1.6. Main changes in the labour market

The evolution of employment and of the employment per sector of activity in the period 1994-2000is moderately positive for Objective 1 Regions.

They create around 250.000 jobs during the period mostly in the service sector (12%). Employmentin manufacturing grows by 1.6% while employment in agriculture decreases by 24%.Unemployment remains high during the whole period and the decrease in recent years from morethan 20% to 19% does not allow the area to reach the pre 1994 crisis levels. In this sphere thedifference with the Centre-north remains extreme; this area in fact reaches 5% unemployment andduring the period generates 1.1 million jobs, mostly in the market service sector.


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Table 84 Employment in objective 1 regions (thousands and %; absolute and relative variation inthe 1994-2001 period)

Absolute change1994-2001 1994-2001 variation (%)

Total IndustrialTransf. TOTAL Agriculture Industry Industrial

Transf. Buildings Otheractivities

Of wichCommerce

Abruzzo 35,9 17,0 8,3 -28,1 9,1 18,3 -4,0 13,5 10,0Molise 3,1 4,7 2,9 -46,2 21,5 30,5 13,3 11,8 12,3Campania 15,0 -25,1 1,0 -34,3 -7,0 -9,9 0,4 10,2 7,9Puglia 66,7 5,7 5,7 -13,8 3,1 3,0 10,4 11,7 16,1Basilicata 4,3 14,0 2,4 -34,5 20,8 64,3 -11,6 4,0 4,2Calabria -18,1 5,0 -3,1 -25,2 -6,7 14,2 -16,8 3,3 -8,0Sardegna 42,6 -4,3 8,6 -22,3 -2,2 -7,2 4,8 18,9 1,9Sicilia 102,7 -4,9 8,0 -18,1 -0,6 -4,4 3,7 15,7 6,6Centre-North 1.107,9 -71,0 7,7 -16,1 -0,3 -1,7 8,0 14,9 4,5Objective 1 252,3 12,1 4,3 -24,0 -0,1 1,6 0,6 11,9 7,2ITALY 1.360,2 -58,9 6,7 -20,2 -0,3 -1,2 5,2 14,0 5,3Source: ISMERI EUROPA processing on ISTAT data (Labour Force Survey)

It has to noticed that the objective 1 activity rate remains lower than in the rest of the countryespecially for its female component, whereas the migratory component favours the objective 1employment performance as result of a resumption of the migration flows towards the north inrecent years.

The labour force structure by qualification has undergone a remarkable improvement over theperiod, as a result of the investments in training and education, partly financed through the ESF.During the period 1994-2000, we register a fall of 10%, later 14%, of the workforce with the lowestqualification and without qualifications. The same improvement is registered in the Centre-north (-9%), which however started from a lower relative weight of this category of worker.

By consequence we observe an increase of the qualification levels - University and short universitydegrees (+2.5%) in the objective 1 and (+3.2%) centre-north. The highest increase is registered inthe intermediate levels like secondary school diploma and professional school diplomas. Theyincrease by 7.4% and 8% respectively in the objective 1 and Centre-north.

5.1.7. Investments, exports and GDP

Gross fixed investments fell dramatically from 1990 and 1993 from 26% to 19% as a result of thecrisis as well as of the privatisation process, which brought the activity of the main investor in thearea which were the public firms, to a halt.

After 1994 the investment trend changed and resumed growth reaching 21.7% of the GRP; duringthe same period the Centre-north investment rose from 18% to 20.5%. In the objective 1 this growthis mostly due to the increase of the machinery and equipment component, whereas the constructioncomponent remains stable.


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Graph 1: Gross fixed Investments in % of GDP.

GROSS FIXED INVESTMENTS % OF GDP

15,0017,0019,0021,0023,0025,0027,00

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

ANNI

%

Mezzogiorno Centre-North

Source: Ismeri Europa elaborations of Istat data for period 1995-1999 and Svimez data for period 1990-94.

Another positive component of demand and growth is the increase of exports in the area, which forthe first time records a consistently better performance in % terms.

Table 85 Demand and GDP (cumulative rate of growth 1994-2000)Variables Mezzogiorno Centre-North Italy

Employment 0,8 5,0 3,8Exports 62,0 32,3 35,1Gross fixed investments* 22,5 20,3 20,8Gdp 11,4 12,7 12,4*Period 1995-2000Source: Ismeri Europa elaborations of Istat data.

The exports in constant prices had a cumulate growth of 62% in the period against 32% of theCentre-north bringing the Mezzogiorno export share to 11.1 % of the total national exports from8.7% of 1994. This improvement is mainly due to the rise in relative cost of refined energy productsand of the sector of vehicles and its components, following the new investment of FIAT inBasilicata; to a lesser extent other sectors became more lively.

Due to these trends, income per head in the South over the decade has remained stationary incomparison to the Centre and North.


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Table 86 GDP per capita in objective 1 regions (EUR15=100, PPS)Regio 1990 1994 2001

Abruzzo 88,7 88,9 84,8Molise 79,7 80,9 78,9Campania 69,2 67,1 67,1Puglia 68,2 68,6 67,0Basilicata 66,3 69,2 75,0Calabria 60,3 62,1 65,8Sicilia 69,6 69,0 68,4Sardegna 76,7 79,8 79,1Mezzogiorno 70,1 70,0 69,7Centre-North 120,5 122,0 120,2Italy 102,3 103,1 102,0Euro15 100,0 100,0 100,0Source: Ismeri Europa elaborations of ISTAT, SVIMEZ e European Economy n.72-2001, data.

In conclusion the large institutional and policy change in Italy and the EU, the effects of the1992-95 crises and the less expansionary expenditure policies, the long series of reforms whichwere begun mid-decade and are only now slowly beginning to take effect, all characterised thedecade. The productive structure in the South tried to defend itself and adapt to the changes butrelative levels of income have paradoxically been kept stationary by the overall effects of thedecade.

The stationary state of the level of regional income per head on a national scale is in partsynonymous to the lack of improvement in terms of cohesion, but also signifies a resistancecapacity in a difficult and prolonged period of crises and the effort of adapting to changes whoseresults, now that the system of programming is up and running, must demonstrate theirefficiency if they induce a significant climb towards the strong areas. Otherwise they will besanctioning the loss of a decade to the goal of cohesion.

A positive aspect of this stationery state is that it has been achieved with a public spendingcomponent which is significantly less than in the past. Consequently there has been a largercontribution from the private sector and with internal demand where investments have doubledin the last six year in respect to final consumption. From this point of view, and also with respectto the sectoral adjustments in manufacturing and the growth of SMEs, the objective 1 regions arenow more similar to the rest of Italy. The gap with the Central-Northern regions remains verylarge, but the dynamics of their development are less distant.

5.2. ACHIEVEMENT OF CSF/SPD STRATEGIC TARGETS

The following table summarises the main results of the CSF as shown by the analyses of efficiency,efficacy and the social and economic evolution of Objective 1.

Forecasted results were achieved in support of the private production sectors of industry andservices, tourism and agriculture, and fisheries. The large financial contribution sustainedinvestments and despite cases of dead -weight (see below), introduced high liquidity assets, whichimproved businesses’ profitability and reduced their difficulties in accessing credit.

In the field of infrastructures results are much less successful. Generally speaking, existinginfrastructures were improved, but the supply of infrastructures showed a limited increase. This was


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true for all sectors, especially in the water sector where results were below expected. In this case,planning difficulties, together with a fragmentation of responsibilities and the scant ability shown ininvolving the private sectors gave rise to very limited results.

In infrastructure sectors many projects that had already been financed with national resources wereincluded, so that activities of on-going maintenance predominated over development projects.Despite this however, the CSF’s important contribution to the supply of infrastructures should beemphasised. In many cases the disparity between the resources needed and those available underlinethat there is still much to be done in this area.

Actions for human resources attained significant results with an increase in the number ofbeneficiaries and the range of actions. However, correspondence between programming andproduction sector needs, and an identification of how the progress of actions should actually beimplemented were both weak. These policies show the effects of the weakness in Objective 1production, and it is in fact for this reason that efficiency and the quality of services on offer shouldhave been identified as priorities.

Lastly, we believe it important to mention technical assistance. This axis had the dual objective ofsupporting action implementation and improving management abilities in public administration.The first objective may be considered achieved, as in many cases technical assistance was vital tothe performance of programmes, while the second was not. The employment of TS as anoutsourcing of particular services, the weak role played by evaluation, the absence of actionsaddressed to re-organising and improving public administration, all hindered any real transfer ofknowledge and skills. The same can be said of the widespread use of training, which attained theimportant result of disseminating basic skills and knowledge, especially to local bodies, but hadvery little impact on management methods in programmes and projects.


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PRIORITY AXES MAIN TARGETS ACHIEVED1 COMMUNICATIONS Transport – improvement in some strategic communication routes already in existence, but little extension of road and rail links. Weak support to

rail options compared with roads. Works of redefinition and extension in some ports and airports. Almost all the works carried out were part oflarger actions, so that their impact is currently slight.Telecommunications Improvement in services and extension of the fibre optic network..

2 INDUSTRY Great support to local production systems, especially to SMBs. The level of investment remains high for the Central-North despite the dramatic fallin investments by public businesses.Aid has covered falls in competitiveness due to the reduction in subsidies towards labour cost and decrease in domestic demand. The evolution ofproductivity is in line with that in the Central-North, even though they remain at different levels.Little integration with other policies on training or research.

3 TOURISM General support of the modernisation and re-definition of the tourist industry, especially to mid-category hotels. Support found rising demand andthe sector has seen substantial development.There were no integrated actions at area level nor large-scale policies on diversifying the goods and services on offer.

4 AGRICULTURE ANDRURAL DEVELOPMENT

Great support of agricultural businesses and their investments in re-definition and modernisation of production. Good results in terms of anincrease in productivity, partly favoured by the steady rise in unemployment.Under par results for technological innovation, rural development and diversification in production activity, with the exception of agriturismo(farm holidays) which received significant impetus. There was also no sector (filiera) policy that linked the food and agricultural system into anorganic whole.

5 FISHING Significant support to the renewal of production equipment and hydroculture. Less impact on the environmental aspects linked to fishing.6 ECON. INFRASTRUCT. Water: significant support of infrastructure maintenance; limited actions on expanding availability. Results are definitely below expectations, and

involvement of private parties too was nil.Energy Actions limited to the completion and consolidation of existing availability. Support of renewable resources was almost nil.Environment Implementation of many actions of re-arrangement and consolidation of existing infrastructures. Actions were below those needed(especially waste disposal) and showed no clear area policy. Of note was the initial activity of supplying infrastructures to parks and thus a firststep towards their exploitation for economic development.Research, development and innovation Enormous involvement of universities and significant development of higher education in scientificsubjects. Implementation of large research projects, but weak SMB involvement. These are ineffective limited results, especially for actions oftechnology transfer.Security infrastructure the programme on security was added half-way through; it attained significant results not only in the construction ofsecurity infrastructures , but also as a message that there is a development policy including all elements of society and state.

7 HUMAN RESOURCES The FSE programmes reached an enormous number of beneficiaries and contributed to the creation of a support system for human resourcesincluding schools, universities, professional training, and continuing education. In addition the development of specific actions for targetpopulations (women and the underprivileged) also enabled the first experimentation in these sectors to be carried out.No similar widespread efficacy corresponded to the great breadth of the action. The greatest successes were seen within schools and universities.On the contrary, there were no links between support of human resources and the production sector, and it is no coincidence that continuingeducation was the action most penalised by re-programmings.The non-existence of a system of employment services and the almost sole use made of training as a means of placing people in the job marketlimited the efficacy of actions.

8 TECH. ASSISTANCE Important role in supporting the public administration. Technical assistance worked almost exclusively in outsourcing, and the transfer of abilitiesand resources was limited. Importance of training for the PA as a means of disseminating basic concepts, but low efficacy on influencingmanagerial ability.


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5.2.1. Impact on employment

CSF results on employment are important not only because programming began during a downturnin the economy, but also because the starting levels of unemployment in Southern Italy were sovery high.

The table below shows our estimations of the temporary and new employment generated by theCSF. The estimations are based on an analysis of the little information available (average costs foremployment created) and on additional information from national accounting or other sources ofgeneral data. When referring to the main types of action, estimations are as follows:

New created jobsUnit cost of 1 new job-

Public expenditure(.000 Euro)

Temporary jobsUnit cost of 1 man/year-

Public expenditure(.000 Euro)

Grants 168 0Public Work 920 92R&TD, 0 100Stimulation, promotion services, etc. 0 50Incentive to hire 50 0Training for unemployed people 0 80Training for employed people 0 85TA, employment services, otherservices for the PA

0 60

This is necessarily a simplification of actions that were very different from each other even whenthey belonged to the same category. In addition, multiplication or spill-over effects from CSFactions (direct or indirect employment) have not been taken into account, as neither have any effectsof crowding-out or substitution that the CSF may have generated. For this reason, for example,permanent employment following training courses has not been estimated19. Obviously, whereofficial data on employment results were available (only 27 measures out of 864), these have beenused20. Despite these limitations, the estimate presents a good approximation of the CSF’s“potential” impact on employment.

More than 60% of temporary employment was concentrated on the infrastructure axes and in totalwas equal to 203,000 years per person (see table below). New permanent employment on the otherhand was almost exclusively concentrated (70%) on the industry axis and was a little lower than138,000 units.

19 Indications from surveys carried out mainly in the Central-North indicate a positive impact on employment bytraining even though it is limited (+5/10% compared with those who have done no training) and is not always consistentwith the courses held.20 However these official data do not always appear plausible.


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Table 87 Estimation of employment impact by priority axes and sub-axesPriority Axis and sub-axis Estimated temporary jobs Estimated new jobs

Person/years % Units %1 COMMUNICATIONS 61.197 30,2 6.115 4,41.1 Roads and highways 17.817 8,8 1.780 1,31.2 Rail 25.265 12,5 2.526 1,81.3 Other transport 4.841 2,4 484 0,41.4 Telecommunications 13.274 6,6 1.325 1,02 INDUSTRY 11.594 5,7 95.336 69,22.1 Grants for industry 3.457 1,7 77.096 55,92.2 Grants for handicraft 0 0,0 6.893 5,02.3 Grants for business services 371 0,2 1.873 1,42.4 Local development - crisis areas 6.027 3,0 8.541 6,22.5 Industrial and handicraft areas 1.739 0,9 934 0,73 TOURISM 13.542 6,7 9.479 6,93.1 grants for tourist investments 1.316 0,6 7.359 5,33.2 Development of tourist resources 12.226 6,0 2.121 1,54. AGRIC. – RURAL DEVELOPMENT 21.534 10,6 14.330 10,44.1 Agricultural resources and infrastructures 5.702 2,8 5.236 3,84.2 Rural development 5.068 2,5 2.472 1,84.3 Services in agriculture 5.082 2,5 158 0,14.4 Objective 5a 5.430 2,7 4.902 3,64.5 On-going measures 253 0,1 1.563 1,15 FISHING 89 0,0 1.801 1,36. ECON. INFRASTRUCT. 62.626 30,9 8.918 6,56.1 Water 21.571 10,6 2.958 2,16.3 Environment 15.486 7,6 2.179 1,66.2 Energy 5.414 2,7 3.243 2,46.5 Infrastructures for health 2.007 1,0 172 0,16.4 R&TD 18.147 9,0 368 0,37. HUMAN RESOURCES 30.493 15,1 1.819 1,37.1 education and initial training 17.391 8,6 0 0,0-Training for the under 25’s 9.626 4,8 0 0,0-Vocational training and education 4.587 2,3 0 0,0-Short-degree graduates, universities 3.178 1,6 0 0,07.2 Inclusion of unemployment 7.422 3,7 1.632 1,2-Training for long-term unemployed 5.647 2,8 0 0,0-Support for long-term unemployed 0 0,0 972 0,7-Support for young unemployed 0 0,0 660 0,5-Training for women 547 0,3 0 0,0-Training for underprivileged people 1.228 0,6 0 0,07.3 Continuing training 1.742 0,9 0 0,0-Support for continuous training system 306 0,2 0 0,0-Training for workers in large companies 729 0,4 0 0,0-Training for workers in SMBs 707 0,3 0 0,07.4 PA and systems reinforcement 2.042 1,0 0 0,0-Training for trainers 315 0,2 0 0,0-Training for public officials 1.727 0,9 0 0,07.5 Training structures 1.896 0,9 187 0,18 TECHNICAL ASSISTANCE 1.493 0,7 0 0,0TOTAL 202.568 100,0 137.798 100,0Source: Ismeri Europa data processing.

Annually, temporary employment was around 0.6% of existing employment in Objective 1 regions,while new employment was around 1.5% of unemployment (see table below).


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Table 88 Estimation of the impact on employment of the 1994-99 CSF.Temporary jobs New jobs

Regions Estimated temporaryjobs (person/years)

Estimated annualtemporary jobs(person/years)

Annual temporaryjobs/Employment in

1999 (%)

Estimated new jobs(units)

Estimated annual newjobs

(units)

Annual newjobs/Unemployment in

1999 (%)

Abruzzo 4.355 726 0,2 1.439 240 0,5Molise 5.670 945 0,9 1.305 218 1,1Campania 17.646 2.941 0,2 9.629 1.605 0,3Puglia 15.977 2.663 0,2 8.108 1.351 0,5Basilicata 8.380 1.397 0,8 4.806 801 2,2Calabria 12.477 2.079 0,4 5.593 932 0,5Sicily 20.008 3.335 0,3 9.209 1.535 0,4Sardinia 12.076 2.013 0,4 5.364 894 0,7Multi-regional 105.979 17.663 - 92.345 15.391 -Overall total 202.568 33.761 0,6 137.798 22.966 1,4(*) total value divided by 6 yearsSource: Ismeri Europa data processing and ISTAT for employment and unemployment in 1999.


159

In the smaller regions (Molise and Basilicata) impact on employment was proportionally higherboth for temporary and new employment.

The analysis of impact on employment confirms previous conclusions:- The CSF has not enabled the employment problem to be resolved or drastically reduced, but it

has made a significant contribution to alleviating the social problems connected tounemployment;

- the employment effects shown may be magnified by multiplying and spill-over effects but noestimation is possible. However, on the basis of overall social and economic evolution, effectsdo not seem particularly large and are concentrated in some districts, and in some areas withlarge external investment);

- The concentration by area, here summarised by the small regions, confirms a capacity tocreate a significant critical mass. It is no coincidence that Basilicata and Molise also have thebest employment performance compared with other regions.

5.3. CONTRIBUTION OF CSF/SPD TO ACHIEVEMENT OF TARGETS

The following analyses aim to define the CSF contribution to the achievement of the objectivessummarised above, and more generally, to the social and economic development of Objective 1regions.

5.3.1. Additionality

Although only the first provisory estimations are currently available, an analysis of additionalityconfirms the central role played by the CSF as regards national development policies. In fact, CSFexpenditure rose from 8% of total annual expenditure on development in 1989-93 to 23% in 1994-99.

This was the direct consequence of policies for privatisation and a reduction in public spending. Itwas actually the part of public spending that decreased the most between the two periods (-45%)and had a negative effect on the sectors of transport, human resources and industrial investments(see table below).

The reduction in national public spending was widespread over all sectors (-36% infrastructures, -21% human resources), with the exception of production. Here an overall growth of 26% wasrecorded, but with a concentration in industry and services (+81%), while other sectors saw areduction in public resources.


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Table 89 Variation of expenditure for development between 1989-93 and 1994-99 (% valuescalculated on annual average at 1999 prices)

TOTAL whose:public

companies

CSF Without EU funds TOTAL

(nat.+EU) EU Nat. Nat. Nat.2 3 4 5 6 7

INFRASTRUCTURE -32,4 -42,5 125,0 133,2 -40,2 -35,7Transport -38,8 -21,3 817,7 1031,9 -49,4 -43,5Telecommunication -60,4 -60,4 65,2 84,9 -71,2 -64,3Energy -34,6 -35,8 4,8 31,1 -38,8 -35,8Water -43,8 -76,0 77,8 64,4 -68,3 -55,0Environment 0,1 -28,3 93,9 98,9 -12,4 -5,8Health -24,6 [+8,7]* [+6,5]* -27,3 -26,1Housing -6,3 252,3 -6,3 -6,3Varies -6,3 -6,3 -6,3HUMAN RESOURCES -6,3 -100,0 244,2 273,1 -30,4 -20,9Education -6,6 -6,6 -6,6Training (capital expenditure)Training (current expenditure) 9,2 198,3 243,1 -47,1 -26,0R&TD -32,4 -100,0 330,5 264,1 -111,6 -72,5PRODUCTIVEENVIRONMENT

39,7 -63,1 146,0 178,0 -1,1 26,3

Industry and service 85,0 -63,1 113,1 175,9 58,8 80,8Agriculture -11,6 225,9 190,3 -43,3 -27,2Fishing -52,6 4136,4 3731,0 -141,4 -97,6Tourism -10,5 130,9 147,1 -501,7 -84,3OTHER 53,6 0,0 53,6 53,6TOTAL -14,8 -44,9 150,3 164,3 -29,2 -21,0(+) absolute values (in Meuro); in 1989-93 the value of these actions was zero.Source: Treasury, provisional estimation for additionality, July 2002

The additionality analysis confirms the great problems experienced by public spending in thelatter half of the 1990s and also confirms the CSF’s vital contribution to maintaining the overallexpenditure on development at a high level. This reference framework should be kept well inmind in any judgement on the role of 1994-99 CSF.

The concentration of national policies on the private sector, particularly private industry,confirms a basic choice already seen in the strategies of the CSF: the desire to support theproduction sector at a time when the public sector was struggling to implement investments,externality and indirect support.

It is likewise evident that a reduction in strategic investments, such as those for basicinfrastructures, may be only temporary and will have to find new resources and strategicdirections.

5.3.2. Gross Impact

The following pages are a comparison of the gross impact recorded by the CSF with a stock ofsupplies or existing beneficiaries. This is obviously an approximation of the CSF’s contribution tothe Objective 1 economy, but presents some significant facts in the order of size. The results shouldbe viewed with caution since comparisons are often complex and ideally would require separatingout, which unfortunately is impossible.


161

Table 90 Summary of main gross impact by priority axisMain indicators U.of m. Effective

ValuesEstimated

ValuesTotal values Value in the Objective

1 regions% of results onexisting values

Notes and year of theregional data

1 2 3=1+2 4 5=3/4*100CommunicationsRail network km 538 79 616 5.446 11,3 1996Rail network (two tracks) km 187 187 1.311 14,2 1996New roads km 262 262 71.577 0,4 1996Re-defined roads km 539 539 71.577 0,8 1996Optic fibre implemented km 137.797 137.797 437.308 31,5 1993IndustryBeneficiary farms No. 86.973 22.509 109.482 994.249 11,0 1996TourismBeds No. 33.760 37.216 69.179 910.695 7,6 Hotel+other

sleeping accomod.1999Agricultural res. and Rural development Beneficiary businesses No. 76.984 52.327 129.311 1.474.398 8,8 2000Businesses involved No. 6.434 6.434 1.474.398 0,6 2000Beds No. 7.102 6.834 13.936 12.452 111,9 Agriturismo 2000Agricultural surface area involved ha 377.782 28.615 406.397 3.596.829 11,3 UAS 2001Economic infrastructuresWater purification plants No. 145 145 2.000 7,3 1993Human resources (*)Unemployed pupils No. 536.202 536.202 1.636.258 5,5 1999Employed pupils No. 117.437 117.437 5.815.133 0,3 1999Secondary schools students involved No. 724.543 724.543 663.173 18,2 1999Note (*) impact of training in the human resource axis has been calculated at annual level (total value divided by 6 years).Source: Ismeri Europa data processing and ISTAT


162

As indicated in the summary above, since a complete set of physical indicators is unavailable,estimated results have been calculated in many cases. As with employment, estimations arebased on the unit costs recorded for actions (where available) and other additionalinformation. Again it is important to emphasise that the estimates indicate “potential” impactand not actual impact, which would have been influenced by many social and economicphenomena that are here not taken into account. Lastly, one final word of caution concerns theanalysis coverage, which is incomplete; only some more general or significant indicators havebeen estimated and there are many CSF actions and results that are not considered in thefollowing tables.

5.3.2.1. Impact on infrastructure supply

Road actions marginally involved new roads of national or regional importance (see only thecommunications axis), mainly being for the construction of agricultural roads and roadsservicing industrial areas (see other axes). Actions on the communications axis involved 0.9%of existing roads, but fewer than half were for new lay-outs and very few for kilometres ofnew motorways.

Table 91 Impact on road network by regionPriority axes

Communications

Otheraxes (*) Total

Regionalstock (**)

Communic.On regional

stock(%)

Total Onregional

stock(%)

1 2 3 4 5=1/4*100 6=3/4*100Abruzzo New roads 0 133 133 6.725 0,0 2,0

New roads 33 300 333 2.936 1,1 11,3Molise Re-classified

roads 27 27 2.936 0,0 0,9

New roads 27 170 197 10.109 0,3 1,9Campania Re-classified

roads 170 170 10.109 1,7 1,7

New roads 722 722 11.212 0,0 6,4Puglia Re-classified

roads 48 48 11.212 0,4 0,4

New roads 65 2.369 2.434 4.797 1,4 50,7Basilicata Re-classified

roads 83 83 4.797 1,7 1,7

Calabria Re-classifiedroads 118 118 10.289 1,1 1,1

Sicily New roads 6 6 17.063 0,0 0,0New roads 129 129 8.447 1,5 1,5Sardinia New roads* 0 261 261 8.447 0,0 3,1New roads 3 12 14 71.577 0,0 0,0

Multi-regionalRe-classifiedroads 120 22 142 71.577 0,2 0,2

New roads 262 3.967 4.230 71.577 0,4 5,9Re-classifiedroads 539 49 588 71.577 0,8 0,8

Overall Total 679 3.983 4.661 71.577 0,9 6,5Total CSF

(%) 14,6 85,5 100 - -Notes: (*) Other axes = Agricultural resources (rural roads), Industry (roads in industrial area) and tourism(tourist routes); (**) Includes: motorways, national and provincial roads in 1991.Source: Ismeri Europa data processing .


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Financially, resources allocated to roads in the CSF were limited as well. They were around10% of the expenditure that had already been financed by the General Plan for Transport 2000for main actions in Objective 1, and around 6% of the total expenditure budgeted (includingthose that had not been financed).

The overall impact of road actions on the transport and mobility system was thus limited,even though addressed to actions of strategic importance (the TEN network).

Action for railways was significant and overall involved between 12% and 14% of existinginfrastructures. In this case as well however, extension of the rail system only involved asmall number of actions ((in particular 48 km of the high-speed line between Rome andNaples).

Table 92 Impact on rail network by regionRail CSF Regional rail network in 1991 CSF/Regional network %

rail 275,8 977,1 28,2Campania rail - two tracks 61,6 496,4 12,4Molise rail 88,0 250,3 35,2Puglia rail 78,8 850,7 9,3Sicily rail 7,9 1448,0 0,5

rail 214,0 5445,6 3,9Multi-regional rail - two tracks 125,0 1311,0 9,5rail 656,6 5445,6 12,1Total CSF rail - two tracks 186,6 1311,0 14,2

Source: Ismeri Europa data processing

In relation to the expenditure forecast by the General Plan for Transport 2000 CSF resourcesfor railways were about 13% of actions that had already been financed and 10% of the totalactions planned.

The action for the diffusion of the optic fibre telecommunication network appears large sincethe CSF extended the previous network by 32%.

Table 93 Impact on rail network by region.Communication

Km of optic fibreimplemented by the CSF

Km optic fibre in 1993 CSF/Existing

Abruzzo 3.164 - - Basilicata 6.753 - - Calabria 16.125 - - Campania 18.137 - - Molise 1.854 - - Puglia 22.552 - - Sardinia 26.218 - - Sicily 42.994 - -TOTAL CSF 137.797 437.308 31,5Source: Ismeri Europa data processing .

Lastly, environmental infrastructures showed great improvements in the water purificationsector (involved+increased 21% of existing plants) and slight impact in the treatment of waste(2% of existing plants).


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Table 94 Impact on environmental infrastructuresPriority axis

EconomicInfrastructure

Other axesTotal Regional supply

(1998)CSF/regional

supply(%)

Calabria 10 - 10 77 13,0Multi-regional - 6 6 - -Total Waste disposal (*) 10 6 16 908 1,8Basilicata 56 15 71 129 55,0Campania 23 - 23 304 7,6Calabria 66 - 66 335 19,7 Total water purification plants 145 15 160 768 20,8Source: Ismeri Europa data processing and ANPA.

Many other infrastructure actions were implemented, but it is not possible to estimate resultsor make a comparison with existing supply.

5.3.2.2. Impact on industrial enterprises

The high level of CFS resources addressed to the industrial sector is reflected in great impact.:around 11% of industrial and service businesses (1996) was involved in CFS financing21.

Table 95 Impact on industrial and service enterprises by region (1996)Indicators Industry + Tourism

No. of beneficiaryenterprises

% on total CSF Regional privateenterprises in industry

and services (1996)

CSF on regional stock(%)

Abruzzo 6.433 5,9 78.235 8,2Molise 5.016 4,6 17.132 29,3Campania 6.895 6,3 268.797 2,6Puglia 10.662 9,7 196.427 5,4Basilicata 1.773 1,6 30.077 5,9Calabria 4.140 3,8 91.007 4,5Sicily 19.931 18,2 227.010 8,8Sardinia 7.278 6,6 85.564 8,5Multi-regional 46.721 42,7 - -Total CSF 109.482 100,0 994.249 11,0- Actual 86.973 79,4 994.249 8,7- Estimated 22.509 20,6 994.249 2,3Source: Ismeri Europa data processing and ISTAT for enterprises (Intermediate Census 1996).

The maximum was recorded in Molise where almost 30% of businesses would seem to havebeen subsidised to varying degrees; in Campania on the other hand, the minimum of 2.6%was recorded. These variations derive from the variations in regional resources, but also fromvariations in the size of planned actions. Almost half of beneficiary businesses were howeverfinanced by multi-regional actions in the industry and services programme.

21 In addition, the estimates taken are based on the unit costs of incentives in the capital account, which involvesan under-estimation of many of the more widespread actions (“de minimis”, rotation funds, business services,etc.).


165

5.3.2.3. Impact on farms

In a similar way to industry and services, actions in agriculture reached a very high number ofbusinesses (9% of the total in 2000). In this case however there was greater differentiation atregional level: in Molise a maximum of almost 70% of businesses involved was reached,while in Puglia this did not rise above 3%.

Table 96 Impact on farms by region (2000)Farms benefited % on total CSF Total existing farms

(in 2000)CSF/ existing farms

(%) Abruzzo 3.630 2,8 82.833 4,4 Molise 23.024 17,8 33.973 67,8 Campania 28.726 22,2 248.931 11,5 Puglia 8.900 6,9 352.510 2,5 Basilicata 8.020 6,2 81.922 9,8 Calabria 8.684 6,7 196.191 4,4 Sicily 21.228 16,4 365.346 5,8 Sardinia 25.782 19,9 112.692 22,9Multi-regional 1.316 1,0 - -Total CSF 129.310 100,0 1.474.398 8,8- Actual 76.983 59,5 1.474.398 5,2- Estimated 52.327 40,5 1.474.398 3,5Source: Ismeri Europa data processing and ISTAT for farms (Agricultural Census 2000).

5.3.2.4. Impact on tourist facilities

The CSF helped to increase or modernise 9% of the tourist facilities already in existence in1999 in Objective 1 regions. In Sicily and Sardinia the greatest contribution came from theagriculture axis and thus was addressed to agriturismo (farm holidays). In Campania, Calabriaand Basilicata on the other hand, action concentrated on traditional tourism and reached apercentage of between 14% and 32% of existing tourist facilities.

Table 97 Impact on tourist facilities by Region: sleeping accommodations (beds)Priority axes

Agriculture

resources

Industry Tourism EconomicInfrastructur

es

TotalRegionalstocks (*)

% on regionalstocks

Abruzzo 1061 2699 3.760 94.919 4,0Molise 958 949 1.907 11.370 16,8Campania 2030 27504 29.534 161.113 18,3Puglia 240 3261 3.501 174.094 2,0Basilicata 6.649 6.649 20.605 32,3Calabria 26158 44 26.202 187.059 14,0Sicily 3.771 1.864 5.635 121.429 4,6Sardinia 5.876 5.876 140.106 4,2Multi-regional 1.678 94 75 1.847 - -CSF TOTAL 13.936 1678 69.179 119 84.912 910.695 9,3- actual 7.102 1.678 31.963 119 40.862 910.695 4,5- estimated 6.834 37.216 44.050 910.695 4,8Note (*) Includes Hotels and extra-hotel accommodations in 1999Source: Ismeri Europa data processing and ISTAT for existing beds in 1999.


166

5.3.2.5. Impact on human resources

Impact on human resources has been sub-divided into three main categories: unemployed,employed and students of technical and professional colleges. Here as well, the need toestimate results has led to simplification and grouping by prevalence (e.g. all sector actionshave been grouped with those for unemployed, the number of pupils has been calculated onaverage costs that vary by region); in short, here as well one has to imagine a “potential”impact, which should however be close to real impact.

Annually, FSE actions involved a target population of around 5.5% of the unemployed inObjective 1. The most important actions were those for the long-term unemployed and foryoung people under 25 years of age.

Table 98 Impact of training on unemployment in Southern Italy (1999)Estimatedtotal N. of

pupils

Estimatedannual N. of

pupils

% of total % ofunemploymen

t in 19992 INDUSTRY 65346 10891 12,2 0,73 TOURISM 16172 2695 3,0 0,24. AGRIC. – RURAL DEVELOPMENT 30418 5070 5,7 0,35 FISHING 1513 252 0,3 0,06. ECON. INFRASTRUCTURES 41876 6979 7,8 0,4Total production priority axes 155325 25888 29,0 1,6Support for long-term unemployed 10.786 1798 2,0 0,1Support for young unemployed people 9060 1510 1,7 0,1Training for long-term unemployed 136213 22702 25,4 1,4Training for women 10480 1747 2,0 0,1Training for the underprivileged 18770 3128 3,5 0,2Training for young people under 25 143951 23992 26,8 1,5Short-degree graduates, universities 51617 8603 9,6 0,57. Total Human resources 380.877 63480 71,0 3,9TOTAL 536.202 89367 100,0 5,5Source: Ismeri Europa data processing and ISTAT for unemployment in 1999.

Actions for the employed involved an annual average of 0.3% of employment and mainlydealt with PA officials and SMB workers.

Table 99 Impact of training on employment in Southern Italy (1999)Estimated total

N. of pupilsEstimated

annual N. ofpupils

% of total % ofemployment in

1999Training for workers in large companies 26.883 4.481 22,9 0,1Training for workers in SMBs 33.833 5.639 28,8 0,1Support for continuous training system 8089 1348 6,9 0,0Training for trainers 10874 1812 9,3 0,0Training for public officials 37758 6293 32,2 0,1Total Impact On Employment 117.437 19.573 100,0 0,3Source: Ismeri Europa data processing and ISTAT for unemployment in 1999.

The students from technical and professional colleges who were involved in FSE projectswere 18% per year of the total; this means that in six years of action the whole of thetechnical and professional college population was involved (see the following table).


167

Table 100 Impact of training on students of secondary technical colleges (1999)Estimated total N. of

pupilsEstimated annual N. of

pupils% of students in

technical andprofessional colleges

Vocational training and education 724.543 120.757 18,2Source: Ismeri Europa data processing and ISTAT for student in 1999.

At regional level Molise and Basilicata recorded a greater importance of actions for theunemployed people; the same actions were less important in Campania, Puglia and Sicily.

Table 101 Impact of training on unemployment by region (1999)Estimated total


annual N. ofpupils

% of total Unemploymentin 1999 (units)

Annual Pupils ofunemployment

(%)Abruzzo 17.104 2.851 3,2 48.940 5,8Molise 16.208 2.701 3,0 20.379 13,3Campania 9.264 1.544 1,7 482.212 0,3Puglia 41.675 6.946 7,8 274.902 2,5Basilicata 46.645 7.774 8,7 36.946 21,0Calabria 65.949 10.991 12,3 206.759 5,3Sicily 59.615 9.936 11,1 429.482 2,3Sardinia 65.379 10.896 12,2 136.638 8,0Multi-regional 214.364 35.727 40,0Total 536.202 89.367 100,0 1.636.258 5,5Source: Ismeri Europa data processing and ISTAT for unemployment in 1999.

Actions for the employed were again of a certain import in Molise and Basilicata; while theywere nil in Campania, where nominally at least the measures for this purpose were cancelled.

Table 102 Impact of training on employment by region (1999)Estimated total


annual N. ofpupils

% of total Employment in1999 (units)

Annual Pupils ofemployment (%)

Abruzzo 2346 391 2,0 436.010 0,1Molise 4377 730 3,7 105.524 0,7Campania - - - - -Puglia 13146 2191 11,2 1.174.276 0,2Basilicata 10359 1727 8,8 178.683 1,0Calabria 2325 387 2,0 531.411 0,1Sicily 1839 307 1,6 1.326.257 0,02Sardinia 9202 1534 7,8 514.263 0,3Multi-regional 73842 12307 62,9 - -Total 117436 19573 100,0 5.815.133 0,3Source: Ismeri Europa data processing and ISTAT for employment in 1999.

Overall, the impact on human resources seems to have been significant and widespread.However, it was largely influenced by the varying ability in implementation in the differentfields of action and in the different regions.


168

5.3.3. Net Impact in aid schemes

This section deals with the net impact that can be estimated for actions on incentives toindustrial investments. The estimation concerns all the incentive actions implemented in thepriority axis “ Industry and Services” (about 14 thousand million Euro of total investmentsand 7.9 thousand million of public spending), and is based on the results of a survey carriedout on businesses that benefited from Law 488/92.

Table 103 Measure of influence on investments by financingItaly Central-North Southern Italy

Not at all 41 49 27To some extent 39 36 44Significantly 11 7 17Had a determining effect 4 1 9Non respondents 5 7 3Total 100 100 100Source: Ministry for Industry, Unioncamere, Survey on Law 488/92 (2000). The sample included about 1500businesses.

In this survey, only 27% of the businesses benefiting in Southern Italy stated that they hadnot been influenced in their choice of investment by public financing (“dead-weight”). Thetable shows however that for 26% in Southern Italy aid was “significant” or “had adetermining effect” on whether investment was implemented. In the mid band (influenced “tosome extent”) there was a substantial percentage of 44%.

Eliminating the non-respondents and taking the remaining replies as 100%, in Southern Italythe net impact relating to aid to investment may be considered:- average (72% of the total), if only the reply “not at all” is included in “dead-weight”;- low (27% of the total), if the reply “ to some extent” is also included in “dead weight”.

The estimations of dead-weight confirm other analyses carried out at European level (see DGREGIO, Thematic evaluation on the contribution of structural funds to SMES, 1998) andother similar national surveys).

The two scenarios (estimated in the table below) are significantly different, but both confirman important difference between the gross and net impact in the aid to investment sector.

It should be noted however that a “reduced” net impact was also recorded in the infrastructuresector, where a large number of the projects co-financed by structural funds had already beenfinanced with national funds; it is unclear where the funds thus “released” were finallyallocated.


169

Table 104 Estimation of the net impact in aid-schemes by region (calculation only for industry axis and aid-schemes).Total estimated gross impact Estimated “medium” net impact (72%) Estimated “low” net impact (27%)

Beneficiaryenterprises

(n.)

Jobscreated

(n.)

Totalinvestment(.000 Euro)

Total publicexpenditure(.000 Euro)


(n.)

Jobscreated

(n.)




(n.)

Jobscreated

(n.)



Abruzzo 6.433 195 34.013 81.569 4.632 140 24.489 58.730 1.737 53 9.184 22.024Basilicata 1.608 701 134.310 353.608 1.158 505 96.703 254.598 434 189 36.264 95.474Campania 6.895 2.011 386.635 605.589 4.964 1.448 278.377 436.024 1.862 543 104.391 163.509Calabria 4.099 1.893 349.021 480.758 2.951 1.363 251.295 346.146 1.107 511 94.236 129.805Molise 4.112 550 92.564 64.000 2.961 396 66.646 46.080 1.110 149 24.992 17.280Puglia 10.537 2.148 330.790 203.276 7.587 1.547 238.169 146.359 2.845 580 89.313 54.885Sardinia 6.132 986 156.429 109.500 4.415 710 112.629 78.840 1.656 266 42.236 29.565Sicily 18.286 3.909 497.139 420.504 13.166 2.814 357.940 302.763 4.937 1.055 134.228 113.536Multi-regional 43.642 79.913 12.166.387 5.576.227 31.423 57.537 8.759.799 4.014.883 11.783 21.576 3.284.924 1.505.581Total 101.743 92.305 14.147.287 7.895.031 73.255 66.460 10.186.047 5.684.422 27.471 24.922 3.819.768 2.131.658Source: Ismeri Europa data processing and Ministry of Industry “Survey on law 488/92” (2000).

ISMERI EUROPA - Impact

170

In the sector for human resources some estimations of net impact (calculated as a comparisonin the probability of finding work between the trained and untrained) in the Central-Northshow this to be rather limited. Lastly, in agriculture, in some years, and not only in Italy, totalsubsidies (structural policies plus CAP) were greater than the sector added value.

Thus, an open mind is needed when judging the net impact in the industrial incentive sector.In particular, it may be helpful to underline certain additional aspects.

Subsidised businesses, for example, recorded a better performance compared with non-subsidised businesses22. There is therefore a positive effect of financial transfer, whichdepends both on the system of selection23 and on the high amount of resources given tosupport of businesses. There were also important indirect results: the strong support of theemployment linked to investments and the reduced pressure on the credit system, which wasexperiencing deep-reaching re-organisation in Southern Italy.

There is then a trade-off between management and net impact: the more thoroughmanagement and selection are, even though procedures are complex and time-consuming, thehigher the net impact should be. The cost of management would however become extremelyhigh from its organisation and the unpopularity it would meet with from businesses, who wantfast decisions. The national choice of a “semi-automatic” transparent system has probablyreduced the net impact, but has increased overall efficiency in the management of aidschemes.

Lastly, there is the effect of other types kinds of aid to which businesses have access; the netimpact of an aid system also depends on the overall aid system in force. In Italy over the lastfew years, various automatic or discretionary systems of tax relief (programme agreements,territorial Pacts) have been introduced, which may have reduced the net impact of a selectiveaid system.

In conclusion, analysis indicates that:- aid to businesses has had a limited net impact, which confirms the indications of

previous studies, and does not appear very far off from the net impact that can beestimated for other sectors of the action;

- the overall strategy of support of the private sector that has been progressed by the CSFnecessarily involved the acceptance of a high level of “dead-weight”;

- an increase in net impact is possible, but requires the maintenance of the balancebetween costs and benefits in aid management, plus consistency in the different aidsystems being applied;

- any revision of the system for aid to businesses should not solely consider net impact,but also a more complete redressing of the balance between direct support and indirectsupport to businesses’ competitiveness..

22 See again Ministry for Industry, Survey on Law 488/92 (2000).23 Law 488/92, for example, mainly supports businesses’ financial solidity, creating an “adverse selection” asregards market failure and accentuating competitiveness. But in this way the percentages of the incentive’ssuccess in the long term is increased.

ISMERI EUROPA - Impact

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5.4. CONCLUSIONS

The various analyses suggest that overall the CSF has had a positive impact.

The CSF has been a vital means in the support of development policies at a time of heavyreductions in national spending. Generally speaking, effects appear of great import for thenumber of beneficiaries and the physical results implemented. Through the CSF the mainproduction sectors have been supported, particularly the industrial sector . Of lesserimportance appear results on support of infrastructures, despite some large constructions.

In many cases the limited results derive from limitations in initial strategy and frommanagement difficulties, which have impoverished the integration of various actions andtheir ability to concentrate on certain areas of major importance.

The simultaneous drop in domestic demand and public spending in the 1996-1999 periodseem however to have been the major impediments to the CSF having a greater impact.

Although the CSF has not increased development rhythms in Objective 1 regions (it stillonly represents 20% of national development policies), it has been of fundamental supportto aiding them to draw closer to the dynamics of development as experienced in the rest ofItaly. It has therefore favoured an essential structural adaptation, which could begin togenerate more robust development mechanisms over the next few years.

In any event, there emerges the need for a development policy that will integrate direct andindirect aid to business in a more balanced way. Actions for infrastructure are seen to havebeen rather poor and fragmented in the various objectives; the weakness of nationalprogramming, in addition to the reduction in the national resources available, are the maincauses for these limitations.

ISMERI EUROPA – Management and Implementation

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6. MANAGEMENT AND IMPLEMENTATION SYSTEMS

6.1. INSTITUTIONAL ARRANGEMENTS

6.1.1. Overview of Programme management structure

Management of Structural Funds involves a plurality of public organisations, both centraladministration and decentralised administration. Compared with the previous periodimportant improvements in managing and implementing structural actions occurred atdifferent institutional levels (central, regional and local).

A still unsatisfactory operational competence affected many institutions, specially atregional level. As a whole, the management system faced criticisms the main causes ofwhich were:– the lack of co-ordination within various organisations, which led to the duplicationof administrative actions and the complication of the implementation process;– lack of involvement in the policy-making phase by the various levels within PAs,specially local institutions, weakening the efficiency of the implementing phase;– the operative staffs did not have adequate professional skills and were understaffed.

The traditional poor orientation of the Italian administration to the objectives increased theeffects of these problems.

Faced with the problems of internal co-ordination, both centralised and decentralisedpublic administrations began processes of organisational re-structuring. This was on alòarger scale and more successful at national level. A common factor in these processeswas the tendency to centralise co-ordination of actions into a single internal structure. Thecentralisation of general co-ordination, however, was often carried out over too-long atime-scale and was not accompanied by a complete overhaul of the organisational andfunctional structure.

The management of Structural Funds mirrored the institutional division of roles withinnational policy. These roles and the management system of the CSF were subject to changethroughout the cycle of programming. The main causes were:- the revision of national strategies and regional policies;- the changes in the institutional jurisdictions of the management;- the reorganisation of the Public Administrations, aimed at improving efficiency.

The next graph shows the institutional structures for Objective 1 management, as defined atthe end of the 1994-99 period. In the next paragraph the performance and the main changes inthe management structure will be examined.


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TREASURY

Ministry …(Responsible for

MOPs)

Public body…(Responsible forMOPs under the jurisdiction of a

Ministry)

Regions(Responsible for

POPs)

Programming and implementation ofMulitregional Sectoral Programmes

Programming and implementation ofRegional multisectoral and integrated

Programmes

IGRUE (RGS DEPARTMENT)Financial circuits

COHESION DEPARTMENT•Monitoring, coordination and

guidance of structural interventions•Coordination of ERD interventions

•Responsible for 2 OPs

MINISTRY OF WELFARE(ex-Ministry of Employment)

•Co-ordination of ESF interventions•Responsible for 3 OPs

MINISTRY OF AGRICULTURE•Co-ordination of EAGGF and

FIFG interventions•Responsible for 3 OPs

INSTITUTIONAL STRUCTURE OF THE 1994-99 CSF MANAGEMENT

CIPEDecision of financing

Intermediary bodiesResponsibles for GGs

Provinces, Municipalities and Mountain Communities, public bodies and private companiesImplementation of single project

Over this administrative structure operates the CIPE (Comitato Interministeriale per laProgrammazione Economica) in which there are representatives from all the main Ministries.The CIPE has the financing function in sector and area development policies, both nationaland those co-financed by the EU. The CIPE deliberates on national co-financing of StructuralFunds , the financing requests by each administration officially responsible for an OP24, andthe consistency of these requests with the financial plans and the community rules.

As can be seen, the Treasury holds a central role. From the initial phase of programmingonwards it has been given the responsibility for co-ordinating all the structural programmes(regional and multi-regional), co-financed by various Community Funds25. Several internalservices of the Treasury are called to cooperate in the management of the structuralprogrammes:- The Department of Development and Cohesion Policies deals with the co-ordination and

strategic aim of the various programmes through the Service for Structural Fund Policies.It also co-ordinates evaluation processes through the Evaluation Unit.

- IGRUE – dependent on “Ragioneria Generale dello Stato” Department – is responsible foractivating the financial circuits and for controlling the transparency and efficiency of theprocedures. It also guarantees the centralised collection of financial and physicalmonitoring data.

24 In October the CIPE should receive the financing requests for the next year.25 With the abolition of the “Intervento Starordinario,” the jurisdiction for general co-ordination of the StructuralProgrammes belonging to the Department for the South was conferred on the Ministry of Budget in 1993. At thebeginning of the programming cycle (1994-99) another Ministry – the Department for Community Policies,instituted within the Prime Minister’s Cabinet – was given responsibility for co-ordinating StructuralProgrammes, but this role diminished to nothingness.


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- The Directing Unit, set up by Law 341/9526 ensures the convergence of the most importanteconomic policy decisions by the regional authorities and national Government in theimplementation of Structural Programmes27. After the institution of the Department ofDevelopment and Cohesion Policies in 1998, the national Directing Unit progressivelylost influence and for this reason is not included in the graph.

In terms of managing the Structural Programmes, the governing authorities play an importantrole of co-ordination and address28:- The Treasury, which co-ordinates actions co-financed by the ERDF- The Ministry of Labour (now Ministry of Welfare) which co-ordinates actions co-financed

by the ESF;- The Ministry of Agriculture, Food and Forests which co-ordinates actions co-financed by

the EAGFF and the FIFG.

These “leader” Ministries also manager certain national OPs, like the other Ministriesresponsible for programming and implementing structural actions. Still at a national level,some sectoral multi-regional programmes were implemented by public agencies andcompanies:- ANAS implemented multi-regional road programmes under the jurisdiction of the

Ministry of Public Works;- FS 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

At regional level only the regions managed the multi-fund OPs. They had completeresponsibility for structural actions and shared it between the several internal Departments(Assessorati) which were responsible for the sectoral actions.

At the base of this structure, at local level, are the public and private bodies responsible forthe implementation of single projects. Among them the local councils played a important role,being responsible for many kind of public works and also often promoting importantinitiatives in the tourism and human resources sectors. The Provinces too increased their roleaccording to their increased responsibilities for transport and area management. Partnershipand co-ordination between these players and the management authority very often determinedthe success or failure of the action.

6.1.1.1. Management at National Level

Two main keys of to interpretation of the CSF management at national level are:- the institutional and administrative adjustment that occurred during the programming

period

26 The main tasks of the Directing Unit should concern: the management of relationships with the Communitybodies; the co-ordination between the actions of national administrations and those of Community bodies; themonitoring of the implementation of various programmes and the proposal of improvements.27 A similar function was given to the State-regional Conference28 In the phase of negotiation the structural fund reform, also the Ministry of Foreign Affairs takes an importantrole, although mainly at a formal level. In this phase it manages relations with the Community bodies and withthe Commission.


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- the organisational answers to the OP managing requirements

The institutional adjustments succeeded in assuring an adequate co-ordination ofstructural actions at national level. It was not guaranteed after the difficulties of the 1989-93 period. In addition, national administration had to face the conversion of a centralisedmanagement approach (“intervento straordinario”) to a multi-level and decentralisedapproach (new “Intervento aree depresse” and CSF).The success of the adjustments depended on the role of the Treasury, whose authority andoperational ability grew during the period.

The organisational improvements are also positive and significant, but not equallywidespread in the different Ministries. The sector approach and the limited number ofmeasures of the multi-regional OPs facilitated the management tasks of the Ministries. Theoperational definition of the new regional policy required some years, but afterwards thelevel of implementation and expenditure quickly grew.

As mentioned before, in 1992 the abolition of the Intervento straordinario opened a phase ofreorganising the central management of development policies and structural actions. This wasalso in response to the inefficiency in managing the first cycle of programming (1989-1993).The next table shows the milestones in the evolution of regional policies and the changes inthe institutional and management framework of the CSF.


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Table 105 The milestones in the evolution of regional policies and the changes in the institutional frameworkYear Key Event Main changes in institutional structures1992 - The abolition of the “Extraordinary Programme” and the start of ordinary actions

for “depressed areas” (Law 488/92)- The closure of the Agency for Southern Development whose responsibilities were re-

appotioned among the Ministries with sector responsibilities (Industry, Public Works,Research, Public Functions).

1993 - Financial reprogramming of the 1989-1993 CSF which penalised regionalprogrammes, favouring multi-regional programmes.

- The role of co-ordinating actions in “depressed areas” and structural actions was conferred onthe Budgetary Ministry and on the Inter-ministerial Committee for Economic Programming(CIPE)

- Approval of the 1994-99 Objective 1 Development Plan by the CIPE - Creation of a Regional Policy Observatory within the Budgetary Ministry, with the task of co-ordinating the institutions involved in regional policy.

- Identification of the Leader Authorities for the Structural Funds in the 1994-99 cycle: theBudgetary Ministry (ERDF), the Ministry for Agricultural Resources (EAGGF and FIFG) andthe Ministry for Employment (ESF). Treasury has responsibility for financial circuits.

1994 - Approval of the CSF Ob. 1 1994-99 with the Community decision

- Attribution of co-ordinating role for the regional OPs to the Budgetary Ministry- Agreement between the EU and Italy which ratified the end of the dispute over

national aid systems, and the start of a phase of strengthening managementsystems and national monitoring

- Institution of the National Directing Unit with responsibilities of co-ordination, control,guidance and support administrations involved in regional policy co-financed by StructuralFunds. Experts from the private sector may be members of the Unit; it works without powerof substitution with regard to other administrations.

1995

- Start-up of local development policies (negotiated programming, Territorial Pacts)and increased influence of local bodies in development policies

- Formulation of more restrictive budgetary policies which forced nationalauthorities to use Community Funds in a more efficient way

- Attribution of the management of financial flows relevant to the ESF to IGRUE (Departmentof the Treasury). This role was previously carried out by the Ministry of Employment

1996

- Identification of the procedure for “automatic” financial re-programming of theStructural programmes and the definition of the annual “spending targets”

- The “Ciampi - Wulf Mathies” agreement charged Italy with improving itsmanagement of the Structural Funds, improving its monitoring system, andallowing the insertion of “similar” projects in OP implementation

- Strengthening of the Treasury and Budgetary Ministry and reunifying the co-ordination of thepluri-fund programmes with management and control of financial flows

- Speeding up of the devolution process following the “Bassanini Laws”, whichtransferred to the regions and provinces responsibilities for industrial, labourmarket, educational and territorial management policies

- Increase of the role of regions and provinces in development policies and their need to re-organise in order to deal with new responsibilities. Creation of the Evaluation Unit withinevery administration.

1997

- Perfecting of rules for Territorial Pacts and negotiated programmes - Formalisation of the responsibilities of the Treasury and of CIPE in the management andcoordination of development policies.

1998 - First financial reprogramming of the CSF Objective 1 on the indicators of the MidTerm Review, using the method defined in 1996

- Treasury receive the responsibility of Territorial Pacts and negotiated programmes

- Institution within the Treasury of the Department for Development and Cohesion Policies,which received all the responsibilities of coordination and control of the national cohesionpolicies. It is one of the 3 Departments of the Treasury and includes 7 services and theEvaluation Unit; one service is devoted to the co-ordination of structural funds actions

- Closure of the Regional Policy Observatory.1999 - Closure of commitments for the 1994-99 programming period. - Institution of “Sviluppo Italia”, merging all the national development Agencies; it is devoted

to investment attraction and promotion

This process can be divided into two main periods:

- 1992-96 This period is characterised by the reorganisation of administrative structures andthe initial experiments of national and regional co-ordination of the institutions involvedin the cohesion policy. The attempts to introduce new offices (the Regional PolicyObservatory and the Directing Unit - Cabina di regia) in the existing administrativestructure without clearly defining their power and tasks brought limited effects. Theseservices did not find a position in the hierarchy of the Treasury and their responsibilitieswere often vague, when not overlapping29. The parallel reorganisation of nationaladministration and the body of the Budgetary Ministry, initially responsible for the CSF,in the Treasury requested additional time and adjustments.These experiments demonstrated the necessity of a more radical reform, able to identify ata high institutional level the responsibilities for the co-ordination and address of structuralpolicies.

- 1996-99 >From 1996-97 the Treasury took a resolute initiative in order to increase theefficiency of regional policy30. In term of partnership the main result was the definition ofthe automatic reprogramming for the CSF in 1996. In term of management the main issuewas in 1998 when the Cohesion Department instituted within the Treasury and devoted tocoordination, monitoring and support of the regional and negotiated policies. TheCohesion Department received the authority and the staff to carry out its role; its influencebecame very evident in the programming of the 2000-06 period.

The good results in terms of expenditure highlight the positive effects of these institutionaland organisational adjustments, although examples of institutional complexity are stillevident. For example, the responsibilities for aims and monitoring are shared between twodifferent Departments (IGRUE and Cohesion Department). This division reflects the divisionbetween the management of financial circuits (IGRUE) and the management of decisionmechanisms (Cohesion Department), but hinders a more focused organisation.

Co-ordination of individual funds by the Ministry for Employment and the Ministry forAgriculture has also increased but to a lesser extent. The causes for the difference may becontinuing understaffing and lower operating ability..

The organisation and management of the Ops implies a gneral improvement at national levelcompared with past years. Gnerally speaking, the Ministries have almost always managedsingle-sector actions, and thus more specialisation and concentration of activities could beachieved, facilitating the programme’s overall performance.

The Ministries’ capacity to manage the Ops has also been closely correlated to the newnational policies that co-finance them: when policies began to take effect the Opsdemonstrated a good expenditure capacity.

29 The Observatory had responsibilities for monitoring all the national regional policies; the Directing Unit hadresponsibilities only on the co-financed regional policies. The two fields are clearly overlapping. The DirectingUnit was not capable of increasing the level of synergic integration between national and regional developmentstrategies and encouraging co-ordination between the Ministries and the regions.30 The parallel strong reduction in public expenditure required the increase of their efficiency and did not allowto loose European resources.


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The Industry Ministry defined the implementing procedures of law 488/92 aid scheme only in1995. In the Ministry for Universities and Research centralisation ofco-ordination, besidesbeing completed only in 1999, never became operational31. Following the complete re-ordering of the Ministry, all the functions relating to the MOP were put under a singlestructure that headed six distinct offices responsible for the various types of actions. Only oneof these took on the management of actions expressly activated by the programme; the otherswere “titular holders” of the actions inserted into the programme, but these actions were reallypart of the Ministry’s institutional activities. These were re-defined in the 1995-98 period and,after some initial experimentation, became efficient and permitted the complete absorption ofEuropean funds.

These Ministries demonstrated also a good operational capability with regards to the actionsfunded only with structural funds (see, for example, the ESF in schools and Universities).Other Ministries as well (i.e. Domestic Affairs and Social Affairs) called to manage the newOP during the implementation phase showed adequate programming and managing ability.

Management of the Ops in other ministries showed lower effeiciency (for example, theMinistry for Public Works, the Ministry for Employment and the Ministry for theEnvironment) caused both by increasing decentralisation that lowered their ability to interactwith other bodies, and a lack of internal organisation.

6.1.1.2. Programme Management at a Regional Level

Institutional enhancement at regional level has been relevant, both in the awareness oftheir rising role in developing policies and in partnership with national level.

However, the Regions’ management abilities often show serious shortcomings and verydifferentiated performances. The sector complexity and the consequent necessaryintegration of regional OPs did not often find an adequate response in implementationmechanisms.

A vertical and compartmentalised administrative hierarchy did not favour exchangesbetween different regional Departments and made management an individual concern. Inthis way know-how transfer too was very limited and hierarchical within the administrativestructures.

The regions had great and increasing responsibility for development policy. The organisationof the regions was similar to that of central government: regional departments (in Italian:“assessorati”) had a similar responsibility for sector policies, as do Ministries at nationallevel32.

31 Previously, the implementation of the MOP “Research, technological development and higher education” hadbeen assigned to two distinct departments, co-ordinated by a technical secretary, created to support the Presidentof the Monitoring Committee (General Director of the Ministry). In practice the technical secretary took on arole which would have been better fulfilled by an office explicitly dedicated to the management of theProgramme.32 Two of the seven regions classified as Objective 1 regions, Sicily and Sardinia, have a special statute whichgives them greater autonomy and greater power to their regional Departments.


179

The definition of plans and the main responsibility for managing structural programmes wereshared between different departments (see next graph). A “leader” department wasresponsible for the co-ordination and control of the whole programmes, while otherdepartments were responsible for the co-ordination, control and implementation of anindividual fund.

In Objective 1 regions, the Programming Department (or the Community Policy Department,depending on regional structure) was responsible for the definition and co-ordination of theregional operating programme; it often also co-ordinated the ERDF actions. The Departmentfor Agriculture was responsible for the co-ordination and management of EAGGF and FIFGactions and the Department for Training and Employment was responsible for the co-ordination and management of ESF actions. The Departments for Public Works, theEnvironment, Industry and Craftwork, etc., implemented programme measures that cameunder their area of responsibility.

LEADER DEPARTMENTProgramming, co-ordination, and

Monitoring (often responsible for ERDF)

ERDF DEPARTMENTResponsible for ERDF

Implementation of some interv.

ESF DEPARTMENTResponsible for ESF

Implementation of some interv

EAGGF DEPARTMENTResponsible for EAGGF

Implementation of some interv

Sectoral Dept. ERDF 1Implementation of

sectoral intervention

Sectoral Dept. ERDF 2Implementation of

sectoral intervention

Responsible For Meas. 1.1



ADMINISTRATIVE STRUCTURE OF THE REGIONAL OP MANAGEMENT

Provinces, Municipalities and Mountain Communities, public bodies and private companiesImplementation of single project

Sectoral Dept. ESF 1Implementation of sectoral intervention

…………….

…………….

The regional administrative structure for the implementation of structural funds highlightedtwo problematic aspects:– the large number of players involved in the programming and implementation of actions.

The various political addresses (each department depends on a different “Assessore”) andthe parallel responsibilities for ordinary and OP actions (each department also managesregional funded actions) made this complexity ever more complex. The effects on theregional OPs have been: difficulties in the co-ordination and focalisation of criticalmanagement phases.


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– The vertical and hierarchical quality of the organisational structure and the absence of“horizontal” functions. Co-ordination was limited to the top level of the organisationalstructure, and even recurring operations (such as call for tenders, project selection, legalsupport, etc.) were rduplicated by Departments and not integrated into common stafffunctions. In addition, the transfer of know-how on implementation methods has beenvery slow and loccurred within a imited hierarchy. In some cases management was alsovery personalised and depended on the ability of a single official.

The negative aspects of this situation can be seen in action in the Campania case study. Here,the regional Departments performed in considerably different ways, management decisionswere often not directed towards efficiency and were not transparent. At the beginning, inorder to improve co-ordination the region set up the “Community Policy Co-ordination Unit”which headed the internal structures responsible for the implementation of three single-fundprogrammes33. However, this increased the centralised approach of management and did notpromote horizontal co-ordination. In addition, the Region never identified the managersresponsible for the measures, increasing difficulties in sharing responsibilities, and increasingthe need to co-ordinate between the different services.

The regions attempted to tackle management difficulties by identifying new organisationalprocesses. However the processes were excessively slow in showing results and did not solvethe problem of the lack of internal co-ordination by departments.

The Directing Unit was also defined at regional level. Its role was similar to the national one:it was generally dependent on the Regional Presidency and co-ordinated regionalDepartments. Unfortunately they only became fully operatiional some time after their creation(January 1996) and their functions were not clearly defined.The operational approach of theregional Directing Unit was less prominent than the national Unit, but it represented animprovement in communication and an exchange of experiences between different regionalservices, and to a limited extent helped to improve decision making. The same limitations ofthe national experience affected the regional Directing units: unclear responsibilities, lack ofintegration in administrative procedures, absence of specific power (substitution, veto, etc.) inthe implementation process. In practice, the regional Directing Units were progressivelyabandoned and the Steering Committee remained the only forum for the exchange ofexperience and shared decisions.

Lastly, the lack of a regional self-governing programming must be considered. Programmingof Structural Actions was, and still is, the only regional operational framework34. For thisreason it is very difficult to integrate the OP into ordinary policy, and when it occurred(“sponda” projects) regional decisions followed only financial and “ad hoc” criteria withoutclear reference to regional needs and priorities. The difficulty of integration between ordinaryand European actions was an additional obstacle in the way of simplifying and speeding upOP management.

33 The Campania region implemented three mono-funded programmes, approved by different Communitydecisions34 Regions are used to define the “Regional Development Plan”, but it is a political document and it identifiesonly the main policy addresses, with no clear obligations on the schedule and the resources for theirimplementation.


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6.1.1.3. Programme Management at Local Level

Local authorities play a fundamental role in structural policies, because they areresponsible for the implementation of many kinds of public works and also promote socialand economic actions. The active and responsive participation of local authorities instructural programmes greatly increased in the 1994-99 period. On-going decentralisationand experiences of local policies encouraged participation and the more active role of localbodies.

The absence of a stable and structured partnership between management authorities andlocal authorities provoked difficulties in implementation and the full benefits of increasingparticipation were not experienced.

Local institutions (Provinces and Local Councils) and local bodies (Service Centres,Universities, etc.) were responsible for implementing certain projects co-financed byStructural Funds. When the management authorities did not delegate them directly, a call fortender by the region (or ministry) allocated the funds for implementing actions to them.

During the programming cycle the increasing participation of local institutions enlarged thepolicy arena. The main causes of this new participation were decentralisation and theexperience gained from the Territorial Pacts.

Decentralisation transferred to local institutions (specially provinces) responsibilities forterritorial management, environmental policy and employment services. At municipal levelnew administrative organisation on the model of the “one-stop-one-shop-approach” was alsopromoted in order to facilitate business localisation. The direct effect of this innovation on the1994-99 action was limited, because of the time taken to put it into operation, but it helped toincrease the role of local institutions.

The Territorial Pacts promoted a similar effect. The Pacts activated a very large number oflocal authorities in all the regions, especially in the Mezzogiorno. This experiences multipliedlocal plans, requests for resources and, more generally, enhanced the leading role of localauthorities35.

Last but not least, the identification and choice of “sponda” projects required the greatinvolvement of local councils, provinces and other local bodies either in national or regionalprogrammes.

The growing participation of local authorities was an important opportunity to improve thequality and efficiency of the programmes, but it was only partially exploited. Frequentinformal consultations between region and local authorities, exchange of information betweenservices of the different institutions and knowledge of structural funds in local institutionsincreased and improved, but no structured partnerships were implemented.

35 In many cases, the local institutions participated to the Pacts for the opportunity of bypassing the influence ofthe region, which was not a partner in the pacts.


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Lack of involvement in the policy-making phase weakened the overall management of actionsat a local level. Here, the delays were mainly caused by poor co-ordination between the regionand the local Authorities and by their unfamiliarity with European rules.

The effects of the importance of local authorities worked in two directions. Not only could awell-organised region or ministry positively activate local institutions in implementing theOPs, but also efficient local authorities could stimulate region or ministry to improve thequality of the implementation. The lack of this stimulation and the need to reinforce localauthorities were very evident in Calabria, but it was also widespread in other regions.

6.1.2. Involvement of Other Groups

Involvement of private bodies in the management of structural funds was very limited. Theadministrations utilised public companies or public agencies for implementing sector orcomplex actions. The experience highlights:- the need for specialist support to public administration in the management of the ever-

increasing complexity of public policies (R&D, financial engineering, etc..);- the poor attitude of the Italian administration towards collaboration with the private

sector. In some cases this attitude also affected delegated public agencies, whichdemonstrated insufficient ability to involve the private sector in their activities.

As mentioned before, at national level certain public companies (Telecom, FS) or publicagencies (ANAS) were responsible for the implementation of a multi-regional OPs(respectively: telecommunications, rail and road). They operated under the control of theMinistry in charge of the sector. These bodies were generally efficient; they had on-goingindustrial or sector plans for investment and did not encounter problems in co-financing them.

In the R&D OP the national research public bodies (CNR, ENEA, INFN, etc.) were given theresponsibility for the implementation of certain measures still in the initial planning phase. Asin the case above, these bodies ensured a high level of financial absorption having a largenumber of in-house projects. However, in many cases their actions were self-centred andineffective in involving SMEs.

The external support by technical organisations for the implementation of aid schemes waswidespread within the MOP “Industry and services” managed by the Ministry of Industry.The implementation of certain actions was delegated to national agencies; these were: Societàper l’Imprenditorialità Giovanile (Sviluppo Italia), MedioCredito Centrale e Cassa per ilcredito alle imprese artigiane (ArtigianCassa). Within regional POPs, however, themanagement of incentives was generally taken on by regional development agencies. Theywere public agencies, often dependent on the region (Technology Parks, BIC, etc.). Theircontributeions were specialist and generally limited to project selection or to theimplementation of business services or territorial stimulation projects.

The involvement of external subjects guaranteed greater flexibility in management, especiallyin the case of the MOPs managed by the Ministry of Industry. In this case some problemswere however registered in the relationship with the banks, who had the task of checking theadmissibility of requests for finance of the proponents. Their function as promoters of theinitiatives through their widespread distribution throughout the territory was not adequately


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exploited. This was especially true for measures which supported the acquisition of businessservices.

The last example of involvement of groups outiside the public administration concerns globalgrants. They were generally carried out by public bodies, company linked to entrepreneurialassociation and financial institutions. In Italy Global Grants have to follow rules(fidejussione) in addition to European rules, and this was one reason for the delay in theirstart-up and in final expenditure. The involvement of local players and establishing mutualtrust with them were the other problems faced by some Global Grants.

6.1.3. Vertical partnership

The reinforcement of vertical partnership between different institutions was one of themain results of 1994-99 management. It meant that new re-programming mechanismscould be implemented, which significantly helped to increase commitments andexpenditure.

This experience of vertical partnership confirms the importance of effective institutionalco-ordination in decision mechanism and the need for common well-defined rules orientedtowards matching administrative procedures with Community rules.

Over the course of the monitoring committee meetings in 1996 and on the basis of the twoagreements made in 1995 between the Commission and the Italian Government, aimed atimproving management and monitoring processes, vertical partnership took a central role inthe management of the 1994-99 period. In addition, these agreements aimed to strengthen theadministrative structures given to management36.

Therefore several rules were identified and then definitively perfected during 1997:- the establishment of annual “spending objectives” for the remaining implementation

period;- the “automatic re-programming” mechanisms which favoured the programmes with a

greater spending capacity37

- the possibility of inserting “similar projects” (commonly called progetti sponda) fundedwith national resources into the group of projects which were co-financed38.

Besides their effects on the effectiveness and efficiency of the programmes, these proceduralinnovations stood out for two reasons:

36 Here reference is made to the agreements of 1 March 1995 and 26 July 1995. The convergence of theprocedural practices followed by the Italian Administrations and the Community Administrations, and the“rules” behind the annual spending objectives were sealed in the Ciampi- Wulf Mathies Agreement of 199737 During the 18 July 1996 CSF Monitoring Committee a reprogramming mechanism for resources andfinancing was approved. This was to be implemented on the basis of: a) a profound investigation of theimplementation results of the Programmes in 1997; b) an “automatic” procedure in the years that followed38 Given the administrative delays in the approval of new projects and the long time-scale of some types ofpriority (in particular those regarding infrastructure) the insertion of the “similar projects” should have reducedthe risk of losing unspent resources. The effects on the efficiency of the CSF were controversial; the procedurepermitted an increase in the commitments capacity but had far less positive effects on the effectiveness of theProgramme.


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- the definition of annual “spending objectives” and “automatic re-programming”anticipated the automatic re-programming mechanism of the unspent quota ofcommitments (see Article 32 and 33 of the EC regulation 1260/99);

- by means of the re-programming mechanism the redistribution criteria for the financialresources already assigned among various public administrations were institutionalised inItaly for the first time39.

This last confirms the fundamental role played by vertical partnership on the model ofmanagement and on the financial result of the CSF. Without a strong and wide institutionalpartnership and without the definition of common objectives, it would have been impossibleactivate mechanisms like the “automatic” reprogramming.

The resolute initiative of the Treasury was the main stimulus to improving verticalpartnership. This “top-down” approach was justified by the financial emergency of nationalpublic budget and by the need for strong co-ordination to conform closely to Communityregulations. As mentioned before, in the Treasury the new methods also met adequatereorganisation. The same did not occur in all the Ministries and regions.

6.1.3.1.. The role of the Monitoring Committee (MC)

Monitoring Committees played a fundamental role in vertical partnership and in decisionmechanisms. They represented the main forum to deal with reprogramming problems anddefine management guidelines.

Financial efficiency was the focus of their activity and effectiveness received less of theirattention.

The MCs demonstrated themselves to be most capable in defining and sharing decisions,but time spent on procedures was not reduced: procedures remained the responsibilityindividual administrations.

The added value of the MC of the CSF by the on-going improvement of management andfunctional coordination of the various institutions involved has been evident. It was the forumfor all the main decisions on management and allowed finalising institutional agreements andoperating adjustments.

At OP level the MCs played a similar, but more operational, role. They defined thereprogramming decisions in line with national regulations and focused on the financialaspects of management.

39 The reprogramming of unused resources was made concrete in a reallocation of resources between variousMinistries and/or various Regions. This also happened in 1993 when an intense financial reprogramming of the1989-1993 CSF based on the reallocation of resources from the POPs to the MOPs was carried out. In that case,however, it was due to a specific decision caused by the delay in the implementation of the CSF and, moreover,it happened only at the endo of planning period.


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STRUCTURE OF THE MONITORING COMMITTEESMembersIn the following table, the structure of the Steering Committee of CSF is summarised.The number of members varies depending upon the complexity of the structural action and the consequent numbers of administrations involved. The number of membersreached 40 members at CSF level and is in the range of 20 to 30 members at OP levelComposition of Monitoring CommitteesThe composition of Monitoring Committees is related to administrative responsibility. The chair of the Committee is assigned to the administration responsible for the overallprogramme. All the other administrations or departments responsible for a specific part of the programme are represented on the Committee.The composition of the MC of the CSF is in accordance with the principles of institutional partnership. Economic bodies and trade unions do not however participate in thework as permanent members. They are consulted as and when necessary. Their participation in various forms on the MOP and POP Monitoring Committees is more wide-spread. Their active presence in the national ESF MCs and, at the end of the programming cycle, within the MC of the MOP “Research, Technological Development andHigher Education” should be noted.Advisory bodiesThe advisory bodies admitted into the Steering Committees are generally Technical Assistance and the Independent Evaluator. These bodies are not official members and areinvited by the Committees in order to present the results of their work. Other advisory bodies (such as experts, representatives from agencies involved in the programmes,local administrations) are occasionally invited onto the Committee.

Features OBJECTIVE 1 CSF OBJECTIVE 1 REGIONAL OPs OBJECTIVE 1 MULTIREGIONAL OPs

N. of members of MC 40 25-30 15-20Broad composition ofmonitoring committee

• Chair: Budgetary Ministry and Treasury• Commission: DG XXVI, DG V, DG VI, DG XXII, DG

XI• National level: all the Ministries responsible for an OP,

Directing Unit• Regional level: Regions responsible for an OP;• sometimes other administrations (Court of Auditors, etc.)

participate;• Social partners are not participants, but the chair informs

them of the conclusions in special meetings. Socialpartners were invited to participate as observers, butfailed to agree on the composition of their delegation.

• Chair: Responsible administration• Commission: DG XVI, DG V, DG VI, DG XI,• National level: Treasury (2 persons: 1 for

financial control and 1 for co-ordination),Ministry of Employment, Ministry of Industry,

• Regional level: regional departments involved inimplementation

• Social partners (observers): trade union andenterprise associations (in different waysdepending on regions)

• Chair: Responsible administration• Commission: DG XVI, DG V, DG VI, DG

XI,• National level: Treasury (2 persons: 1 for

financial control and 1 for co-ordination),Ministry of Employment, Ministry ofIndustry,

• Regional level: regional departmentsinvolved in implementation

• Social partners (observers): trade union andenterprise associations (in different waysdepending on OP)

N. of advisory bodies - Independent and internal evaluator- Technical assistance

- Independent evaluator- Technical assistance

- Independent and internal evaluator- Technical assistance


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In general, the MCs demonstrated a weakness in their ability to have an impact on strategicdecisions. Their reprogramming had only a financial rationale: to catalize the CSF’s financialperformance, even at the cost of compromising the internal coherence of the actions

In the composition of MCs the institutional players and the rationale of vertical partnershiphad a strong influence (see the frame above). Horizontal partnership has had less influence onthe MC’s decisions. The presence of several officials in the MC often had a marginal impacton the orientations of the Programmes, because a small number of directors from theadministration responsible had a determining influence.

In general, the activities of the MCs have contributed to:- the promotion of institutional co-ordination;- the enhancement of the visibility and the transparency of Community programmes;- the dissemination of positive experiences in implementation and the transfer of best

practices;- the improvement of monitoring systems;- the enhancement of the role of evaluation.

The MCs contribution was of great use in debating and confirming technical solutions and itfacilitated the implementation of management procedures, but it rarely reduced thecomplexity and length of procedures. Problems arising during meetings often requiredadditional consultation inside the different institutions and not always did representativemembers have the power to deliberate on them. On the contrary, when problems wereexamined before the meetings and a proposed solution found, the MC could then deal with itthere and then.

During the 1994-99 cycle, the support by technical working groups of the MCs waslimited. The technical working groups which merited mentioning were at national level the“Environment Group”; the “Human Resources Group” and “Placement Group”, whose taskswere mainly aimed at verifying the effectiveness of the actions co-financed by ESF40.

The support of technical groups created to perfec reprogramming mechanisms wasparticularly significant. However, the creation of technical groups was greatly delayed withrespect to the beginning of MC’s activities. It can be concluded that their consultancy supportshowed itself to be more significant during the definition of the Southern Development Planfor the 2000-06 Objective 1 CSF than for on-going improvement of the implementation of the1994-99 CSF.

6.1.4. Horizontal partnership

Horizontal partnership was weak. The general climate (agreements between social partnersand national government, participation of local partners and institutions in developmentpolicy promoted by the Territorial Pacts) favoured the involvement of social partners and 40 It should be noted that each of the leader authorities – Ministry of Budget, Ministry of Labour and Ministry ofAgriculture – could have taken advantage technical support of specialised agencies: respectively Nucleus for theEvaluation for Public Investments; Institution for Employee Training and National Institution for the AgrarianEconomy. Moreover during the drafting of the Mid Term Review, the Ministry of Economics was supported bya technical group created ad hoc.


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local institutions; but it remained limited to informal and marginal cases. The onlyexception was the national ESF MCs where social partners were official members.

This depended on the limited practice of involving social partners or local institutions in thedecision mechanisms of ministries and regions, specially in Objective 1 Regions. Theabsence of these players in the planning phases of the OPs and the rigid schedule of theimplementation phase did not facilitate their access to decision mechanisms.

Horizontal partnership involves administrations responsible for structural programmes, socialpartners and local institutions.

On the whole, the involvement of social partners was limited, but greater than in theprevious programming cycle. National income agreements and employment policiespromoted increasing participation of social partners also at local level. But, this kind ofinvolvement did not find a formal place or representation and was not visible in structuralfund actions.

In the initial planning social partners were involved only in the definition of the CSF, whileduring the planning of the individual OPs they were not present or played a very limited role.The situation did not change In the implementation phase. The presence of social partners inthe MCs was dependent upon the attitude of the national and regional administrations:- in some regions social partners were admitted to the Steering Committee as observers or

are consulted before and after the meetings;- in other regions they were not admitted;- in the national ESF programmes the social partners (but not “non-profit” organisations)

were members of the MC. This was the reasonable consequence of intense collaborationbetween the Ministry of Labour and the social partners in the labour market reforms ofthe last decade.

A similar unofficial role was given to local authorities. They were much involved during theimplementation phase (collection of “similar” projects), but neither in initial programming norin strategic decisions were they present, or they were only consulted informally. As notedbefore in the analysis of management, the unorganised and fragmented involvement of localauthorities weakened implementation.

The main causes of the limited horizontal partnership were:– lack of a traditional attitude to partnership in the administration of Objective 1 Regions;– weakness of the production fabric and the related lack of power of social partners in

Objective 1 Regions;– the stringent timing for implementation, which meant that debate on the strategic issues

during actions could not be extended.

Horizontal partnership was only becoming a strategic element in the 2000-06 programmingcycle.

6.1.5. Management capacity in 1994


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At the beginning of the programming period the management capacity of national andregional administrations appeared inadequate. The failure in managing the previous 1989-93CSF and the lack of substantial reforms were at the origin of this judgement.

In the final evaluation of the 1989-93 the start of a “learning by doing” process wasunderlined. This experience was then important in 1994: a pool of officials knew Europeanregulations, implementation mechanisms were experimented, and an initial reflection on theintegration of structural funds in national policies was started. The same reform of nationalcohesion policy addressed several questions that had arisen in CSF management (nationalconcentration the same as the European, simplification of co-financing, increasing devolutionin decision-making), though it simultaneously introduced radical changes in national policyand its administrative management.

In this context the approach to the management of the 1994-99 CSF was far from systematic,but it had the experience of the existing limits and dealt with some important problem areas.

6.1.6. Development in management capacity

During the programming period great improvements in management were recorded. The mainsuccesses of the 1994-99 management are:- the adoption of European standards (efficiency, transparency, etc.) in administrative

behaviour, as well as in policies;- the enlargement of the policy arena and the diffusion of management rules to a large

number of new players (this was a direct result of the increased resources available);- the definition of specific mechanisms for speeding up expenditure: the integration of

European resources into national policies and “automatic” reprogramming;- the optimisation and development of co-ordination functions, which occurred especially in

vertical partnerships and at national level;- the development and growth of a - still small - group of experts in structural funds

management at the different levels of the administration;- the consequent reduction of dependence on the European Commission for each decision

and the initial experimentation of a “national way” to structural funds.

The organisational rigidity and the officialdom of Italian public administration have been thestructural constraints which hampered a more radical development in management capacity.The administrative reforms of the last decade tackled this question, but their results are notimmediate and are to be appreciated only in the long term.

The experience gained in 1994-99 higlights how important it is in Italy to define specific rulesor mechanisms for managing structural funds, and an adaptation of ordinary procedures isneither possible nor sufficient. These remain too slow compared with European regulationsand are not supported by adequate organisation and flexibility in the administrative services.

6.1.7. Processes in 1994-99 compared to 2000-06

In general the comparison between the two programming periods is very complex, becausethe new planning period is characterised by a completely different strategic and operational


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approach. The passage from the 1994-99 CSF to the 2000-06 CSF demonstrated a profoundawareness of the previous management weaknesses and attempted to deal with it quickly.

The main - and positive - inheritance from the period 1994-99 in management are:- the advanced adaptation to the European regulations of the administrations responsible;- widespread experience on the methods for integrating national projects with European

programmes;- the optimisation of vertical and horizontal partnership, already in the planning phase, and

the confirmation of active co-ordination by the Treasury;- the development of horizontal functions (task forces, round tables with the stakeholders,

etc.) among different administrations;- the awareness of the administrative question and the linkage of results in the

implementation of national administrative reform to the new prizing system of structuralfunds;

- the activation within the administrations of technical services (i.e. evaluation unit)41 tosupport decisions on structural actions.

The stricter implementation rules adopted by the new Regulations and the parallelintroduction of local initiatives (Integrated Actions) in the OPs requires great managementeffort. At the same time, the organisational aspects of management appear still weak andneeds more emphasis, especially in the regions.

6.2. PROJECT SELECTION PROCESS

The selection processes demonstrated important improvements in terms of transparencyand respect of competitive rules, but they also evidenced serious implementation problems(delay in completion, legal appeals, etc.).

In some cases, the selection criteria required a more technical and coherent definition inmatching the operational objective. These shortfalls often depended on an insufficientknowledge of the technical aspects of the projects among the officials or on their desire toshift selection responsibility to the selection commission

The effects of the greater utilisation of open procedures and, more generally, the effects ofthe selection criteria on the OPs were substantially restricted by the widespread inclusion of“similar” nationally funded projects in the OP. In this case, only financial absorptioncriteria determined selection.

6.2.1. Description of process

The use of public procedures and call for tenders for selecting projects was widespread in the1994-99 CSF. This change was more visible in the ESF actions, where the open calls fortenders were adopted less often, and the administrations usually gave approval by restrictedtender.

41 They were defined in the law 144/99 and are introduced in all the relevant national administrations. The roleof the evaluation unit is wider tha structural funds support, but in many regions this function is preminent.


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The general procedure to select projects via an open call for tenders was composed of thefollowing main phases:1. definition of the contents of the call for tender by the administrative or political body

(assessore or giunta), following specific responsibility;2. publication of the call for tender in a national or regional bulletin;3. timescale of 2 months (minimum) for presenting the bids;4. identification of the members of the selection commission (generally in tandem with the

previous phase)5. checking the formal admissibility of applications for financing (generally the

responsibility of the administrative services);6. evaluation of projects on the basis of the criteria reported in the tender (generally the

responsibility of the commission);7. the administration approve the list of selected projects on the basis of the examination of

the work carried out by the Commission;8. contracting of the approved projects.

In many cases, step six was very time-consuming and not efficient enough. In the cases ofESF (see Campania and Ministry for Emplyment) the large number of projects prolonged thetime of the selection phase. In addition, the officaldom of administrative procedures and theircontrols called for great accuracy in order to avoid any legal appeal and a consequent block ofthe contracting phase. However, even without legal appeal the contracting phase often took aslong as the previous selection phase, because a time limit was rarely determined beforehandand often contracts were not included in the call for tenders.

6.2.2. Average length of time to approve a project

Many of the selection procedures are complex and time-consuming; so that they producedelays in implementation.

ESF actions took a long time because of the large number of projects and the understaffedselection team. In the case of Campania many errors in selection procedures provoked a highquota of legal dispute, which extended delays and caused action being halted for one year. Ingeneral, the length of ESF procedures from the definition of the call for tender to thecontracting phase was about 7-9 months.

The selection of infrastructure actions followed national rules (law 109/94 “Merloni”), whichare extremely strict and complex. The law was approved 1994 and naturally had a negativeinfluence on the call for tenders for the 1994-99 CSF, because their operating regulationsrequired additional time. The same law n.109/94 was modified in 1998 (law n.415). These on-going adjustments of the legal framework created a climate of vagueness around procedures,which did not obstruct project selection but did increase difficulties in defining the call fortenders for infrastructures. It is very difficult to define the time needed for selectionprocedures in this field, because it depend on the type, the feasibility and the initial status(preliminary or operating) of the project; in general, the procedures from the definition of thecall for tender to the approval of the projects lasted not less than 7-8 months.

Selection procedures recorded the main improvements among aid schemes. The pivotexperience is that of law 488/92. Here, the financial institutions investigate and examine the


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applications on the basis of a short number of transparent criteria. Then, the publicadministration confirms the score and define the recipients. The time for this procedure ispreviously defined in the legal framework of the aid scheme and cannot last more than 4months (3 months for banks and 1 month for the administration). The huge number ofapplications examined and its transparency determined the success of the procedure;furthermore, in comparison with the time previously required by Law 64/86 (up to 5 years toapprove and disburse) the new aid scheme appears fully, and easily, successful.

The success of this approach partially arrived at regional aid schemes, which sometimesinvolved banks and defined a small number of automatic selection criteria. However, it didnot affect all of the measures in the same industry OP (business services financingencountered great problems in the selection phases). Probably, the main reason for the successof this selection procedure was the consistency of legal and organisational aspects.

Within the aid schemes, the mechanism for “running down the graded list” was seen to beextremely useful for those possible failures of projects already receiving funding. It allowedthe financing of the projects which were not initially funded due to a shortage of resources. Itpassed from the administrative approval of individual projects to the administrative approvaland financial commitment of a whole list of admissible projects. After 1999 this escamotageavoided the necessity of modifying individual commitments and permitted high absorption,particularly in regional aid schemes. Nevertheless it was clear that in this way projects whichhad already been discarded in the technical evaluation phase would receive funding andtherefore a decline in the average level of quality was possible.

It is difficult to make a general estimation of the length of time for the selection process, butin all the examples it varied from 5-6 months (Law 488/92) to about 7-8 months for ESF andinfrastructure projects. It is significant, however, that the excessive length of the selectionprocess forced the orientation of implementation towards the financing of on going projects. Italso prevented the utilisation of call for tenders for local institutions, which would haverequired a dual procedure (one selection for local institutions, one selection for the recipientsin charge of the work). This occurred in almost all the programmes, but it was more evident inthe case studies of Calabria and Campania.

6.2.3. Rigour of the Project Appraisal System

The competition procedures for access to resources was generally implemented in an adequatemanner. The legal framework was always conformed with, and when this did not occur legalappeal was made; hence in legal terms the rigour of the project appraisal system has beengenerally verified. In 1994 the end of a legal campaign against corruption (mani pulite)increased official controls and sometimes promoted a surplus of controls. For the samereason, in some cases, public officials also became reluctant to operate.

It was also evident that the initiatives implemented through public procedures registeredeconomies of resources.

In terms of efficiency and transparency, the rigour of the project appraisal system, was notalways adequate. The calls for tenders were often not accompanied by a definition of theselection criteria in order to guarantee the entry of technically valid and/or innovative


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projects. These criteria were detailed only within the selection commission; and although theywere indeed transparent, they were unknown at the time of the bid.

Moreover, it was shown that the length of investigation into an application was often a factorin slowing down implementation. Such a factor slowed down above all the implementation ofinfrastructure actions, caused by the rigid approval procedures required by nationalregulations on public works (the Merloni-ter Law).

6.2.4. Project Selection Criteria

Projects selection criteria have been generally consistent with the objectives of measures andwith programmes. On some occasions, the main exceptions were:- vague definition of the selection criteria (see for example R&TD OP), which implied a

less targeted selection and increasing discretionary powers in the selection criteria;- great weight given to the past experience of recipients (see ESF and the Ministry for

Emplyment OP), which implied a facilitation for large traditional bodies and a barrier fornew companies; in this way also the importance of project quality was reduced;

- a general tendency to translate the selection criteria utilised in the field of public works(well known and defined within the legal framework) to the selection criteria utilised inthe fields of service and training (new and still being defined). This implied less attentionto project quality in favour to greater attention to the recipient and the price; not alwaysdid this appear justified.

The desire to favour publicly visible procedures was in fact weakened by the large-scaleinsertion of “similar” projects in various programmes. The financial dimension of thisprocedure often exceeded 50% of the programmes, and was also greater in the ERDF actions.In this case, the criteria for including a project in the OP were: its eligibility to a measure andits financial absorption. No other significant criteria emerged from our case studies. In thesecases the consistency between inclusion criteria and the OP’s objectives is obviously focusedon the financial aspects and difficult to verify in detail.

The insertion of similar projects often primed “direct negotiation” mechanisms among thoseresponsible for management and implementation. Within the regional OP the actions forstrengthening electricity networks and road networks through “similar” projects followedagreements between regional administrators and public companies (ENEL and ANASrespectively, see Campania).

Even within the MOP “Research, Technological Development and Higher Education”, theutilisation of “similar” projects reinforced the prevalence of public sector players and enabledfrequent use of direct negotiations between the Ministry of Universities and Research andproponents. In this way the involvement of SMEs was reduced or implemented only viapublic bodies.

6.2.5. Participants Views of Process

The satisfaction for the selection procedures is not quantifiable and, obviously, differentiated.


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In general, the main complains concerned:- the insufficiency of the information actions;- the insufficient technical and financial support to local institutions in defining

infrastructure projects;- the general length of time for the selection process, which often conflicted with the timing

of European regulations and reduced the time available for implementing the plannedactivities (this often occurred in the ESF projects).

On the other hand, there is great consensus on the 488/92 procedures, which giveentrepreneurs the confidence on the timing of selection and, then, payments.

6.3. FINANCIAL SYSTEMS

Financial circuits alone did not create relevant problems to implementation. The criticismsof financial availability derived from external factors: the reduction of national publicexpenditure, which some times and temporary reduced the financial availability for theOPs and the initial slow advancement of OPs , which reduced the availability of structuralfunds.

In the 1994-99 period financial circuits were reinforced and centralised in the Treasury.The complete design and the relationship between national and Community resources isnow clear and sufficiently efficient. Several improvements are still possible in themanagement of financial circuits and in the related control system.

6.3.1. Financial system and their Impact on the Programme

6.3.1.1.. The structure of financial system

The structure of the financial system can be divided into two main segments:- “the primary circuit” in which are involved the EU, the Member State and the

administrations (regional or ministerial) which manage the programmes;- “ the secondary circuit” which involves the regions for the POPs and the ministries

responsible for the MOPs and “final beneficiaries”42. The latter distribute the funds tothose who implement them

The pivot of the “primary” circuits is the Rotation Fund, which is devoted to theimplementation of Community policies and is instituted by the Treasury (Department ofGeneral State Accountancy, service IGRUE), as summarised in the next graph43. The rotationfund is fed in part by Community resources and in part by national resources. The nationaland Community resources were subject to different accounting systems, through themanagement of two different accounts open within the Treasury (IGRUE service).

42 The notion of “final beneficiaries” is explained in the SEM 2000 lists introduced by the Community decision1035 on 23 April 1997. These were introduced to guarantee greater transparency of financial flows between theEU and Member States and a greater certainty in line with the procedures of expenditure certification43 Until 1992 the fund was operative only in Northern regions. With the promulgation of Law 488/92 it was putinto operation within the whole of Italy


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The finances availability within the rotation funds were distributed by IGRUE to the titularregions and ministries of the structural interventions, according to the quota of resourcecompetences44. In the case of the Ministries there are two main financial procedures: a) if theintervention is defined only in the OP, the Treasury pays directly the beneficiary after aformal requests of the Ministry responsible for the intervention; b) if the intervention is anational intervention included in the OP (for example aid scheme of 488/92 law), theTreasury pay the Ministry for the eligible amount of expenditure.

6.3.1.2. The Main Processes

The financial processes are based on the distribution of resources in different quotascalculated on the advancement of the project45; the final payment requests the financial andphysical control of the completed project.

As a rule, the final beneficiaries received an advance aimed at helping the start-up of theactivity; the advance was usually 20% of the whole cost for ERDF, till 40% for ESF and veryvariable for EAGGF. There are two options regarding the successive payments:- to benefit from intermediate sections, following the signing of a “fidejussion” with banks

and/or insurers;- to anticipate the resources necessary for the completion of the works and to receive the

balance in a single final transaction46.

Both “processes” are subject to specific criticism due to implementation. The advantage of theintermediate slices of finances concession is that the final beneficiary do not need toanticipate financial resources (with the possible added cost of passive interests in the case ofthe acquisition of funds on a credit market). At the same time a definite additional dutybecomes necessary, involving the “fidejussion”. Such criteria are obviously exacerbated byimplementation delays which can be traced back to both bureaucratic inefficiency whichcauses delays in the distribution of funds to implementers, and to the same systematicinefficiencies in the Italian financial system.

44 However IGRUE has a technical role of switching resources. The authorisation for employing the resources isheld by CIPE.45 The case of the infrastructure interventions were typical; these foresaw the attribution of financial resources bythe state of advancement of the work46 It can be observed that the limited quota of financing foreseen by the start of works and the delays by thepublic administration in the distribution of funds during the advancement of works tend to reduce the level ofquality of investments obtained


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Community Budget CE

Community Budget CE

Treasury-RGS-IGRUE“Fondo di rotazione”

Ministry 1Ministry 1 Ministry 2Ministry 2

RegionsRegions

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National BudgetItalian Government

Prim

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Seco

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Min

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Payment for reimboursingNational expenditure

Nat

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FINANCIAL CIRCUITS

6.3.1.3. The Impact of the Financial System on the Programme

The evaluation of the impact of the financial circuits on the CSF should take in account thatmanagement problems were concentrated in implementation and management, and the relateddelays provoked a more difficult functioning of financial circuits and in particular of thecommitments at European level.

At national level the rationing of public resources, obliged by the strict targets of budgeting,some times (generally at the end of the year) caused a delays in payments to beneficiaries orin the availability for management authorities.

The wide utilisation of national policy to feed the stock of projects in all the OPs reduced theimpact of financial circuit; in this way, the circuit operated only for reimbursing nationalresources and not affected on going projects.

In the ESF interventions, where there was no the reimbursing practice, the financial circuitsoccurred in delays. These do not appear a consequence of the system design, but depended onmanagement inefficiency and time spending controls. In addition, the extension to the ESFintervention of the obligation of fidejussion47 created some problems to the beneficiaries,which are often small enterprises and no-profit bodies and have not a large financial credit.

47 The fidejussion cost was not recognised as eligible by the Commission.


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The efficiency of secondary circuits was also conditioned by the accountability procedures ofCommunity resources in the regional budget. The case of the Campania region, which had tomodify its regional budget law, was a typical one. The lack of updating in administrative andlegal framework of financial management constituted a “bottle neck” in the possibility ofmoving and utilising Community resources.

Similar problems happened also in the transfer of resources from the Commission to theTreasury. The Commission often did not communicate clearly the destination of resources(OP, number and date of requests, etc.), but moved cumulative amounts which took time tointerpret.

6.3.2. Evolution of the Financial Systems over 1994-99

The financial processes acquired a greater level of effectiveness only in the second half of theprogramming cycle. In this phase, the delays in the financial advancement of the CSF and ofthe OPs imposed an improvement in the implementation processes (above all financially) onthe national authorities48

The financial architecture, showed in the previous graph, structure itself during theprogramming cycle. The following factors shaped it:- the decision, by the national authority, to assign from 1 January 1996 to the General State

Accountancy, the distribution of the national ESF co-financing quotas, previously underthe jurisdiction of the Ministry of Labour49;

- the introduction of the Community regulation (Reg (EC) 2064/1997) concerning thecontrols on the regularity and the transparency of financial flows activated by theimplementation of Structural interventions;

- the introduction of the rules of SEM 2000, which implied a radical transformation of thebeneficiary definition, which before in the national rules interested the publicadministration responsible for the OP and with this innovation was translated to the finalbeneficiary responsible for the project. It requested a wide adjustment in the financialmanagement and in the relationships with the beneficiary, now more involved in financialmonitoring. The application of these new rules was progressively introduced in agreementwith the European Commission.

- the extension of the obligation of opening a fidejussion to all the private beneficiaries,created serious problems to some beneficiaries, but also to insurance and credit sectors.Several meetings between Treasury and insurance and credit representatives tried to limitthe problems inherent to the fidejussion system.

- the internal reform of Treasury with the progressive acquisition of a central role byIGRUE.

In this phase IGRUE acquired a series of “control and inspection” functions50 on financialflows and their regularity. These modifications reinforced the leading and co-ordination roles

48 Several methodological Community indicators brought in 1997 have an equal impact on the systemisation offinancial processes – and on all of these the decision on admissible spending and their correct certification(“SEM 2000 lists”). This clarifies the legal interpretation of “final beneficiary” aimed at making the utilisation ofCommunity funds more transparent and effective.49 Previously the Ministry of Labour managed autonomously the “outside budget” for the rotation fund, whichforesaw the national co-financing of the ESF priority.


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of the Treasury within the management structure, but run the risk of a duplication and aexcess of controls; it also implied a not relevant, but significant (generally 3-4 weeks),increases in the timing of financial circuits.

6.3.3. Link to Output Monitoring

The link between financial and physical data was only formal. At the Treasury a uniquedatabank collected both the information, but the physical one was very poor and not currentlyupdated (see below). Only at OP level some annual reports presented estimation orinterpretation of both the data (see for example road OP).

6.3.4. Quality of Financial Control Mechanism

The controls over financial flows of the Structural interventions have for a long timerepresented a prolonging of the ordinary controls over national public spending . Theirconformity to the Community regulations and their effectiveness have tended to improvefollowing the EC 2064/97 Regulation. This guaranteed greater harmonisation of systems andprocedures of control over national and Community public expenditure.

Different considerations should be made for the interventions implemented within the field ofthe “Industry and Services “ MOP. Almost 80% of the financial endowment of theprogramme is covered by the interventions financed at a national level by Law 488/92. Thislaw is characterised by a system of checks into the correctness of satisfactory financialmanagement. Therefore for this programme an adjustment in the procedures of control wasnot necessary as envisaged by Community rules.

In the case of ESF financial controls were, and are, carried out on all the projects. The easiercommunity approach of sampling has not been accepted by the national authorities, alsobecause a high number of financial frauds at the beginning of nineties.

The Italian administrations at the end of the programming cycle instituted internally divisionconstructed on an “ad hoc” basis to carry out controls (particularly in the case of theinterventions co-financed by the ESF) in accordance with the Community regulations.

Due to the lack of efficiency of national procedures, the controls constituted a factor in theslowing down of the financial implementation of the Operative Programmes, especially forthe interventions co-financed by the ESF. In this field, the will of examining all projectsgranted went with a serious shortage in the inspection staffs.

6.3.5. Project Auditing

Detailed information of the projects audited between 1994 and 2001 is not available. Asmentioned all the ESF projects are controlled after their closure, other projects are underimportant controls. 50 IGRUE – previously called IGFOR – was reorganised in 1999, with the institution of an office tasked with thecontrols on the usage of ERDF and FIFG resources and an office proposed for the control of ESF and EAGGFresources.


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In the examined case studies no really significant problems rose from national or communitycourt account auditing. In July 2002 in Calabria emerged problems about the eligibility ofsome expenditure, but the question was not concluded at the moment of the case study.

On a different way, the police investigations induced by legal opposition often led to theblock of the OP’s activity (see for example ESF in Campania or in Sicily).

1.4. MONITORING STRUCTURES

In the 1994-99 period the financial monitoring has been developed and reached a sufficientlevel of efficiency. On the contrary, the physical and procedural monitoring system waspractically absent, and this was the case for many programmes.

The contribution of financial monitoring was decisive in the management ofreprogramming and in reaching the expenditure targets. The absence of a real physicalmonitoring prevented a knowledge and an on-going examination of outputs and results.This differentiated performance of financial and physical monitoring was the consequencesof a political and managing attention focused only on expenditure.

Important improvements and experiences, has been, however, accumulated in monitoringand they represent a important base for future improvements. In order to reach significantlevel of efficiency in monitoring, the past experience points out the necessity of a sharedand common effort in the different administrations for winning traditional reluctance andweak organisation in this field.

1.4.1. Description of Monitoring Structures

The structure of the monitoring system - a computerised system for the gathering andprocessing of data on the physical and financial progress of programmes - is composed of twolevels (see graph below):1. a decentralised level, which includes:

1.1. collection reporting of data relating to physical and financial progress by thebeneficiaries;

1.2. data reorganisation by those responsible for implementation (regions, ministries);2. a centralised level at Sistema Informativo della Ragioneria Generale dello Stato (SIRGIS)

in the Treasury and under the control of IGRUE, which acquires the original data from theauthorities responsible for the implementation and elaborates it.


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Centralised level

Decentralisedlevel

Projects

SIRGSERDF Post

Final beneficiary

ERDF

Measures

SIRGS(by IGRUE)

Regional / Ministerial Monitoring System

SIRGSESF Post

SIRGSEAGGF

ESF EAGGF

MeasuresMeasures

Projects Projects

STRUCTURE OF MONITORING SYSTEM

6.3.6. Recipients of Monitoring Information and Frequency of Provision of Information

The financial monitoring data is collected quarterly, the physical data yearly. The timing forfinancial data was generally observed; sometimes the authorities sent information aggregatedor on paper instead electronically, but the financial advancement was monitored. On thecontrary, the physical data covered less than 40% of the total resources and was not updatedfollowing the expected timing.

In particular there is a lack of physical monitoring of the actions co-financed by the ERDF –indicators were only made operative by the Treasury in 1999 - and those co-financed by theEAGGF, in this case, mostly because of the extreme variety of infrastructure interventions inagriculture. Definitely incomplete was the physical monitoring of the actions co-financed bythe ESF.

This poorness of the central physical monitoring not always reflects a similar situation atregional or ministerial level. Here, often physical information is partially available, but it israrely organised in a unique database and it is not currently updated at a defined time. Atnational level the sectoral approach of the OPs and their limited number of measures facilitatethe availability of some physical information (see, for example, Ministry of Research orMinistry of Industry), on the contrary at regional level the high differentiated interventionsproduced a low and confuse level of physical information. The physical data collectionimplemented in this evaluation is an evidence of this situation.


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6.3.7. Accuracy of Output/Result data

The accuracy and self-reliance of the financial data was sufficiently high. Not greatrectifications occurred during the implementation; in this field the delayed or aggregatedavailability of data from some OP has been sometime the main problem.

Accuracy of physical data, when it existed, was very poor. The more frequent distortion wasthe utilisation of the initial information content in the application as physical indicator ofoutput. This practice interested all the ESF interventions, but it was also very frequent for theERDF and EAGGF interventions. This information was very useful, but not monitoring wasput in place.

A relevant attention to the financial information was devoted. It was the consequence of thepolitical and administrative focus on the financial performance of the CSF, either at central orregional level. Control of financial progress was very high both on the OP funded projects andon the similar projects; in this last case the priority was that of verifying their eligibility androbustness to financial controls.

No central control system for checking physical data has been developed. Generally, thepassage of the information along the hierarchical steps of the implementation structurerepresented the main source of control.

6.3.8. Quality of Monitoring data

As mentioned before, the quality of information was good for financial data and was bad forphysical data. Procedural information and indicators were completely absent.

The causes for the difficulties of monitoring the physical results and procedural advancementswere diverse:- the predominant attention given to the management and monitoring of finances, this was a

general issues among the various administrations;.- lack of experience in monitoring and evaluating at the different levels of the PA. It means:

poor attention to the results and their measurement, weak confidence with indicators andrelated elaborations, no systemic approach to the analysis and interpretation of theimplementation process;

- lack of clear contractual constraint between the management authorities and thebeneficiaries for the availability of the physical information;

- frequent delays accumulated in the collection of information;- low organisation of monitoring and consequent its high labour intensive feature; the

insufficient human resources available in the administration represented a bottle-neck(generally, the external technical assistance carried out the collection and organisation ofdata)

- the lack of an initial preparation, in many cases, of a battery of physical indicators;

If the aggregation of information was necessary at CSF level, it was less justified at OP level.Here, the set of indicators was incomplete and a wide range of information useful forunderstanding the programme effects (such as, location, size and activity of businessesreceiving aid, length of time in the implementation of infrastructure actions etc.) was notsystematically collected. Though in different measure, it happened in all the examined case


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studies. This low attention to the use of the indicators and the tendency to accept a minimum,often formal, content of information explain the difficulty and the failure of the physicalmonitoring.

6.3.9. Evolution in Quality of Monitoring data

During the programming cycle monitoring recorded relevant improvements, moreoverbecause at the starting point it did not exist.

During the 1989-93 period financial information was collected and centralised manually andwithout a clear timing. Physical information was not collected, it was scattered within thedifferent OPs and depended on single administration, when not personal, initiatives.

In the present programming cycle:- rules for monitoring were established, as well as responsibilities for it within the

management authority; but some times, specially in the regional OPs, theseresponsibilities resulted very vague or completely delegated to external technicalassistance.

- financial central monitoring reached a good performance (in terms of timing andinformation quality) and knew the participation of all the different managementauthorities;

- an important experiences of systematic approach (general guidelines, collection,centralisation, elaboration, etc.) has been experimented;

- a first attempt of defining a common grid of physical indicators was promoted, but it wascompleted only in 1999.

Support given to the PA by external technical assistance and monitoring bodies proved to beweak, in as much as:- it only partially helped to make up for the shortcomings of internal monitoring structures

in administrative bodies; generally administrations operated an out-sourcing with poorfeed-back on their staffs;

- it did not help to make the definition of “project park” more understandable. Betterconsultancy support in the verification of “accountable” projects would have helped toavoid reaching the end of a cycle of programming with, in many cases, a “project park”that not yet been defined, and to raise the average qualitative level51.

It should equally be remembered that technical assistance structures did however begin apraiseworthy initial work of computerising the system of data reporting and rationalisation ofthe physical indicators grid around the 1998. This was the case, for example, in Campania.

6.3.10. Added Value of Monitoring

The contribution of financial monitoring was decisive in the management of reprogrammingand reaching the expenditure targets.

51 To close, some programmes encountered great difficulties in identifying the definitive “park projects”. Theregion of Calabria may be mentioned among the POPs, while among the multi-regionals the greatest difficultieswere recorded by the MOP “Infrastructures of road transport” and the MOP “Civil Protection”.


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The absence of a real physical monitoring prevented a knowledge and an on-goingexamination of outputs and results and did not offer a clear accountability of the CSF. Inparticular, the inclusion of the “similar projects” in the OPs increased the difficulty in readingthe outputs of the programme. Till now, the continue change of the similar projects includeddo not permit to understand what really the OPs contributed to implement52.

The positive contributions of monitoring were also delayed. Specially on physical monitoringsome improvements (i.e. the indicator grid) arrived only at the end of the programming cycle.

6.4. PROGRAMME EVALUATION

The evaluation played a very modest role in the programme management and strategicorientation.

First of all, the delay (generally around the 1999) occurred in the selection of theindependent evaluator minimised the possible influence of evaluation on the decisionmechanisms. Secondly, the absence of physical monitoring restricted the evaluationanalysis and forced the evaluator at focussing on data collection. Thirdly, the interpretationof the evaluation as an obligation or a control did not facilitate the active involvement ofthe administrations responsible for the programmes.

Evaluation has also not found a relevant space in the MCs, which were focused onfinancial aspects of implementation, and this did not facilitate its reinforcement.

6.4.1. Description of Evaluation System

The evaluation process was articulated on two main levels:- the CSF evaluation;- the evaluation of the single OPs.

At the two levels the independent evaluators have been selected by the administrationresponsible for the programmes (the Treasury at CSF level). The content of the call fortenders were defined on the basis of a unique common track; with only little exceptions theadministration did not intervene on this track and the bids were no customised.

In a parallel way, the internal evaluators53 of the administrations responsible for the co-ordination of structural funds were operating. They implemented the mid-term evaluation andworked as a support for their leader administration.

One relevant deficit in the evaluation system was the lack of clear and quantified objectivesboth at the CSF and the OP levels. This was not a methodological question, implicitobjectives could be always identified and estimated, but it was the sign of the little attentionpaid to the results by the political and administrative stakeholders.

52 For example, during only one month the Calabria POP changed the physical indicator of tourist harbour from3 to 1 port, because of changes in the “similar projects”.53 The internal evaluators were: INEA for Ministry of Agriculture and EAGGF, ISFOL for Ministry of Labourand ESF, Evaluation Unit for Treasury and ERDF.


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The final and more critical aspect of the evaluation system was the delay in the selection ofindependent evaluators. Their selection arrived only the end of the programming period andprevented their inclusion in the decision mechanisms. The case of Campania was exemplar,here the selection of the evaluator was completed in 2000

6.4.2. Evolution of Frequency and Amount of Evaluation

As mentioned before, each programmes had its evaluator. In the majority of cases, theevaluators produced 2 reports in a year to present them in the meetings of the MonitoringCommittee. Notwithstanding the delays, in the call for tenders a mid-term evaluation wasrequested to the evaluator, with the aim of offering a global view of the programme.

The contents of the report followed a grid based on a in-itinere approach to the evaluation,which often resulted little coherent with the time and the role of the effective evaluation. Theabsence of physical data often moved the focus of the evaluation on cases studies or directdata collection.

6.4.3. Evolution in Evaluation Capacity

The evaluation of the single OPs promoted an increasing attention to the evaluation capacityand opened a new market for consulting. This was something new with respect to the previous1989-93 period, when the evaluation was never carried out.

The administration were no prepared to manage this function, and often felt the evaluation ascontrol or obligation, and not like a support. Also the monitoring committees very rarelydedicated sufficient space to debating the results of the evaluation or created task force toaccompany the evaluator. This approach derived from the tradition of our administration,which is oriented to the formal control, and is not used to verify accountability and results.

Also the market was not prepared to face a similar demands. Many companies adapted theirtechnical assistance or consulting ability to the new demand of evaluation, but often tended toreproduce forms of technical assistance instead of an independent evaluation. This was wellaccepted by some officials, because it diminished the possibility of divergences and at thesame time reinforced its operational capability. The market of independent evaluation resultedconcentrated in a not large number of companies and not very specialised.

Nevertheless these limits, the diffusion of the evaluation culture was significant. Theimportance and the resources dedicated to this issue promoted in the public administration aprogressive interest and a more targeted use of the evaluation. In the private companies andin the public bodies favoured the growth of new skills and experiences.

These positive effects were amplified by the concurrent developed of the Evaluation Unitwithin the national administrations, which multiplied the professional demand for evaluationand introduced a stable support in the administrations. In any case, this evolution of theevaluation influenced only in a marginal way the 1994-99 CSF and should interest in amoresensible way the 2000-06 period.


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6.4.4. Evolution in Evaluation Quality

Due to the limited time in which evaluation operated, it is difficult to examine the evolutionof its quality. In general, this evolution appears poor in terms of the number of the treatedthemes and in the methodological approaches. For example, the experiments on theevaluation of the net effects in training were concentrated in Central-Northern regions andonly one survey interested objective 1 (Sardinia).

Frequently evaluation focused excessively on the financial performance of the programmes,losing sight of the qualitative results and the comparative reading of the outcome. One of themain limitations of the evaluation processes has been the inability to gather the economic andinstitutional impact of the interventions.

The examination of the evaluation reports of the different OPs shows the production of a largeamount of information and analyses, which often have little or none effect on the decision ofthe MCs.

The more relevant improvements have been in the relationships between the evaluator and theresponsible administration, which favoured a focalisation of the activity.

6.4.5. Added Value of Evaluation

The added value of evaluation activities to the structural programmes showed to be onlypartial.

The delays in its implementation hindered the independent evaluators from:- examining in depth the causes of the delay in the start of the programmes and supplying

an adequate support to those in charge of the programmes;- identifying the critical factors as they occurred. This would probably have averted some

drastic financial adjustments and would have favoured a definition of the procedural andorganisational adjustments to be made;

- promoting changes in the strategic orientations or in the management structures

The difficult of introducing evaluation in the decision mechanisms was the main constraintfor its contribution. In addition, the public administration demonstrated difficulty inexpressing an “evaluation demand” and often misinterpreting the role and function of theindependent evaluator, seen as “an inspector”54.

The positive effects of the evaluation were:- the increase of the amount of knowledge on the programmes; in some cases the obliged

recourse to surveys and qualitative methods of analysis produced interesting sectoral orlocal analyses;

- the direct support to the implementation processes; in fact, the evaluators have supplied anextra consultancy to the responsible administrative bodies.

54 Generally the administrative bodies viewed the evaluation reports as a kind of bureaucratic performance ratherthan a technical support for the improvement of the programme.


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6.5. EFFECTS OF SYNERGY

6.5.1. Internal Effects

Internal synergic integration in the sub-programmes (and the measures of the OPs) and in thevarious funds has generally proved to be very limited. There are various causes, among whichthe following stand out:- deficiencies in the original programmes. Frequently the theoretical base of the

programmes, the reasons for the choice of defined actions/measures, and the synergycreated by the actions/measures have not been made explicit. In addition, attempts todevelop internal and external consistency have been unsatisfactory; especially at regionallevel;

- the various levels of the PA showed a weakness in their working for programmes ratherthan for projects; aspects related to the timing and synchronisation of actions wereneglected and there is a weakness in connection between the individual actions as there isan obvious fragmentation of expense.

It should be added that the initial poorness of internal consistency in the programmes wasfurther accentuated along the way by the massive addition of “similar” projects. There is infact a trade off between their positive effects on financial performance and negative effects onthe internal consistency of policy design.

6.5.2. External Effects

Integration between actions co-financed with structural funds and other actions of nationaland/or regional policy proved to be even weaker. In this field Italy has certainly paid for theabsence of widespread programming by sector of economic policy55.

At regional level as well, however, actions prove to be unrelated to strategies for localdevelopment. It is particularly obvious that strategies in support of industry - co-financedthrough the ERDF – have often paid for the lack of defined priorities by geographical areaand/or sector.

The very actions to support employability have not been based on a preliminary recognitionof the professional needs of production sectors. This has had an inevitable influence on thepossibilities of synergic integration of actions to strengthen the productive fabric and those toreinforce human resources (and thus between actions co-financed by the ERDF and those co-financed by the ESF). In this light, we can state that the same weakness in horizontalpartnership has had a negative influence on the possible synergic integration of actions taken.

55 A significant result here was that the same multi-regional programmes designed to reinforce the transportsystem in the Mezzogiorno, did not seem to take on in their entirety a policy design that was consistent.


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6.6. EQUAL OPPORTUNITIES AND ENVIRONMENT

Transversal objectives on the environment and equal opportunities marginally influencedProgrammes in the 1994-1999 cycle.

6.6.1.Equal Opportunities

The attention of official bodies on the subject of equal opportunities has been very poor, if notnon-existent.

The design of programmes does not usually include a specific measure for this objective.Only within the types of projects co-financed by the ESF to encourage entry into businessenterprises have actions been implemented aimed at the creation of businesses by women.

In addition, selection criteria for projects did not include a raise in points given for respectingthis transversal objective.

In the 1994-99 cycle no technical and/or informal groups to raise awareness of/supportadministrative bodies on this topic were established either..

6.6.2. Environment

Environmental topics were the subject of a specific MOP programme but it did not showsatisfactory financial performance and reservations on its overall efficacy may be expressed.

In more general terms it can be stated that environmental topics have aroused little attention,as much at programming strategy level as at implementation level. At the project selectionphase as well, little attention is given to evaluating their impact on the environment.

The implementation of actions in the environmental field co-financed by community funds ismoreover negatively influenced in the southern regions of Italy by the lack of regionalplanning on the environment. Technical support by informal groups and the involvement ofnational and regional environmental bodies has proved to be insufficient overall.

6.7. CONCLUSIONS ON IMPLEMENTATION AND MANAGEMENT

Implementation and management processes recorded a significant improvement in the1994-99 CSF.

The reinforcement of the vertical partnership and the national co-ordination producedimportant results in terms of utilisation of resources and homogenizing the administrativebehaviours.

The capacity in spending did not means an automatic increase in the general efficiency ofmanagement and decision processes. The wide integration between national policy andOPs, throughout the co-financing of the ”similar” projects, was the principal leverage onexpenditure and many management difficulties are still relevant.


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The more significant improvements of central administration with respect to the regionaladministrations, and also the differentiated improvements among different Departments ofthe same region, confirmed:- the easier management of the structural interventions when these were included in

national policy, which have well-experimented procedures (this is the case of thesuccessful multiregional OPs);

- the difficulty in managing and integrating different sectoral interventions without anadequate co-ordination of different Departments and services (this is the case of thesuffering regional programmes).

In all cases the efficiency and the adaptability of the administration were the main factor ofsuccess. In the regions the complexity of the programmes matched a more rigid,hierarchical and fragmented administrative organisation, which did not favour themanagement. The hierarchical organisation and the absence of a real co-ordinatingfunction at regional level often prevented a significant increase in the know-how on themanagement techniques and the transfer of experiences among the officials. In our casestudies the Basilicata represented the exception, which confirmed the rule.

The complexity of the national procedures (selection, controls, etc..) and the frequentshortage of staff increased the severity of the organisational deficit.

A second important aspect of the 1994-99 experience concerns the horizontal partnership.Many different motivations (increased role of regions, increased resources of structuralfunds, national process of devolution, diffusion of Territorial Pacts, positive climate in therelationships with social partners, etc.) enlarged the number of actors involved in thestructural funds policy. But, it did not correspond to a real reinforcement of the horizontalpartnership. The relationships between managing authorities and local institutions becamemore frequent and close, but were not structured and did not facilitated a commonplanning and implementing of the co-financed projects.

The multi-level management system of the structural funds requires a simultaneous verticaland horizontal partnership. The limited contribution of the horizontal partnership in the1994-99 CSF could have reduced the possibility of integrating at territorial level theinterventions. A stronger and more structured horizontal partnership require an adequatetime for producing results and an important organisational effort of all the involvedadministrations.

The operational modality of the structural funds supported the management, but not alwaysrecorded significantly improvements:- the Monitoring Committees, and specially the CSF one, played a central role in

defining programming adjustments and in guarantee the functioning of institutionalpartnership; but they were not able to face strategic question;

- the financial monitoring enhanced its performance and arrived at a significantefficiency level; on the contrary procedural and, moreover, physical monitoring wereabsent;

- the evaluation practice was diffused and increased the information on theimplementation, but its role in the decision making mechanisms was practically null.

It is clear as the main improvements of the implementation mechanisms were all targeted tothe financial absorption.

ISMERI EUROPA – Strengths and Weakness

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7. STRENGTHS AND WEAKNESSES

The strengths and weaknesses of the 1994-99 CSF are summarised in the following tables.

For processes, strengths and weaknesses are separated out mainly by their effect on financialefficiency (strength) and efficacy (weakness). Overall, management mechanisms showed thatthey could be satisfactorily adapted to community regulations and could be carried out fairlywell (with the sole exception of ESF) the same cannot be said of the ability of processes tosustain the efficacy of actions and their internal consistency.

In the results gained, the most positive aspects relate to consolidated policies and the spendingcapacity of aid systems. The most negative aspects concern some of the more innovativeactions (financial engineering, and support to business services), and more particularly, theintegration of the various sector actions.

From the strengths and weaknesses emerges a CSF which successfully adapted tocommunity regulations, but which remained fragmented and locked within operatingapproaches that both lacked flexibility and were little able to interact with the demand fromthe area involved.

The CSF was a vital programming and financial means to reinforce national developmentpolicies at a time when public spending was falling, but it was also shown to be still notenough to generate - in terms of both efficacy and efficiency - the development processesnecessary to activate sustained growth in Southern Italy.


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7.1. PROCESS ISSUES

Strengths WeaknessesProgramming – sector actions reflected sector needs at local level – Absence of a clear strategy for Objective 1 development: no

integration with sector action– Poor involvement of horizontal partnership: programming was

limited to a few experts and administrative directorsPartnership – Strong improvement of vertical partnership

– Reinforcement of co-ordination and direction by the Treasury– Important role of the Monitoring Committee, at national and

regional levels, in vertical partnership and in decision-makingmechanism

– Poor involvement of horizontal partnership in the decision-makingmechanism

– The participation of many local institutions in the OPs was notreflected in the decision-making mechanism

Implementation:a) general

– definition and implementation of mechanisms to increaseabsorption: utilisation of an automatic procedure for re-programming; co-financing of similar project already funded bynational policies

– Very little attention given to effectiveness in managementdecisions

– many selection procedures are complex and time-consuming,producing delays in implementation (especially in ESF actions)

Implementation:b) management structure

– Improved ability in managing structural funds, particularly infinancial terms

– Vertical hierarchy and watertight separation between differentdepartments (particularly in regions) hampered transfer of know-how and flexible adaptation to the needs of the programming cycle

Implementation:c) selection

– Diffusion of public procedures (call for tenders), which are nowwidespread. Changes were significant in ESF actions, whereinitially public procedures were the exception rather than the rule

– Use of financial criteria only for the selection of “similar” projectsto co-finance in the CSF

– many selection procedures were complex and time-consuming,producing delays in implementation (especially in ESF actions)

Implementation:d) financial circuits

– Significant improvements in management of structural funds andpromoting controls in line with EC requirements

– Existence of “bottle necks” in national financial procedures (i.e.budgeting procedures in many regions, insufficient officials forESF controls, fidejussion for all types of action, etc.)

Monitoring/evaluation

– adequate efficiency of financial monitoring– for the first time widespread use of independent evaluation in the

national OP: each OP had its evaluator.

– very low efficiency, and often complete absence, of physicalmonitoring

– evaluation did not support decision-making mechanisms for manyreasons: late start up (about 1999), supply function for physicalmonitoring, low priority given by administrative bodies, technicalassistance approach of some evaluators


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7.2. ACHIEVEMENTS

Sector of action Strengths WeaknessesEmployment – Significant but not determined support to creation of

employment– Lack of a strategy for creation of employment

Road – Improvement in the quality and safety of the transportsystem – Marginal reductions in infrastructure gap

TransportRail

– No problems of implementation or absorption– Gradual improvements within the existing structure of

communication networks– Marginal reductions in infrastructure gap

Aid schemes

– High capacity of absorption– Very high number of firms which benefited from

incentives– Significant employment impact– High leverage effects– Considerable financial support to the private sector and

indirect support to financial institutions (reduction ofrisk element)

– Industrial policy is based on individual firms rather than onterritorial systems of firms or vertically integrated sectors

– Crowding-out effect by Law 488/92 on other, lessadvantageous, incentive laws.

– High level of dead-weight

Business services – Diffusion and experimantation of this support – Weak results of measures supporting demand for servicesBusinessinfrastructure

– Increased availability of premises at low cost and withbasic infrastructures – No clear area strategy

Financialengineering – Diffusion and experimantation of this support – Weak results generally on innovative and complex actions

SmallMedium sizeBusinesses

Training schemes – Experimentation and initial diffusion of training schemesfor businesses (in tandem with ADAPT)

– small number of in-house training projects (some measures werere-programmed towards initial training)

– Lack of on-going relationship between ESF programming andbusinesses

– considerable gap between needs and the supply andimplementation mechanisms of training schemes


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Sector of action Strengths Weaknesses

Research and Development

– The first comprehensive policy tool for R&D specificallyaimed at Objective 1 regions

– Results in product and process innovation and in scientificinfrastructure

– Upgrading of higher education system– No problems of implementation and absorption– Improvement of the network between actors in the R&D

system

– Partial success in balancing demand- and supply-orientedmeasures and in technology transfer measures

– Large margin for increasing efficiency (little use made of publicselection procedures for public bodies, vague selection criteria,difficulty in managing R&D projects especially at regionallevel)

– Room to increase integration between regional and national OPs

Education and Training

– Very high number of pupils and course hours– Very large spectrum of topics covered by the training

courses– Considerable widespread support to technical education and

fight against early school leaving– General improvement of human capital– Some important experiments have been carried out

– The training course was the only instrument for development ofhuman resource and inclusion in the employment market

– The Objective 3 approach by target population promoted apreliminary differentiation in actions, but the overall rationaleremains very vague and the main target was unemployed youngpeople.

Agriculturalresources

– The objectives of production diversification and qualityimprovement have been successfully pursued (viticulture,olives, greenhouses, animal husbandry)

– Lengthening of the production year– Hygiene and sanitary improvements in animal husbandry

– Weak integration of these measures with other instruments forrural development

RuralDevelopment

– Scattered actions with positive environmental impact– Increase in beds available and very promising

developments in the agriturismo (farm holidays) sector– Optimisation of typical products

– Marginal improvements in the amount of water, roads andenergy in rural areas

– Measures for rural development were weakly integrated– The objective of reducing internal disparities was too ambitious

and has not been achieved

Objective 5a

– The number of firms which benefited from the incentives inall EAGGF programmes was very high

– High number of low-income farmers receivingcompensatory benefits

– Predominance of incentives as instrument of agricultural policy– The objective of completing and integrating the production

process has not been achieved– The objective of promoting farmers' associations has not been

sufficiently pursued

Developmentanddiversification ofagricultural andrural resources

Agriculturalservices

– Individual projects have been completed with a potentiallyimportant impact on the competitiveness of the system

– This remains a field of experimentation for innovative projectsaddressed to the whole system of farms

Fisheries - First structured policy for fisheries- Good level of expenditure and significant results

– Limited focus on environmental and social aspects of sector re-organisation


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7.3. OVERALL EFFICIENCY

CSF efficiency can be analysed at various levels, and the following paragraphs detail the mainlevels that emerged from the report.

Cost efficiency – This is the traditional computation for efficiency: the relationship betweencosts and policy output. As already mentioned in the chapter on efficiency, the unit costs ofthe main actions seem to be in line with national costs. The extreme variability derives fromthe multitude of diverse operating contexts, and also from physical monitoring which was notcompletely reliable.

Still referring to the information available, the sole action that generated significant newemployment was incentive to investments. Employment created has a lower unit cost forsmall and medium-sized businesses (SMBs), where investments are relatively small andemployment density is higher. This is not a new result and does not seem to influence anyconsequent strategy decisions..

Table 106 Job creation and unit cost in the 1994-99 CSF (public cost and measures for whichdata were available)

Measures New employment(No.)

Public cost per new job(.000 euro)

O.P. TERRITORIAL PACTS FOR EMPLOYMENTEnvironment 12 276Production activities 70 113Towns and cities' 80 84Support of tourism businesses 140 63Support of small and medium-sized businesses 110 59Support of voluntary and non-profit organisations 42 38Improvement in employment situation 20 32Production sectors and non-profit organisations 450 30Tourism 489 23Development services system 71 19Environmental and urban re-definition 331 17Support infrastructures 130 13Strengthening of personal services offered 90 11Research 66 5O.P INDUSTR.CRAFT.SERV.BUSINESSESSupport invest. to production Law.488/92 34606 84Support invest. to production Law.64/86 36770 50Support to develop craft businesses 20921 9SG BIC SICILYAction to create businesses 100 54Action to develop businesses 532 12GLOBAL GRANT TARANTO CRISIS AREAAid to investment 543 46Source: ISMERI EUROPA processing

Efficiency of expenditure – This refers to the relationship between programmed expenditureand actual expenditure. This was relatively high, especially if compared with the very lowlevel of performance in the 1989-93 period. There is still much room for improvement in theFSE and in implementation capacity in the infrastructure sector.


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Efficiency of programming and the means to achieve actions – This refers to theoperational capacity demonstrated by initial programming and the means used to achieveactions during the implementation phase. This has shown itself to be rather low; programmingrequired extensive on-going modification and the completion of very many measuresdepended on projects that had already been financed with national resources. Only somenational aid systems, already tried and tested and with a good level of administrativeorganisation, were seen to have efficient procedures.

Efficiency of decision-making mechanisms – This refers to the decision-making processeslinked to programme management. If the mode of implementing the CSF is considered(partnership, Supervisory Committee, etc.), this generally gained efficiency in the 1994-99period, while improvements in the administrative background against which the CSF had tofunction still appear very small. This is particularly true in the case of the Regions and localbodies, where the growth in efficiency was still extremely slow and not up to standard.

Before the great improvements attained in the 1994-99 period, the efficiency problem in themanagement of structural funds is still correlated to state administration. Cost efficiencygenerally appears to have been respected compared with other national policies, whileefficiency in implementation timescales compared with forecast remains problematical andrequires further adaptation actions.

ISMERI EUROPA – Conclusions

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8. CONCLUSIONS

The macroeconomic results of the Objective 1 CSF: a vital support to structuraltransformations in the 1990s

The Italian 1994-99 CSF achieved important results in supporting the production fabricduring the 1990s. It had to sustain the Objective 1 economy during a period of structuraladjustments, which saw a policy reduction for Objective 1 regions compounded by a generalreduction in national demand. These deep-reaching transformations closed a thirty-year periodof policy for Southern Italy and were not seen in other European Objective 1 areas.

In these difficult circumstances Objective 1 regions did not record a positive performance, butwidening of the gap compared with the rest of the country was contained, and in the last twoyears the gap was actually narrowed. In addition, during this period Objective 1 regionsmodified their macroeconomic trends and reduced their dependency on the rest of the country.

The CSF contributed to the change, but macroeconomic, political and institutional factorswere its main causes, as follows:

– from the macroeconomic point of view, the dramatic reduction in public expenditure, theincreasing prominence of an export-led model of growth, the privatisation of large publiccompanies and the increasing competitiveness arising from a single market with a singlecurrency affected Objective 1 regions more than other countries, because the regions wereless competitive and more dependent on public funding.

– from the political and institutional point of view, the increasing opposition to transferringfinances to Objective 1 regions, the increasing efficiency required from public markets,the break-up of the traditional relationship between national and local government, andprogressive devolution forced Objective 1 players to seek a more autonomous waytowards growth.

Within these transformations the CSF played a vital role: it kept expenditure on developmentat par, helped the private sector to make any necessary adjustments, supported levels ofinvestments and employment, involved many local institutions and became the mostimportant development policy for all Objective 1 regions.

The slow progress in “wearing away” Objective 1 regions

In the year 2000, the decrease in the number of Objective 1 areas (with Abruzzo no longerbeing classified as such and Molise in the process of being phased out) confirmed structuralchanges in Southern Italy and showed the presence of developing areas within its boundaries,even though the areas are of limited size.

It is not however possible to attribute the decrease in Objective 1 areas to the CSF, as bothregions had already passed the threshold of 75% in 1994. What is important to underlinethough is how the CSF favoured the process of “wearing away” Objective 1 areas, and that


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over the last few years Sardinia and Basilicata as well have reached a situation where theywill shortly be able to leave Objective 1.

In Italy therefore Objective 1 is tending to contract, but still involves the main regions ofSouthern Italy (Campania, Puglia, Sicily), which also show a reversal in pro capita incomevalues compared to 1994. As a whole Southern Italy still records income values that wouldadmit it to Objective 1. The persistence of high levels of unemployment in Southern Italy is afurther sign of the serious imbalances having a widespread effect on the entire area.

There is therefore the problem of the polarisation of certain processes of development, adevelopment that must be encouraged despite any inherent imbalances that it may temporarilyinvolve. There is a particular problem however in the “critical mass” of developmentprocesses; their geographical size and economic import are even yet too small when comparedwith the problems of cohesion between the regions of Southern Italy and requires a widerdistribution of resources and greater efficacy of development policies.

In the 1994-99 period the CSF was not successful in having an effect on these questions. Itssupport of the area’s macroeconomic resuscitation was vital, avoiding a yet more seriousdeterioration in development indicators, but it did not appear to have given rise to new,widespread development processes. The large structural improvements to which it contributedoften turned out to be fragmented and with little connection between them.

Structural results: great improvements, but with weak multiplying effects

In the field of structural modifications it is extremely difficult to evaluate short-term results.Some indications are significant however:- the many resources directed at the private sector have aided its adaptation to new market

conditions. The industrial sectors of SMBs have significantly increased productivity andmany businesses have been aided by incentives. The same has occurred in the sectors ofagriculture, fisheries and tourism.

- communication infrastructures concern the Palermo-Messina motorway and the Rome-Naples high-speed railway line.

- General improvements have also been recorded in the sector of economic infrastructures,but with projects and areas of action generally being implemented in isolation. The watersector does not show the improvements forecast in the initial plan, where this actionplayed a leading role.

- In the sector of human resources the number of beneficiaries was high and a wide range ofactions was put into effect. Actions on the education system (higher technical educationand universities) were seen to be successful and of good quality. Traditional trainingactions on the other hand were little geared to area needs and were addressed almostexclusively to the unemployed.

- In agriculture the main improvements were in the re-definition of many local products andproduce. The main results in the context of rural development were limited to thedevelopment of agriturismo (farm holidays). Services to production also had greatsupport, but still did not appear to be able to play a central role in supporting production.

From the overall picture of results emerge:- widespread significant results, but also the almost complete absence of multiplying effects

or obvious concentration/synergies at area level..


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- a high proportion of “dead-weights” both in the infrastructure sector (where “border”,sponda, projects were financed) and in the incentives sector (where dead-weight istraditionally high).

Despite significant results there is thus much room for improvement in action efficacy withrespect to performance in the 1994-99 CSF.

Lack of development strategy

The problem of the strategy for the CSF 1994-99 was not that it was unsuitable in terms of thearea’s economic opportunities or weaknesses. The real problem was that all the CSFprogrammes, even though each had its own rationale, did not compose an integratedconsistent strategy for development (the stringent selection and quantification of finalobjectives, the identification and definition of objective variables and variables in the meansof achieving actions, specification of the causal mechanisms that would lead to theachievement of a certain economic goal, and the identification of objectives that did not comeinto possible goals).

A strategy with too many overambitious objectives, which contains a very high number ofactions and measures, and includes actions of normal on-going maintenance, is not adevelopment strategy in the true sense of the words. And this is why we have made theprovocative statement that the CSF 1994-1999 had no development strategy.

This lack of strategy has its causes and also its effects. The cause is the place held bycommunity programming within national policies, while the effects are the fragmenting ofresources and a lack of integration between measures.

The role of the CSF and the lack of national programming

The main cause of the lack of a development strategy is in the role that communityprogramming has come to take on in the context of national policies. Communityprogramming has fulfilled a stand-in role where sector and area programming (national andregional) was non-existent or wanting in some way.

Although this situation represents very real community added value, it has meant that CSFresources have had to be spread over a very high number of activities and expenditures. Inother words, the CSF has not been that part of national programming specifically devoted toexpenditure on development but has tended to be identified with programming as a whole.This has meant no selection of objectives and very high fragmentation of resources.

The sector approach to programming and management

For the same reasons, the CSF has been considered since its conception phase as acombination of sector actions in the tradition of state action in Italy. The way actions weremanaged then aggravated the lack of integration between programme measures. The rule wasthat every measure had its official head (a ministerial office, a councillor’s office, etc.) andthat management was confined to watertight compartments. No one knew anything of what


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was happening outside their own area of responsibility. Certainly, there were co-ordinatingbodies at various levels of the action, but these were interested in the state of the action’sfinancial progress to the exclusion of all else, and not in aspects relating to economic content.What is more, the sizeable failure of physical monitoring impeded co-ordinating bodies fromreceiving reliable information at the time it was needed on the economic results of the variousmeasures.

A reconstruction of the rationale behind the 1994-99 CSF after the event: support of theprivate sector

Despite the limitations to strategy, a reconstruction of CSF logic can be put together after theevent under one main objective: to promote ample support to the private sector, particularlythe part relating to industry and services.

The widespread use of incentives to investment sustained the private sector at a time whenother incentives were being reduced (reduction in labour costs) and competition wasmounting (the single currency, a reduction in public spending, globalisation of production). Italso favoured the process of a deep-reaching re-organisation of the credit system that hadoccurred during the 1990s in the south, reducing the pressure of further delays in payingdebts.

The results of this choice appear contradictory. The production base of Southern Italy was notdiminished but neither was there a significant surge in productivity and competitiveness.Some dynamic SMB clusters emerged but the percentage of manufactured products was stillclose to 10% of the GDP. The growth in employment deriving from investments wassignificant, but it was often concentrated by area and was not enough to have an affect on thegeneral high levels of unemployment.

Support of the private sector may have played an important part in the recent phase of changeduring the 1990s, but does not appear to have been enough by itself to create development.The capacity to conserve southern industry is still definitely lower than the needs of SouthernItaly.

The increasing efficiency of the CSF: vital progress in a area of persistent problems

Increasing efficiency in the financial management of the CSF aided the achievement of theabove results. The CSF 1994-99 represented a huge leap in quality as regards absorption offunds compared with the previous period of community programming. The achievement ofalmost 100% of commitments and 95% of payments shows considerable improvementcompared with the results for the 1989-93 period.

This was not a certainty at the beginning of the period. CSF efficiency had to deal with achange in national policy on Objective 1 regions, which matched some community guide-lines but required a re-definition of national implementation procedures as well. It also had todeal with the very limited ability to adapt in the national administration, which caused seriousdelays and poor absorption in the 1989-93 CSF.


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The CSF rose to the efficiency challenge by putting two main actions into place:– re-programming between different programmes and within each programme, which

automatically penalised any programmes that did not reach the defined targets forcommitments and payments, and favoured the programmes with greater absorptioncapacity. Automatic re-programming was accompanied by enormous on-going regular re-programming within the individual programmes.

– the great use of nationally funded projects in the CSF, which enlarged the base of eligibleprojects and avoided the implementation of new procedures for a large part of CSFexpenditure.

Other actions were also important in achieving efficiency (well-organised procedures for thenational aid scheme or the greater involvement of public bodies – Telecom, FS, ANAS,ENEL, ENEA, CNR - with a large stock of feasible projects and no need of publicprocedures), but re-programming and the utilisation of nationally funded projects had adetermining affect. The former was based on strong state partnerships between the authoritiesresponsible and was effective not only because it aided more efficient financial allocation, butit also defined financial objectives and compelled the players involved to adhere to them. Thelatter action, the great utilisation of nationally funded projects, moved management focusfrom implementation procedures to financing. In many cases the CSF became a simplefinancial source which was additional to other ordinary national funds.

These corrective actions assured the spending of the CSF, but conserved unaltered themanagement and administrative problems that were at the heart of implementationdifficulties.

Processes of multi-level governance of the CSF

CSF management processes heightened and gave clearer definition to the role of the differentlevels of state institutions.

Before all else, vertical partnership emerged as greatly strengthened following stronger andmore active co-ordination by the Treasury and, even more, by automatic re-programming, thedefinition of which required extensive on-going collaboration between central and regionalgovernment. Here, for the first time in Italy, a state institution agreed to an automaticreduction in its budget if it did not achieve spending objectives. Even though this had alreadyoccurred in actual fact, from the official point of view the acceptance of these rules, with noimposition, represented a considerable change in state attitudes. Overall, this collaborationwas then positively reflected in the different relationships between regions, centralgovernment and the European Commission.

The opposite was the case with horizontal partnership, which was under- developed or notdeveloped at all. Increased participation of local bodies, an increase powered by greaterresources and national policies for local development, and the vital role played by the unionsand other social bodies in the definition of national policies, were reflected little and to alimited extent in CSF management. These partnership limitations may have had a negativeinfluence on the management of actions, especially in the implementation of manyinfrastructure actions, where local state institutions have wide-ranging powers.


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Overall, the experience gained confirms that a system of multi-level governance requires twoelements operating simultaneously: firstly, strong central co-ordination and direction, whichwill specify common timescales and methods for an action; secondly, great independentinvolvement at area and society level, which will root actions in the community and aidimplementation. The latter is obviously more complex and needs more time due to the largenumber of players and the diverse interests involved.

Management problems still to be resolved

The history of the CSF 1994-99 management difficulties is conducive to severalconsiderations.

The first is on the start-up of programmes, which should be as punctual as possible. Delaysshould not already have accumulated in this phase since it will lead to an atmosphere of on-going emergency, which will then cause attention to be concentrated solely on theprogramme’s financial aspect.

Secondly, state institutions lack a background in economic outcome. The officials responsiblefor measures simply do not take this aspect of policies into consideration. They are still tied toa logic of procedural correctness and, because of constraints imposed by the Community, tocommitment and expenditure deadlines. The renewal of the monitoring system in all its threedimensions (financial, physical and economic) thus presents itself as a priority to overcomethis inadequacy.

Thirdly, the inability of state institutions, especially in the regions, to deal with change. It istrue that the period within which the CSF 1994-99 fell was a transition period between an oldand new policy model. The transition involved not only the contents of development policiesbut also the players, and the CSF found itself in the position of having to form a bridgebetween the old and the new. It is also true however that central and local government havedifficulty in assimilating changes. Every time something new occurs - a national law,community regulation, regional law or election - state institutions come to a standstill andwith them implementation of the community programme. The difficulty in dealing withchange leads to innovative projects being the first to encounter obstacles and to build updelays - and also the first to be sacrificed.

Lastly, and this is connected to the above, the part played by professional skills. Despitecertain problems, it does not appear that management difficulties were linked to widespreadindividual incompetence. It would rather seem that the organisation of the managementoffices hinders the optimisation of the existing human resources and growth in potentialresources. For example, it emerged that in the management of different measures no care wastaken in horizontal management functions, and thus no body of knowledge and skills wasdisseminated or created on how community actions worked. Any knowledge wasconcentrated in the person responsible for the fund or the measure and behind that figure therewas no one else. This meant that the frequent changes in those responsible constituted a factorthat slowed down the programme, and that vertical management led to a duplication of mucheffort and little flexibility in organisation.

All these problems taken together return to a question of administration that has a negativeinfluence on the management of community actions. The limitations in administration were


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assailed by various reforms in the 1990s, but time is still needed for them to give firm results.In the meantime it is vital to be able to adapt the operating needs of structural funds to theoperating constraints of state administration.

The necessity of overcoming the trade-off between efficacy and efficiency

The history of the CSF 1994-99 suggests that there is a trade-off between efficacy andefficiency. Considering the conditions for implementation imposed by community regulationsand with the efficiency constraints in state administration, it is only possible to concentrate onfinancial progress. On average around half of the programmes must have been implementedwith projects that had already been financed or aid structures that were already in place, sinceof those planned only around 50% can have been implemented within the pre-determinedtimes.

This state of affairs is permissible and has a strong functional motive, that of not losing theresources allocated, but it weakens any strategy, whether it be simple or ambitious, for thedevelopment of Objective 1 areas. If the implementation of actions that are new andconsistent with a development strategy is desired, more flexibility in deadlines andmanagement methods will need to be given.

Efficacy and the quality of expenditure need to be transferred to the centre of CSFmanagement action, without - obviously - reducing the attention given to efficiency.

Added value of CSF and community actions

Added community value has been of great importance in all its various aspects. Financially,the CSF has guaranteed a significant amount of resources for availability policies whennational public spending was experiencing difficulties. Methodwise, the CSF has filledcertain national deficiencies (programming, concentration) and has fostered policies that aremore oriented towards efficiency and partnership both in state and social institutions.Strategically, it has supported an extension in range (target populations in the ESF, ruraldevelopment, financial engineering, etc.) and the introduction of horizontal concepts withinactions (equal opportunities, SMB, environment, etc.).

Although important in terms of innovation, the strategic aspect appears the least successful.Many programming decisions made by the Commission (financial engineering, support ofbusiness services, allocation of ESF resources by sub-axis, etc.) have undergone greatchanges and drastic reductions along the way, either because of operational or demandreasons. There is therefore the need to set community guidelines more carefully into Italy’ssocial, economic and administrative context.

Despite these limitations, then community contribution to the renewal and improvement ofdevelopment policies remains essential. The very experimentation of local developmentpolicies that were carried out ion Italy in the 1990s was greatly indebted to the experience ofprogramming and partnership in the structural funds. More generally, community policieshave promoted an activation of administrations and national institutions at national, regionaland local level, which were without precedence in national policies and that, despite the


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limited efficiency in the administrative structure, are now an inherited background for anyother development initiatives.

8.1. INFLUENCE OF THE 1994-99 ON 2000-2006 PROGRAMMING

Programming in the 2000-06 period has completed a real revolution compared with the periodnow being considered. In particular, it endeavoured to consolidate the improvements attainedin the 1994-99 period in the management of structural funds, and at the same time offered arevision of the whole process of programming..

The new programming identified a clear strategy56, involved a very high number ofadministrations, specialists and social bodies in the definition of programmes, refined clearerco-ordination between regions and central government, and introduced systems of nationalaward-winning to reinforce the management process. Many of the mistakes and limitations ofthe 1994-99 programming have thus been dealt with. Their resolution however will depend onthe effective working of decision-making mechanisms.

Some questions remain open however in the new programming. Above all else, the balancebetween efficiency and efficacy. The more stringent conditions for expenditure in the newregulations already required much speeding-up of actions in the early years. Manyprogrammes and the new CSF base their start-up on projects that have already been financedwith national resources or national aid schemes (Law 488/92 or Law 297/99). The CSF’sadded value therefore tends to be limited to actions of the Territorial Integrated Projects andto some other measures of particular importance in the various OPs.

Secondly, national, area and sector programming has not progressed. Communityprogramming thus remains the only programming for development, and its integration withnational policies is still vague and sporadic.

Thirdly, programming complements seem to have greatly complicated programming ratherthan simplifying it. Any variation in complement continues to need an opinion, even aninformal opinion, from the European Commission, and above all the complement has oftenrestricted operating options by making simplifications during implementation more complex..

Then, many of the difficulties in the organisation and decision-making by the publicadministration remain unaltered. The incentives to improvement introduced during the newprogramming57 are important, but do not seem decisive compared with the operatingtimescales of the structural funds. Problems in organisation remain however the responsibilityof the individual administrations and it would need united co-ordinated action to deal withthem completely. It is probable that ad hoc actions will be necessary plus greater stimulationof the various offices to improve organisation and assure greater efficiency.

56 This strategy follows in great part the theories of new economic geography and the experience of industrialdistricts in Italy, and above all proposes integration and a high concentration by area and sector of actions, as themain opportunity to generate multiplying effects. To this purpose specific action means have been defined withinregional programmes.57 National award-winning is linked to the activation of certain administrative reforms introduced during the1990s.


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Lastly, great improvements have been introduced in the evaluation process and monitoring,but the confirmation of a greater protection of action quality and efficiency is still lacking. Formanagement authorities the priorities are once again financial, and even the co-ordinatingbodies have been employed in problems relating to the admissibility of certain items ofexpenditure or financial progress. The selection method of projects already financed fromnational funds and the mid-term review will be the test stand to verify in what way aspectsrelating to action efficacy have been decisive in operating decisions.

ISMERI EUROPA – Recommendations

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9. RECOMMENDATIONS

Final recommendations are sub-divided between short-term recommendations, addressed toprogramming in progress and focused on management aspects, and long-termrecommendations, addressed to policies following 2006 and focused on long-term strategy.

9.1. SHORT-TERM RECOMMENDATIONS (2000-2006)

In the short term it is necessary to pass from the CSF that won back efficiency (1994-99) to aCSF that will increase efficacy (2000-06). For this new goal there is already a background ofstrategy and programming, as the definition of the CSF successfully dealt with the manyproblems of strategy direction that had emerged during the 1994-99 programming. It is yet tobe seen how management will be able to build on this background.

Our recommendations concentrate on the following aspects:- the integration between structural fund programming and national programming, the

absence of the latter will have a negative effect on the former- the development of the decision-making functions and mechanisms that will facilitate the

integration between funds and between the various actions;- the identification of partnership, evaluation and decision-making processes that will

increase decision-makers’ attention to the efficacy of actions;- to improve national administrative and organisational aspects that are at the heart of many

of the management difficulties;- to reduce administrative restrictions in the management of structural funds, beginning with

problems of the interpretation of regulations that member states often debate with theEuropean Commission


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Table 107 Short-term recommendations (2000-2006)European Commission National/Regional Government

Re/Programming - to request greater clarity on the integration between CSF andnational actions and on the use of resources thus released

- to define OP with a total cost greater than admissibleexpenditure, but in which are already identified all actionsthat can be co-financed

- Activate methods of programming national development policies(at least: timescales, resources, means and objectives)

- identification of a national “project park” linked to the CSF, fromwhich to select actions to co-finance in line with a clearprogramming logic

Management - to operate with clear but general directions, avoiding theaccentuation of management constraints in nationaladministrations

- to assure one single interpretation of administrativequestions by different offices (various DGs, various unitswithin the DGs) strengthening co-ordination anddeveloping a “single office” approach

- to request the definition of TA action plans that will clearlyidentify short and medium term objectives also relating tothe necessary growth of the PA

- reinforce co-ordination functions between administrations andbetween offices in the same administration so as to favour theintegration of actions;

- promote methods of “horizontal” organisation, that will developstaff functions and oblige different offices to communicate witheach other

- enlarge the awarding of programmes starting from within theadministration, providing award systems for individual offices andpersonnel according to criteria of transparency linked to objectivesachieved

- define action plans for TA that will clarify functions inoutsourcing those supporting PA growth; the PA must however“raise its stakes” , otherwise external support is undefined andinefficacious

Efficiency - to link efficiency not only to spending objectives but also tothe quality of actions

- in the mid-term review consider not only actions’ financialprogress or the achievement of pre-determined objectives,but also the complexity and strategic worth of actionsimplemented by the individual OPs

- define actual, regular physical monitoring- improve horizontal partnership, guaranteeing services and methods

above all for the local administrations that implement actions

Efficacy - to carry out in-depth analysis of planned targets and verifytheir relevance to the overall strategy framework

- assure greater protection of the efficacy and quality of actions(specific sessions of the Monitoring Committee, greater spacegiven to evaluation, identification of quality projects – because ofefficiency and efficacy - in each OP, clear identification ofresponsibilities within the administration)


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9.2. LONG-TERM RECOMMENDATIONS – POST 2006

Objective 1 in Italy finds itself in a critical phase: in the next few years it can reinforce andconsolidate recent structural changes and go towards greater independence from publicspending, or limit the growth in competitiveness and re-activate those processes thatcomplicate and impoverish the local production fabric. Much will depend on the success ofthe current macroeconomic policies and the CSF 2000-06.

At the moment it is difficult to imagine the extent of the Objective 1 area after 2006 and thecommunity resources that will be available. The large regions of Southern Italy will definitelyhowever still have great structural problems. It is likewise sure that over the next few years, ifleft to itself, the local production system will struggle to guarantee the level of investmentsneeded to promote a leap forward in development terms (even though in 2001 investmentswere growing, the total investments per inhabitant in Southern Italy were only 47% of thosein the Central-North).

After 2006, if the process of orientation and opening to the market of the southern economy,which began in the 1990s, is consolidated, public policies will have to be directed towardsgreater quality and the ability to attract investments from outside.

The redress of balance in the area and the urban redefinition of many areas in Southern Italyrequire an enormous amount of resources and much time to be completed. Thus, a steadycommitment to the supply of infrastructures will need to be assured, with support to local andnon-local investments. Using the experience gained from the current CSF, the development ofexternality will have to be reinforced, and the concentration of resources be assured in thesectors and areas determined through specific programming and operating means.


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Table 108 Long-term recommendations – post 2006European Commission National/Regional Government

Strategy andobjectives

- develop a strategy to redress the balance in infrastructureson the entire territory covered by the EU that will lay downthe bases for structural fund action

- define a new development strategy suitable for theconditions of competition from the single currency andexpansion of the EU

- verify the possible integration of community funds andnational funds

- maintain/bring attention on externalities to the production sector- emphasise policies to attract investments from outside (the

production system of Objective 1 regions is still too weak toguarantee the volume of investments needed for growth)

- optimise partnership results obtained in the 1994-99 programming(vertical) and 2000-06 (horizontal) through modes of collaborationand permanent co-ordination

Means - reinforce financing of actions for infrastructures and arearedefinition (here the need for additional resources is alsogreater)

- maintain the principle of multi-year programming evenwhen there is a reduction in resources

- define more carefully innovative means that are to bepromoted in programming.

- define a system of incentives as homogeneous and automatic aspossible for all businesses in Objective 1 regions, alongside aidand strong incentives for foreign investments and local systems ofSMBs

- improve opportunities for the private co-financing ofinfrastructures

- develop local and sector develop policies (on the basis ofexperience of current integrated projects)

Operating mode - favour the simplification of spending methods and strengthsupervision of policy objectives

- abolish the Complement to programming and report muchof the information contained therein (deadlines, procedures,etc.) in a simplified implementation plan with sole nationalresponsibility

- promote national programming of development policies in themain sectors and at area level

- activate models of management and re-organisation of the PAaimed at the management of development policies, which willovercome the old vertical hierarchy that is based on exclusiveresponsibility

Documents

Ex-post Evaluation of the Objective 1 1994-1999 National ...ec.europa.eu/regional_policy/sources/docgener/evaluation/doc/obj1/... · Ex post evaluation of the Ob. 1 – 1994/1999