The European Regional Policy in Hungary. An Evaluation of the Objectives and Instruments for the Cohesion

The paper underlines the progresses Hungary undertook during the pre-accession process and after the European Union membership in regional economic development. Using official documents of the European Institutions, statistical data provided by Inforegio, Eurostat, the Hungarian National Institute of Statistics, FADN-DG Agriculture and AKI Ive evaluated the impact of the European objectives and instruments for the cohesion (Structural funds and the Cohesion fund) on the convergence of the Country with the European parameters. The results obtained show a slow evidence of economic convergence but also the emergence and increase of internal divergence between winning and loosing counties, these last being prevalently agricultural, with problems of re-conversion increased by the effects of the post- 1989 legislative provisions. This outcome derives party from the lack of projecting abilities (and opportunism) of the Hungarian governments but its also linked to the often unsuitable guidelines and weak monitoring of the European Institutions.European regional policy, convergence, cohesion, agricultural reforms., Community/Rural/Urban Development,

Mapping changes on agricultural and rural areas: an ex-post evaluation of the EU membership for Hungary

Several progresses have been made in evaluating the development policies for rural areas in the last years; many indicators1 have been set for assessing the effectiveness of Common Agricultural Policy (CAP) and Rural Development Policies (RDPs) and their role on the convergence process of the EU members, but a shared definition of rurality is still missing. The results obtained at the level of growth and development by the most lagging behind areas, are far from being satisfactory (Brasili, 2005). The evaluation of the policies and programmes introduced evidenced lack of institutional planning and implementing abilities, and an insufficient targeting of policies and payments (Mantino, 2010). The experience of the 10 New Member States (NMSs)2 showed how the current CAP and Cohesion policy, designed for the EU-15 (Csaki et al. 2010), aren’t enough for addressing the regional specificities, hindering a process of development which is already weakened by the effects of the unfinished transition. This paper aims at offering a methodological contribution for evaluating the EU membership, with particular attention to the CAP, in Hungary. We chose this Country among the 10 NMSs because of the relevance (96%) of the rural areas on the total land3, and given the historical socio-economic role played by agriculture. The authors believe that more targeted – and therefore efficient – policies for agricultural and rural areas require a deeper knowledge of their structural and dynamic characteristics. Therefore, in order to identify the changes occurred before (2003) and after (2007) the EU membership on agricultural and rural areas, we use the following multivariate statistics methodologies: Principal Components Analysis, applied to the set of 42 variables, and Cluster Analysis on the results obtained by the Principal Components Analysis. Then, we offer a preliminary evaluation of the distribution of Single Area Payment Scheme (SAPS)4, using the information on the applications provided at the County level by the Hungarian Paying Agency to show correlations with the leading factors.Agricultural and rural development policy evaluation, rural areas, policy targeting, EU enlargement, Agricultural and Food Policy, O18, P25, R58,

Natural Disasters, Cascading Losses, and Economic Complexity: A Multi-layer Behavioral Network Approach

Assessing the short-term socio-economic impacts of climate-led disasters on food trade networks requires new bottom-up models and vulnerability metrics rooted in complexity theory. Indeed, such shocks could generate cascading socio-economic losses across the networks layers where emerging agents¿ responses could trigger tipping points. We contribute to address this research gap by developing a multi-layer behavioral network methodology composed of multiple spatially-explicit layers populated by heterogeneous interacting agents. Then, by introducing a new multi-layer risk measure called vulnerability rank, or VRank, we quantify the stress in the aftermath of a shock. Our approach allows us to analyze both the supply- and the demand-side dimensions of the shock by quantifying short-term behavioral responses, the transmission channels across the layers, the conditions for reaching tipping points, and the feedback on macroeconomic indicators. By simulating a stylized two-layer supply-side production and demand-side household network model we find that, (i) socio-economic vulnerability to climate-led disasters is cyclical, (ii) the distribution of shocks depends critically on the network structure, and on the speed of supply-side and demand-side responses. Our results suggest that such a multi-layer framework could provide a comprehensive picture of how climate-led shocks cascade and how indirect losses can be measured. This is crucial to inform effective post-disaster policies aimed to build food trade network resilience to climate-led shocks, in particular in more agriculture-dependent bread-basket regions.Series: Ecological Economic Paper

Italy’s off shore oil referendum: another lost opportunity

On 17 April, a referendum was held in Italy on rules governing off shore drilling licenses. As Biagio Carrano and Irene Monasterolo write, this relatively niche issue nevertheless produced a full-blown political contest, involving heavy infighting inside the government coalition. They argue that these events illustrate the Italian government is still more concerned with protecting the interests of powerful industrial lobbies than it is with stimulating the economy and employment through investments in renewable energy

A climate risk assessment of sovereign bonds' portfolio.

Aligning finance to sustainability requires metrics and methods to price forward-looking cli-mate risks and opportunities in financial contracts and in investors' portfolios. Traditionalapproaches to financial pricing cannot incorporate the nature of climate risks, i.e. deep uncertainty, non-linearity, complexity and endogeneity. To fill this gap, we develop a frameworkfor climate-financial risk assessment and management under uncertainty. We consider a riskaverse investor with an information set given by past market valuation, information on futureclimate economic shocks, and utility maximization based on the minimization of the ClimateValue at Risk (VaR) in presence of incomplete markets. We then consider a disorderly policy transition to 2°C scenarios that leads to unanticipated shocks in economic trajectories of fossil fuel and renewable energy sectors, estimated using Integrated Assessment Models. We model the shock transmission from the change in sectors' Gross Value Added to firms' profitability and to sovereign fiscal revenues. We then introduce the forward-looking climatepolicy shocks in sovereign bonds valuation introducing scenario- conditioned financial riskmetrics (Climate VaR, Climate Spread). We provide an application to OECD sovereignbonds of Austrian National Bank's portfolio. We find that investments' climate alignmentcan strengthen the sovereign fiscal and financial position by decreasing the climate spread. In contrast, misalignment can negatively affect countries' economic competitiveness and financial stability, and thus the performance of investors who own such bonds. Our analysissupports investors' portfolios risk management strategies in the low-carbon transition andand financial supervisors in the design of prudential risk measures

Opportunities for knowledge co-production across the energy-food-water nexus: Making interdisciplinary approaches work for better climate decision making

The relationship between the energy-food-water nexus and the climate is non-linear, multi-sectoral and time sensitive, incorporating aspects of complexity and risk in climate related decision-making. This paper seeks to explore how knowledge co-production can help identify opportunities for building more effective, sustainable, inclusive and legitimate decision making processes on climate change. This would enable more resilient responses to climate risks impacting the nexus while increasing transparency, communication and trust among key actors. We do so by proposing the operationalization of an interdisciplinary approach of analysis applying the novel methodology developed in Howarth and Monasterolo (2016). Through a bottom-up, participative approach, we present results of five themed workshops organized in the UK (focusing on: shocks and hazards, infrastructure, local economy, governance and governments, finance and insurance) featuring 78 stakeholders from academia, government and industry. We present participant's perceptions of opportunities that can emerge from climate and weather shocks across the energy-food-water nexus. We explore opportunities offered by the development and deployment of a transdisciplinary approach of analysis within the nexus boundaries and we analyse their implications. Our analysis contributes to the current debate on how to shape global and local responses to climate change by reflecting on lessons learnt and best practice from cross-stakeholder and cross-sectorial engagement. In so doing, it helps inform a new generation of complex systems models to analyse climate change impact on the food-water-energy Nexus

Non parametric methods to assess the role of the CAP in regional convergence in Hungary

Using the stochastic kernel, we analyse the Hungarian convergence path before and after accession to the European Union (EU), within its NUTS 3 regions (counties), and between those of the eastern EU Member States. Then, we develop a convergence analysis of GDP per capita PPS (Purchasing Power Parity) conditioned to Common Agricultural Policy (CAP) funds, in order to understand the role of the introduction of the CAP in the convergence of Hungarian rural areas. We find increasing divergence both within Hungarian NUTS 3 regions and between the eastern EU MS NUTS 3 regions, especially after Hungary joined the EU; a limited contribution of the CAP to the catching up of rural areas; and persisting difficulties of working with lacking rural disaggregated statistics

Blind to carbon risk? An Analysis of Stock Market's Reaction to the Paris Agreement.

It is increasingly recognized that a transition to sustainable finance is crucial to scale up the low-carbon investments needed to achieve the global climate targets. A main barrier to portfolios' decarbonization is the lack of conclusive evidence on whether low-carbon investments add value to a portfolio, and on whether markets react to climate announcements by rewarding (penalizing) low-carbon (carbon-intensive) assets. To fill this gap, we develop an empirical analysis of the low-carbon and carbon-intensive indices for the EU, US and global stock markets. We test if financial markets are pricing the Paris Agreement (PA) by decreasing (increasing) the systematic risk and increasing (decreasing) the portfolio weights of low-carbon (carbon-intensive) indices afterwards. We find that after the PA the correlation among low-carbon and carbon-intensive indices drops. The overall systematic risk for the low-carbon indices decreases consistently, while stock markets' reaction is mild for most of carbon-intensive indices. Moreover, the weight of the low-carbon indices within an optimal portfolio tends to increase after the PA. This evidence suggests that stock market investors have started to consider low-carbon assets as an appealing investment opportunity after the PA but have not penalized yet carbon-intensive assets

A Comparative Analysis of the Meat Sector in Hungary and Emilia-Romagna: Performance and Efficiency

In the last years, a lot of important changes occurred inside the European Union after the entering of 12 new member States. The rate of economic growth of the new member States has been higher the other EU members. In Hungary, particularly, the growth level has reached an intermediate position, placing itself at 4% GDP per capita. Comparative analysis are needed to better understand the process of catching-up and to evaluate how the integration between EU regions and countries is going on. The aim of this paper is to compare the economic and efficiency performance of firms in Hungary and Emilia-Romagna, considering a specific sector, meat processing and storage, of the food industry). We will investigate if in the last years the integration process has ultimately led to narrow the gap in the economic performances and efficiency of the firms. The choice of meat processing industry is due to the fact that in Hungary theres a remarkable animal production, whereas in the Emilia-Romagna region the meat industry reflects an organizational structure based on the concentration and specialization in agri-food districts. This paper compares the financial-economic performances and the technical efficiency of firms involved in the industry of meat processing in Hungary and in an Italian region, Emilia-Romagna. We will also discuss and compare the different results obtained throughout governance and structure of meat industry. We will underline the main role of the industrial districts in Emilia-Romagna, and how the Hungarian entrepreneurial system could handle the competition in the global market.Firms financial-economic performances, stochastic production function, agri-food districts, meat processing industry, Hungarian and Emilia-Romagna food industry, Livestock Production/Industries,

A financial macro-network approach to climate policy evaluation

Existing approaches to assess the economic impact of climate policies tend to overlook the financial sector and to focus only on direct effects of policies on the specific institutional sector they target, neglecting possible feedbacks between sectors, thus, underestimating the overall policy effect. To fill in this gap, we develop a methodology based on financial networks, which allows for analyzing the transmission throughout the economy of positive or negative shocks induced by the introduction of specific climate policies. We apply the methodology to empirical data of the Euro Area to identify the feedback loops between the financial sector and the real economy both through direct and indirect chains of financial exposures across multiple financial instruments. By focusing on climate policy-induced shocks that affect directly either the banking sector or non-financial firms, we analyze the reinforcing feedback loops that could amplify the effects of shocks on the financial sector and then cascade on the real economy. Our analysis helps to understand the conditions for virtuous or vicious cycles to arise in the climate-finance nexus and to provide a comprehensive assessment of the economic impact of climate policies