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



across Spanish regions using a small simultaneous equation model and a
decomposition method. They find support to the success of the EU policies in that
they boosted regional convergence.

Evaluation based on fully specified macroeconomic models is discussed, e.g., in
Bradley et al. (1995), Roeger (1996) and ESRI (2002). The main advantage of such
model-based evaluations is that they allow estimating policy impacts compared to the
base-line scenarios that assume no policy intervention. Of course the theoretical
underpinnings of these models play an important role in determining the size of the
impacts. Thus, for example in the QUEST model (Roeger, 1996) crowding out
reduces the overall estimated impact of the Structural Funds.

One modelling framework - HERMIN - has been widely applied to Structural Fund
analysis at the national level (Greece, Ireland, Portugal, Spain, Czech Republic,
Estonia, Latvia, Poland, Romania, Slovenia) and macro-regional level (East Germany
and Northern Ireland).1 The main advantage is that at the national and macro-regional
level, the HERMIN macro-sectoral framework has a proven track record in modelling
the structural funds in isolation as well as in the context of the Single European
Market and Monetary Union (ESRI, 1997 and Bradley, 1998).

In this paper we review the theoretical foundations of the HERMIN modelling
approach, outline its application and highlight the results from its application to
structural funds evaluation. This review will highlight not only the strengths of the
approach but also the weaknesses and areas for further research.

This paper is organised as follows. Chapter 2 outlines the theoretical foundations of
the HERMIN model, chapter 3 identifies the specific aspects of the Structural Funds
that need to be captured in the model and chapter 3 discusses the evaluation results of
the HERMIN framework for the Structural Funds programmes for the period 1994-
1999. Finally chapter 4 summarises the paper.

1 Collaborative research is currently underway to extend the HERMIN framework to include the
Italian Objective 1 Mezzogiorno region (ESRI, CRENOS and GEFRA) and the East German state
Sachsen-Anhalt (GEFRA, ESRI).



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