Cost-benefit analysis of Infrastructure Projects in an Enlarged European Union: an Incentive-Oriented Approach

The purpose of the paper is to analyse some results of cost-benefit analysis in a sample of ISPA (Structural Instrument for pre-accession countries) projects. The focus is particularly on the variability of financial and economic rates of return and how to integrate this information in the EU co- financing mechanism. We investigate, through the analysis of variance of co-financing rate, to which extent variability of rates is due to structural characteristics (sectors, countries) or to the existence of a residual variance due both to specificity of the project and discretional element of the appraisal method, which may constitute an information noise. We find that the variance of co-financing rate across countries is poorly explained by different composition of sectors of investment. This suggests the need to reinforce a more consistent approach to evaluation and co-financing. We suggest some possible solutions.Cost-benefit analysis, Project Evaluation, Structural Funds, European Regional Policy

How can we know if EU cohesion policy is successful? Integrating micro and macro approaches to the evaluation of Structural Funds

In this paper we describe an integrated approach for assessing the general economic effectiveness, efficiency and impact of public policy actions for large investment programs of the kind implemented over the past fifteen years in EU-aided Structural Fund programmes. Far from being rigid, our modelling philosophy includes both formal tools designed to assess all relevant effects, as well as informal (intuitive) elements to allow for flexible policy design and evaluation. When setting up an integrated micro-macro (IMM) model we are trying to over-come two major shortcomings in actual policy design and analysis: Firstly, to bridge the gap between the scientific requirements of model-based decision making and evaluation and the practical requirement for flexible and easy to use decision support tools that are well suited for day-to-day application. Secondly, to address the observed discrepancy in policy analysis between programme monitoring and evaluation realized at a highly aggregate level using quantitative macromodels (the so called “top down” approach) and the highly disaggregated approach to project evaluation, marked as micro- or “bottom up”-approaches.

EU Funded Projects: from Financial to Economic Analysis

Investment projects represent the basis of economic and social development of our country. The investment is a cost that will most influence the future, but it is necessary that this influence should be not only positive, but also should exceed the investment efforts. There could be different sources of financing the investment, but lately, European grants are more and more accessed by various economic agents or institutions. To obtain European financing, the project must fulfill certain conditions and must follow certain economic, social and environmental indicators. Also, for some financing lines, is required the economic analysis preparation, in order to demonstrate that the project benefits to society are important and cover the investments efforts. Thus, economic analysis studies the project influence on macro-economic or regional level, and evaluates its contribution to the welfare of the region or local community. The present paper aims to analyze the most important and available theoretical resources and to provide practical examples for carrying out the economic analysis. In conclusion, economic analysis is an useful tool for each project evaluation, but the biggest barriers to its development are the lack of valid data and the reduced Romanian experience. Under these conditions, input data can be incorrectly estimated, resulting illusory and subjective project data. For a proper projects selection based on indicators of economic assessment, it must be developed a national, complete and complex guide.performance Cost-benefit analysis, European funds, externalities, investments, shadow prices.

Social impact bond feasibility study AEIPS intervention: housing first

AEIPS is a Portuguese social organization promoting the integration of people with mental health illnesses and/or substance abuse in the community through the intervention model Housing First. The philosophy of Housing First aims at lifting people out of their homelessness status by providing instant access to individualized and permanent housing as well as support services. Housing First projects from all over the world have proved very positive results in terms of residential stability and community integration of its participants. This feasibility study evaluates the suitability of using a Social Impact Bond to fund the Housing First intervention of AEIPS in Portugal

Conditions for a contribution by the Structural Funds to real convergence of the Recently Acceded Member States

The recent EU enlargement poses immense challenges for EU regional policy in terms of increased necessity of priority setting and achieving allocative efficiency. In this context, the focus of this paper will be whether – or more precisely under which conditions – EU structural funds can be effective in making a significant contribution to real convergence in Europe. Based on theoretical insights and experiences in the incumbent Member States, conclusions will be drawn (though not exclusively) for the new Member States. In view of the very limited budgetary means of EU cohesion policy, representing less than 0.5 per cent of the EU-15 GDP, the following conditions will be identified as being important for maximising the impact: First, sound and supportive national policies, including macroeconomic policies, national regional policies and good governance, are an essential precondition for the achievement of a real impact. Second, the scarce financial means must be concentrated spatially, i.e. on the poorest Member States and regions and particularly in these countries they must be focused on national growth and growth poles rather than on equalising living conditions across the country and (more) dispersion of economic activity. Third, the strategic design of Structural Funds programmes must allow for a concentration on those types of expenditures most likely to lead to growth and employment. Fourth, ways have to be found to achieve the most effective use of EU Structural Funds. Before these conditions for maximising the impact of Structural Funds are described, empirical evidence and methods for assessing their contribution to real convergence in Europe will be discussed.

R&D investment responses to R&D subsidies: A theoretical analysis and a microeconometric study

Subsidies to the Norwegian high-tech industries have traditionally been given as "matching grants", i.e. the subsidies are targeted, and the firms have to contribute a 50 % own risk capital to the subsidized projects. Our results suggest that grants do not crowd out privately financed R&D, but that subsidized firms do not increase their privately financed R&D either. Hence, the own risk capital seems to be taken from ordinary R&D budgets. We also investigate possible long-run effects of R&D subsidies, and show that conventional R&D investment models predict negative dynamic effects of subsidies. Our data, however, do not support this claim. On the contrary, there are indications of a positive dynamic effects, i.e. temporary R&D subsidies seem to stimulate firms to increase their R&D investments even after the grants have expired. We propose learning-by-doing in R&D activities as a possible explanation for this, and present a theoretical analysis showing that such effects may alter the predictions of the conventional models. A structural, econometric model of R&D investments incorporating such learning effects is estimated with reasonable results.Technology policy; R&D subsidies; matching grants; short run additionality; long run additionality; Norwegian IT-industry