eu cohesion policy funding in estonia: background, trends and challenges

26
1 14EUfunds-show1.ppt 1 Eesti Panga ülevaadete esitlus 9. mai 2014, 11:00-12:30 EU Cohesion Policy Funding in Estonia: Background, Trends and Challenges Karin Kondor-Tabun Karsten Staehr All opinions are personal!

Upload: eesti-pank

Post on 12-Nov-2014

370 views

Category:

Business


0 download

DESCRIPTION

Karin Kondor-Tabun Karsten Staehr Eesti Panga ülevaadete esitlus 9.5.2014

TRANSCRIPT

Page 1: EU Cohesion Policy Funding in Estonia: Background, Trends and Challenges

114EUfunds-show1.ppt 1

Eesti Panga ülevaadete esitlus9. mai 2014, 11:00-12:30

EU Cohesion Policy Funding in Estonia: Background, Trends and Challenges

Karin Kondor-TabunKarsten Staehr

All opinions are personal!

Page 2: EU Cohesion Policy Funding in Estonia: Background, Trends and Challenges

22

1.1 Introduction10 years of EU membership

EU cohesion policy “to enhance economic, social and territorial cohesion” Support regions, income convergence, social issues EU “regional policy”

Page 3: EU Cohesion Policy Funding in Estonia: Background, Trends and Challenges

33

1.2 IntroductionNext 18½ minutes EU cohesion policy funding Background, trends and challenges

Page 4: EU Cohesion Policy Funding in Estonia: Background, Trends and Challenges

44

2.1 The EU cohesion policy Treaty of Rome (1957) 1957 European Social Fund (ESF)– Employment, education, mobility

1975 European Regional Development Fund (ERDF) – Infrastructure, innovation, small businesses

Page 5: EU Cohesion Policy Funding in Estonia: Background, Trends and Challenges

55

2.2 The EU cohesion policy 1988 reform after introduction of single market– “Objectives”– Multi-annual programming – Increased resources

1992 Cohesion Fund (CF) / Ühtekuuluvusfond– Transnational transport networks, environment

EU cohesion policy funding = ESF + ERDF + CF

Structural funds

Page 6: EU Cohesion Policy Funding in Estonia: Background, Trends and Challenges

66

2.3 The EU cohesion policyAllocation of funding 7-years programming periods total allocation

decided before

Recent programming periods 2000-2006 + 10 new Member States 2007-2013 + Bulgaria and Romania 2014-2020 + Croatia– Focus on growth support Europe 2020 growth strategy

Page 7: EU Cohesion Policy Funding in Estonia: Background, Trends and Challenges

77

2.4 The EU cohesion policy Eligibility – Different objectives vs. different funds – Main Convergence objective funded by ESF and ERDF

“Less developed regions” GDP per capita < 75% of EU average “Transition regions” GDP per capita = 75-90% of EU average

Allocation– Complicated calculations (GDP, unemployment, etc.) – Ceilings and floors – Final political decision

Page 8: EU Cohesion Policy Funding in Estonia: Background, Trends and Challenges

88

3.1 Foreign aidStarting point 1st theorem of welfare economics Market equilibrium efficient no resources wasted

But… Spillovers externalities– Positive (transport), negative (pollution)

Solidarity distributional concerns – Compensation to losers of reforms

Compensation to gain support for reforms

Page 9: EU Cohesion Policy Funding in Estonia: Background, Trends and Challenges

99

3.2 Foreign aidConditionality Funding conditional on… (e.g. roads, trains, training) Most foreign aid (including EU cohesion policy

funding)– If spillover motive – If solidarity motive ?

Page 10: EU Cohesion Policy Funding in Estonia: Background, Trends and Challenges

1010

3.3 Foreign aidChallenges Efficiency of aid – Projects with most highest social return per $

Growth potential…

Substitution = lack of “additionality”– Even if conditionality

Aid dependence – Policymakers, bureaucracy, businesses – Transfer effect real appreciation crowding out export

Macroeconomic management– Aid useful during recessions… but may fuel booms!

Page 11: EU Cohesion Policy Funding in Estonia: Background, Trends and Challenges

1111

4.2 Empircal studies from EU15Empirical studies of substitution (few) Ederveen et al. (2003) EU funding ↑ 1 € domestic

funding ↓ 0.17 € Wostner & Slander (2009) substantial substitution

in countries with EU cohesion policy funding > 2.3% of GDP

Page 12: EU Cohesion Policy Funding in Estonia: Background, Trends and Challenges

1212

4.2 Empircal studies from EU15Empirical studies of growth effects Many rely on meta-analyses (not CEE countries) Simulation models investment ↑ – Generally large effect

Econometric studies different cohesion policy funding to different regions – Generally no effect – Large variation across time, regions and methods

Ederveen et al. (2006) background important (openness, institutions)

Marzinotto (2012) implementation important

Page 13: EU Cohesion Policy Funding in Estonia: Background, Trends and Challenges

1313

4.2 Empircal studies from EU15NBs Different results for different methods… Maybe only effects in very long term Other objectives than growth (social, environment) Still improve welfare even if no growth effect

Page 14: EU Cohesion Policy Funding in Estonia: Background, Trends and Challenges

1414

5.1 Cohesion policy funding in Estonia Pre-accession funding from EU May 2004 – 2006 –Weight on environment satisfy EU directives on

drinking water, sewage, waste 2007-2013 (participated in negotiations)– Initially most weight on infrastructure, less on

social policy 2014-2020 – Operational programme approved on 25 Feb. 2014– Focused spending priorities + long-term impact

Page 15: EU Cohesion Policy Funding in Estonia: Background, Trends and Challenges

15

May 2004 - 2006 2007 - 2013 2014 - 20200

500

1000

1500

2000

2500

3000

3500

4000

0

500

1000

1500

2000

2500

3000

3500

4000

Cohesion Fund

European Social Fund

European Regional Development Fund

15

5.2 Cohesion policy funding in EstoniaEstonian cohesion policy funds, different programming periods,

million current EUR and % of GDP

2.4%

3.0%?%

Page 16: EU Cohesion Policy Funding in Estonia: Background, Trends and Challenges

1616

5.3 Cohesion policy funding in Estonia

Hunga

ry

Lithua

nia

Latvia

Estoni

a

Polan

d

Bulga

ria

Czech

Rep

.

Slova

kia

Roman

ia

Slove

nia

0

1

2

3

4

0

1

2

3

4

Cohesion policy funding allocated to 10 CEE countries, 2007-2013, % of GDP

Page 17: EU Cohesion Policy Funding in Estonia: Background, Trends and Challenges

1717

5.4 Cohesion policy funding in Estonia

Payment of EU cohesion policy funding to beneficiaries in Estonia, mill. EUR

2004 2005 2006 2007 2008 2009 2010 2011 2012 20130

100

200

300

400

500

600

700

0

100

200

300

400

500

600

700

Programming period 2007-2013

Programming period 2004-2006

Page 18: EU Cohesion Policy Funding in Estonia: Background, Trends and Challenges

1818

5.5 Cohesion policy funding in EstoniaSumming up EU cohesion policy funding around 3% of GDP Rapid payment of 2007-2013 allocation– Reduce risk of losing allocation due to deadline– “Jump” in 2009

Page 19: EU Cohesion Policy Funding in Estonia: Background, Trends and Challenges

1919

6.1 Experiences and challengesEffect of EU cohesion policy funding Numerous projects funded – Specific project targets met– … but challenges remain

Page 20: EU Cohesion Policy Funding in Estonia: Background, Trends and Challenges

2020

6.2 Experiences and challenges Efficiency Mid-term review (CDP & RAKE, 2011)– Lack of priorities, too dispersed lack of synergies– Lack of funding for subsequent operation

Riigikontroll (2010) – Adult education programmes lack management

Riigikontroll (2012) – Lack of analysis users for schools and roads?

Page 21: EU Cohesion Policy Funding in Estonia: Background, Trends and Challenges

2121

6.3 Experiences and challenges Cases of misallocation – But many and detailed analyses + controls...

Detailed programming Detailed description of requirements Pre-selection requirements, incl. cost benefit analysis Monitoring and evaluation Co-financing

– Feedback to other areas of government spending

Page 22: EU Cohesion Policy Funding in Estonia: Background, Trends and Challenges

2222

6.4 Experiences and challenges Substitution (counter-factual not available ) Cutbacks in 2009 eased by cohesion policy funding Additionality?

Page 23: EU Cohesion Policy Funding in Estonia: Background, Trends and Challenges

2323

6.5 Experiences and challenges Aid dependency Varblane (2013, 2014) Cohesion policy funding in 2007-2013 programming

period– ≈ 11.1% of total fixed investment– ≈ 9.3% of government tax revenue (2007-2013)

Funding secured for 2014-2020 Current rules gradual phase out from EU cohesion

policy funding (“transition region”)

Page 24: EU Cohesion Policy Funding in Estonia: Background, Trends and Challenges

2424

6.6 Experiences and challenges Macroeconomic management Relatively small payments during 2006-2007 boom

(≈ 1.5% of GDP) Large payments during 2008-2010 crisis Future challenges?

Page 25: EU Cohesion Policy Funding in Estonia: Background, Trends and Challenges

2525

7.1 ConclusionEU membership cohesion policy funding

… and potential for faster convergence Challenges– Efficient use, substitution, dependence, macro economy– How generate rapid, stable and sustainable economic

growth in Estonia?

Will EU cohesion policy funding stimulate growth?– Meet in 10 years…

Page 26: EU Cohesion Policy Funding in Estonia: Background, Trends and Challenges

26

Karin Kondor-Tabun [email protected]

Karsten Staehr [email protected]

All opinions are personal!

26

Last slide