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

country or region. This implies that ‘of the peg’ models are inadequate and instead for
each country/ region the model coefficients and possibly the structure of the model
need to be adjusted.

While this paper is not aimed at reviewing this literature on Structural Funds
evaluation, it is nevertheless important to be aware of the different types of
methodologies that have been used for this purpose. These include: case studies, I-O
models, CGE models, single equation econometric models and multi-equation
econometric models (see Ederveen et al., 2002, for review of some of the evaluation
techniques).

Beutel (2002) applies an input-output methodology to Structural Funds impact
analysis at the macro-regional level (East Germany and the Italian Mezzogiorno) and
at the national level (Greece, Ireland, Portugal and Spain). However, in addition to
the problem of updating input-output tables, it is very difficult to incorporate supply-
side (or neo-classical) adjustment mechanisms into a static input-output framework.

Another regional modelling framework is that of Treyz (1993), which has recently
been extended to incorporate aspects of the new economic geography (Fan, Treyz and
Treyz, 2000). However, the earlier (1993) work - although articulated at a very high
level of spatial disaggregation - is based mainly on a simple income-expenditure
framework, and ignores most aspects of the supply-side adjustments that arise as a
result of targeted structural fund interventions. The more recent “new geography”
model (2000) is still at a highly experimental stage and may be difficult to
operationalise in the context of integrating its insights with the body of existing
European work on the structural funds.

Among the single equation econometric evaluations of the impact of the Structural
Funds, some are based on the simple growth regressions, where structural funds
indicators are added to the right hand side. For example Tondl (1999) uses this type of
framework using a panel of regional data. A similar approach is used by Ederveen, de
Groot and Nahuis (2002).

De la Fuente and Vives (1995) study the impact of the EU regional development fund
(ERDF) and of public investment in infrastructure and education on income levels

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