Leaders and outliers in the race of regions - EU Cohesion Policy in Poland in the light of macroeconomic modelling

Since Poland has benefited from cohesion policy since accession to the EU in 2004, and is currently the largest national beneficiary of EU cohesion policy expenditure in the financial perspective 2007-2013, analysis of the impact of the EU funds in this country seems to be an important part of the overall evaluation of this policy. The outcome is especially interesting at the beginning of the debate on the future of EU cohesion policy the results of which will certainly have an effect on the development of many regions in the EU. In our analysis we concentrate on the three Polish NUTS-2 regions: Mazowieckie- capital region with the overwhelming economic supremacy, Dolnośląskie- one of the leading Polish regions, Świętokrzyskie – representative of the regions lagging behind the Poland’s average in terms of socio-economic development. The main aim of this paper is not simply to compare and contrast the impacts of EU cohesion policy on the above mentioned regions, but also to confront them with the theoretical expectations. The analysis is carried out using such macroeconomic indicators as GDP per capita, employment, labour productivity and it focuses on the period 2004-2020 in order to capture both short- and long-term effects of the EU intervention. Our research draws on the regional HERMIN macroeconomic models of Mazowieckie (HPL5MZ), Dolnośląskie (HPL5DL) and Świętokrzyskie (HPL5SW) which are regionalised versions of the Polish national HERMIN macroeconomic model (HPL5)- part of the Cohesion System of HERMIN Models (CSHM) used by the European Commission. The results of our analysis point to the role of EU cohesion policy in the process of socio-economic convergence both at the national and European level. However, they are presented from a perspective of the three Polish regions characterized by the different levels of socio-economic development in order to show how EU funds affect economic leaders and outliers of the country. On the basis of the conducted analysis several conclusions are drawn with regard to macroeconomic modelling at the regional level which might be used to improve robustness and credibility of the evaluation of EU cohesion policy.

Macroeconomic Modelling of Regional Economies: A Useful Tool or a Mere Intellectual Game?

Głównym celem artykułu jest próba odpowiedzi na pytanie o zasadność stosowania modelowania makroekonomicznego gospodarek regionalnych zarówno jako narzędzia analizy kontrfaktualnej wpływu interwencji finansowych, jak też jako metody prognozowania wskaźników społeczno-gospodarczych. Zawarty w artykule wywód koncentruje się na wynikach uzyskanych przy użyciu regionalnych modeli Hermin. Po odniesieniu ich w sposób krytyczny do rezultatów innych symulacji makroekonomicznych została sformułowana konkluzja , iż uzasadnione jest konstruowania relatywnie prostych i odpornych na zakłócenia modeli ekonometrycznych gospodarek regionalnych, a do ich aplikacyjnych zastosowań niezbędna jest dogłębna znajomość empiryczna funkcjonowania modelowanej gospodarki i regionu.The aim of the paper is to assess the validity of application of macroeconomic modelling at the regional level - both as a tool of counterfactual impact analysis of financial intervention and of a forecast method of socio-economic trends. The reasoning is based on the results of the regional HERMIN models contrasted critically with other macroeconomic simulations on the regional level. The author concludes that it is justified to construct relatively simple and robust econometric models of regional economies, and that, for their application, it is necessary to have in-depth empirical knowledge of the regional economy under consideration

Macroeconomical effects of the implementation of the national development plan 2004–2006

The article describes the forecasts for the 2004-2006 National Development Plan implementation on the performance of Poland's economy up to 2010. The estimations are based on the Polish version of HERMIN model. Several development paths for Poland are predicted upon varying assumptions on the ability to absorb the EU assistance, and varying efficiency of use of those funds. In general, it is demonstrated that Poland's accession to EU will bring a significant economic improvement by increasing GDP growth rate and depressing unemployment rate

Socioeconomic Development Programs for Macroregions

The article focuses on a new approach to socioeconomic development in Poland and the European Union. Special macroregional programs have been adopted for the 2007-2013 period in the EU in connection with the bloc’s territorial cohesion policy. A total of 13 macroregions have been identified, including two covering Poland-the Baltic Sea region and Central and Eastern Europe. The methodology used in the article is based on an analysis of both Polish and EU documents, the authors say. On this basis, Szlachta and Zaleski identified the problems that need to be resolved to take full advantage of the potential of socioeconomic programs in Poland and the EU as a whole. After 2013, the macroregions are expected to play a greater role in the European cohesion policy. Since the local government reform in Poland on Jan. 1, 1999 and the country’s entry to the European Union on May 1, 2004, socioeconomic development has been pursued in Poland not only at the national but also at the provincial level. This model, however, has not made it possible to effectively deal with supra-provincial and interregional problems, according to the authors. A pioneering project for the 2007-2013 period is a Strategy for the Socioeconomic Development of Eastern Poland Through 2020, which covers the five poorest provinces in the country, Lubelskie, Podkarpackie, Podlaskie, Świętokrzyskie, and Warmińsko-Mazurskie. The strategy became the basis for a special European Union operational program for eastern Poland for the 2007-2013 period. In the article, Szlachta and Zaleski discuss experiences and conclusions resulting from this projectin the context of the conditions shaping regional policy in Poland and across the European Union. These conditions have changed substantially in recent years, according to the authors. In 2010, local governments in five Polish provinces, Dolnośląskie, Lubuskie, Opolskie, Wielkopolskie, and Zachodniopomorskie, decided to start working on a strategy for western Poland. At the same time, the Polish Ministry of Regional Development, in cooperation with local governments in the eastern provinces, launched work to update the strategy for eastern Poland. In the final section of the article, the authors discuss the ways in such programs could be used to stimulate Poland’s socioeconomic development

Territorial Cohesion and Its Impact on the Structural Policy of the European Union

Expenditure on structural policy is the second largest item in the European Union’s budget. Structural funds and the cohesion fund are intended for the bloc’s poorest countries and regions, and their aim is to increase the cohesion of the entire community. Under the EU reform treaty, the traditional model of economic and social cohesion would be expanded to include a third dimension-territorial cohesion. The authors analyze the implications of the introduction of territorial cohesion to European structural policy. They evaluate EU program documents and research in this area. Szlachta and Zaleski set out to explain why the territorial dimension of European structural policy is important to Poland and why European cohesion policy should be modified after 2013. The paper describes the theoretical foundations of European structural policy, paying special attention to the role of regional factors for community-level intervention and the course of convergence processes. Against this background, the authors describe the EU’s regional policy and its territorial dimension over the past 20 years. The paper also discusses the most important conclusions from a public debate on territorial issues in Europe, and mentions issues such as the EU Green Paper on territorial cohesion and its importance for reforming the EU’s structural policy after 2013

Poland’s Regional Policy Agenda Until 2020

The paper discusses the evolution of regional policy in Poland from 1990 to 2010 and examines guidelines for modifying this policy in 2010-2020. Poland’s entry to the European Union in 2004 and European cohesion policy have had a substantial impact on regional policy in Poland. In recent years new important theoretical inspirations have appeared for regional policymakers, including new economic geography and the economics of location. International organizations such as the OECD, the World Bank and the EU are formulating proposals for a major modification of regional policy in the world. The research method is based on a benchmarking analysis and qualitative assessment of program documents. The results obtained by the researchers point to a shortage of theoretical foundations and the growing importance of regional policy to Poland’s socioeconomic development. Szlachta and Zaleski identify various risks connected with the implementation of a modern regional policy in Poland and formulate a set of questions about the theory of regional policymaking. In the first part of the paper, the authors discuss the experience of regional development programming in Poland since 1990. The next part focuses on the financial and institutional dilemmas of regional policymaking in Poland in the coming years. Later on the authors propose benchmarks for a National Regional Development Strategy until 2020. The paper ends with the formulation of key conclusions, recommendations and questions about the theory of regional policymaking

Assessment of the Impact of the National Development Plan 2004-2006 on the Economy by Means of the HERMIN Model

Poland’s potential accession to the European Union has necessitated a preparation and presentation to the European Commission of the National Development Plan (NDP) 2004-2006 - the primary document programming the use of structural funds in Poland within the framework of implementation of the EU cohesion policy. Presentation of ex-ante assessment of the macroeconomic effect of NDP realisation on the economy is an integral part of the programming document. For this reason, a Polish implementation of the macroeconomic HERMIN model has been developed. This model was, for the mentioned purposes, applied to European Union areas subject to the cohesion policy, i.e. to Ireland, Portugal, Spain, Greece and to eastern Lands (Lander) of Germany. At present, it has also been prepared for application to the candidate countries, such as the Czech Republic, Latvia, Estonia or Slovenia. The study briefly characterises the theoretical foundations of the HERMIN model and its Polish implementation to the ex-ante assessment of the impact of Poland’s National Development Plan (NDP) 2004-2006 realization on the Polish economy. Consequently, analyses of financial transfers associated with NDP realisation were carried out, taking into account both their breakdown into specific years of the 2004-2009 period, and their breakdown into three major categories: investment in infrastructure, investment in human capital and support for enterprise development. On this basis, simulations for the period up to 2010 were made for two alternative scenarios: the first - assuming Poland’s accession to the EU on 1 May 2004 and implementation of the NDP 2004-2006 and, the second - assuming Poland’s staying outside the EU structure and no implementation of the NDP. The results have been presented as a differential between these two scenarios for such parameters as: GDP growth, unemployment level, production and productivity in the analysed sectors of the economy, i.e. manufacturing, services, agriculture and the public sector, the public sector deficit, consumption, prices and wages. The results are shown as an effect caused exclusively by the EU structural funds, and jointly by the EU funds and Polish public funds within the NDP 2004-2006. Additionally, results of simulations are presented for continued EU support in the years 2007-2013 in the form of another NDP with an annual average support level of 2% and 2.5% of GDP. The results of simulation have been supplemented with an analysis of sensitivity to deviation from the adopted assumptions. At the same time, the study indicates directions for further efforts towards the model’s improvement and its extension into the economies of particular regions of Poland as instruments for analysing the problems involved with regional development, which have to be solved with support o EU Structural Funds, as well as national cofinancing of the public and private sectors