percent by the year 1999, and will continue into the post- Structural Funds 94-99
period. Although there is a lowering of the impact on GDP after Structural Funds 94-
99 terminates, due to the externality impacts, the longer term impact endures. This
impact is somewhat surprising, but is partially explained by the close links between
East and West Germany, and the fact that the types of inflation and labour market
pressures that arise in national economies tend not to be so severe in the case of
regional economies. The HERMIN model incorporates these features.
The impact on reducing the unemployment rate is also strong, although this is
reversed in the period after the termination of Structural Funds 94-99. Once again, it
should be stressed that the Structural Funds shock being analysed consists of
Structural Funds 94-99 in isolation. The impacts that the model simulates post-1999
would never be observed in practice because Structural Funds 2000-06 will take over.
Northern Ireland is one of the least developed regions of the United Kingdom, but
since the UK is at the average GDP per capita within the EU, it is clear that Northern
Ireland is relatively better off than the countries of the Southern EU periphery.
Nevertheless, it was designated Objective 1 for the purposes of Structural Funds 94-
99 and was the largest UK region to be so designated. Since we had full ex-post
Structural Funds financial data on Northern Ireland from an early stage, we use these
data rather than the ex-ante planning data used in all the previous simulations. The
Structural Funds/SPD expenditures continued beyond 1999 and were sizeable in the
years 2000 and 2001.
The results for Northern Ireland are presented in the same format as for East
Germany. Table 5, shows the simulation results in relation to the impact of the
Structural Funds/SPD 1994-99 on the level of aggregate real GDP at market prices (as
a percentage change relative to the no- Structural Funds baseline), and on the
unemployment rate (as a difference relative to the no- Structural Funds baseline). In
this case we had access to annual ex-post Structural Funds /SPD expenditures, which
continued beyond the year 1999 to a modest extent.
The Northern Ireland economy started from a moderately high base in 1993, but was
only beginning to emerge from a period of over a quarter of a century of civil unrest
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