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

economic sense. The models are calibrated using time series of national accounts data
from the period 1980-2000 and earlier versions are described in ESRI, 1997. The
HERMIN model databanks are usually developed in Excel and TSP format, and
model calibration is carried out using TSP. The models are constructed and simulated
using the WINSOLVE software package.

3. Incorporating the Impact of the Structural Funds

At the national and regional level the Structural Funds programmes consist of a
multitude of individual measures. In order to be able to analyse the overall impact of
the Structural Funds it is therefore necessary to amalgamate these different measures
into economically meaningful categories. There are various reasons for this. First,
although it is necessary to present a Structural Funds programme in great
administrative detail for the purposes of planning, implementation and monitoring,
there is less rationale for this detail from an economic perspective. Second, if the unit
of analysis is a country or a single macro-region of a country, there is no requirement
to distinguish, say, the impact of a new road in one sub-region as compared with
another sub-region.⁴ Third, if the Structural Funds expenditures are aggregated into
economically meaningful categories, one can make use of research on the impacts of
public investment on the performance of the private sector. The most useful
categorisation amalgamates the measures into just three categories namely:

i. Investment expenditures on physical infrastructure

ii. Investment expenditure on human resources

iii. Expenditures on direct production/investment aid to the private sector

Within each of these three economic categories there are three possible sources of
funding:

a. EU transfers in the form of subventions to domestic public authorities;

⁴ Of course, in the design of a Structural Funds, a sub-regional breakdown is an essential part of
comparing the benefits of alternative investment strategies. But our brief in this project is to analyse
the macro impacts of the actual Structural Funds 94-99, and not to speculate on the likely impacts of
alternative Structural Funds.

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