Macro-regional evaluation of the Structural Funds using the HERMIN modelling framework

Table 1: Total Structural Funds expenditure as percentage of GDP
(GECSFRAT)

Although the magnitudes of the Structural Funds impacts will differ from model to
model, the characteristic pattern is similar for all models, and merits some
explanation. The planned Structural Funds expenditures in each case tended to follow
a similar pattern. This pattern involved a subdivision into the three main economic
categories (physical infrastructure, e.g. roads, buildings etc., human resources, e.g.
training and skills development, and aid to the productive sectors, e.g. investment
support and subsidies). Within these categories, the published planned financial
expenditure data in the Structural Funds/SPD treaties showed that an approximately
equal amount of expenditure was envisaged for each of the six years (1994-1999). In
terms of its demand-side (or Keynesian) impacts, this will result in a sharp increase in
activity in the first year, and the increase will be sustained for the six years 1994-
1999, inclusive. However, after the year 1999 the artificial assumption is made that
the Structural Funds 1994-99 expenditures cease abruptly, or are quickly wound
down, and the demand-side (or Keynesian) impacts return to zero. There is therefore
a public expenditure contraction, and the only longer term benefits are those that stem
from the externalities (or indirect supply-side) impacts associated with the sustained
increase in the stock of physical infrastructure and human capital.

In reality, the ex post (or actual) Structural Funds/SPD expenditure tended to follow a
slightly different pattern. As the new Structural Funds 1994-99 was implemented, the
construction and training programmes were likely to be phased in more gradually,
even if the actual financial expenditures were batched as in the Structural Funds
financial tables. In the case of the Greek Structural Funds, the planned expenditures
were radically altered, and phased so as to be “back-loaded” towards the middle and
end of the period of operation of Structural Funds 94-99. In the absence of detailed
information on the actual phasing of Structural Funds activities on an annual basis and

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