Anna Soci

The state of the Project: an assessment

Aberdeen

May 12th/13th, 2008

In In termsterms of WPs….. of WPs…..

WP5: Meeting in Riga

Evaluation of results from our two (three) TERATERA models: CGE and NEG (and New-NEG)

i.e.

↓The evaluation of the degree of influence of territorial factors on the growth and development of enterprises in remote rural areas

TERRITORIAL FACTORS......TERRITORIAL FACTORS......(list of possible definitions)(list of possible definitions)(see MfD 7.1.1 and 7.1.2 on-line)(see MfD 7.1.1 and 7.1.2 on-line)

• a “factor of production”: a good or service used to produce output, e.g. land(s), labour(s), capital(s)

• a process: e.g. “agglomeration, location, specialization…”; vertical/horizontal integration; competition; innovation

• an “active cause” of an effect (on economic - or enterprise? - development)

• any characteristic of the region likely to affect (i.e. help to determine) economic devt.

• a process (see 2. above), a feature (e.g. result of a process), or a relationship?

TERRITORIAL FACTORS.....TERRITORIAL FACTORS.....(issues for discussion)(issues for discussion)

1: Restrict TFs to “actively causal” ones, or include “characteristics”, e.g. resources, physiography, population density, etc.?

2: Exclude policies (EU, national and local)?3: Are processes themselves “factors”?4: Exclude non-area-specific factors

(common to all or some other areas)?5: Timescale(s)? – some TFs may not be

changeable (in short/long run? by policy?)

The TASK for WP5The TASK for WP5

The main operative task was the choice of which “TFs” to look at:

Two supply-side “factors”: Change in the “internal” side of production Change in the “external” conditions of production One demand-side “factor” An “external factor”: EU policy (meaningful for

TERA)

More specifically…More specifically… in the CGE model in the CGE model

SUPPLY Change in the “internal” conditions of production Labour Change in the “external” conditions of production Infrastructure

DEMAND Tourism

POLICY Agricultural subsidies

More specifically: More specifically: in the NEG model in the NEG model

SUPPLY Change in the “internal” conditions of production Labour - internal migration (urban-rural) - external migration (from a third region) Change in the “external” conditions of production Infrastructure

In our NEG model….In our NEG model….

DEMANDNo demand-composition effect is possible (though some demand-effect is present through the change in the labour force)

POLICYNo policy action is possible (though the tax collection to build infrastructure IS a policy)

ComparisonComparison

Useful comparison between the two typologies of models as far as the supply side is concerned

This comparison should be done

(with the warnings specified in Deliverable 11)

What about the New-NEG model?What about the New-NEG model?

“In a nutshell”:

Trade integration has a positive impact on aggregate productivity through the selection of the best firms (Bernard et al., 2003; Melitz, 2003). The reason is a combination of import competition and export market access.Since international trade integration eliminates the least productive firms, average productivity grows through the reallocation of productive resources from less to more efficient producers.

The point for policyThe point for policy

There is a positive correlation between the export status of a firm and its productivity (the “exceptional exporter performance”, Bernard and Jensen, 1999), but the direction of causality is not clear.

This is a crucial issue for trade policy.

Causation going from export status to firm performance would reveal the existence of “learning by exporting” and therefore call for export promotion. The reverse causation in the form of “selection into export status” (firms that already perform better have a stronger propensity to export than other firms) would call for more specific firm-to-firm (sector to sector) industrial policy.

THUS….THUS….

We calibrated a model of endogenous productivity and costly trade between the study area and its trading partners.

We consider two alternative scenarios. - In the first counterfactual we simulate the increase in productivity steaming from a 5% trade costs reductions between the trading regions. This experiment aims at guiding regional policy makers in designing optimal integration policies. - The second counterfactual consists in an exogenous increase of the local population of the study area. Again, this simulation is meant to guide policy makers in the choice of the best local development strategy.

AGAIN:AGAIN:

SUPPLY Change in the “internal” conditions of production Labour (with no distinction between intra- and inter-regional migration)

Change in the “external” conditions of production Infrastructure

AGAIN:AGAIN:

Useful comparison between the results from this model and from the previous two typologies of models still on the supply side

Also this comparison should be done(with the warning that this is not a core-periphery type of model)

DELIVERABLES of WP5 (on-line)DELIVERABLES of WP5 (on-line)

5 DELIVERABLES• Deliverable No. 8: Application and results of

individual CGE analysis• Deliverable No. 9: Application and results of

CGE analysis (comparative analysis)• Deliverable No. 10: Application and results of

individual NEG analysis• Deliverable No. 11: Application and results of

NEG analysis (comparative analysis)• Additional Deliverable: Productivity and firm

selection: an application to regional trade within the TERA project

We are now under the …….We are now under the …….Objective 2

Assessing the extent to which current and recent EU, national and regional development policies, programmes and projects take account of these “territorial” factors.

We will compare the weight of these factors, as measured by our empirical results, with the effective relevance they have (if any) in the actual policies.

THUS….THUS….

From the previous slide, I expect we now - evaluate how strong - and robust – our results are ➔ i.e., we find out which “TFs” are relevant for our study-areas

- check whether current policies do or do not consider these “TFs”

Work in progressWork in progress

The second part of our task has been almost entirely anticipated.

In the RIGA meeting we had the individual presentations of the complete (i.e. at each level of governance) review of current policies.

WP6 is over.

WP6: Materials for WP6: Materials for Deliverables (on line)Deliverables (on line)

MfD6.1 - Latvian team’s .ppt presentation (in Archanes)

“First ideas on WP6: appraisal of current structural development policies"

MfD6.2 a) - Latvian team’s .ppt presentation (in Riga): “EU policy review”

MfD6.2 b) - Latvian team’s paper: “EU policy review”

MfD6.3 a) - Italian team’s .ppt presentation (in Riga): “National and study-area policy review”

MfD6.3 b) - Italian team’s paper: “Local development in the area of “Basso Ferrarese”: an overview”

MfD6.4 a) - Scottish team’s .ppt presentation (in Riga): “National and study-area policy review”MfD6.4 b) - Scottish team’s paper: “Review of structural development policies in East Highlands, Scotland”MfD6.5 a) - Finnish team’s .ppt presentation (in Riga): “National and study-area policy review”MfD6.5 b) - Finnish team’s paper: “Policy review, Finland”•MfD6.6 a) - Greek team’s .ppt presentation (in Riga):“National and study-area policy review”MfD6.6 b) - Greek team’s paper: “Review of structural development policies in Greece and Archanes”

MfD6.7 a) - Czech team’s .ppt presentation (in Riga):“National and study-area policy review”MfD6.7 b) - Czech team’s paper: “Outline of research paper on the relevance of structural policies in district Bruntal”MfD6.8 a) - Latvian team’s .ppt presentation (in Riga):“National and study-area policy review”MfD6.8 b) - Latvian team’s paper: “Country report: policy review”

DELIVERABLES of WP6 (1/2 on-line)DELIVERABLES of WP6 (1/2 on-line)

Relevance of Structural Development Policies

• Deliverable No. 12: Relevance of Structural Policies and Territorial Factors (Study-Area Specific) (done)

• Deliverable No. 13: Relevance of Structural Policies and Territorial Factors (Comparative Analysis) (done and on-line) 

Work in progressWork in progress

What we should do now is to check whether our results are taken into account by the policies reviewed in WP6.

Task for the Aberdeen meeting

Further work for the same taskFurther work for the same task

In order not to neglect the possibility that current policies are fully taking into account important “TFs” that WE DID NOT take into account, we decided to go on with the research leaving the choice of further steps to each partner.

(see MfD 7.2.2 on-line)

THUS… THUS… Possible additional analyses in WP7Possible additional analyses in WP7

Additional, region-specific quantitative analyses with CGE models with NO changes in the actual CGE model structures as such, but simulations with changes in the intensities of the applied shocks and/or combinations of shocks (e.g. reduction in agricultural subsidies and change in labour supply simultaneously) with changes: simulations with totally different shocks, or even slightly different structure of the CGE (e.g., closure rules)

Moreover….Moreover….

Additional, region-specific qualitative analyses (e.g. via additional region-specific information and knowledge acquired through well-targeted interviews of regional/local experts).

Special attention should be paid to causal relationships and interdependences (which are not explained by and/or not visible in the model results as such).

And here we are..And here we are..The Aberdeen meetingThe Aberdeen meeting

Partner No. 3 – who is leading the last WP7 – is expected to present a comparative comment on the first part of the job (the so called “minimum requirement”) The others – with the exception of Latvia, who decided to stop at the first stage – are expected to present the second stage of their research

A thorough discussion would then allow Partner No. 3 to be able to gather all the results and to reach the ultimate goal of the project, which is:

Objective 3 Objective 3

“The assessment of the extent to which current and recent EU, national and regional development policies, programmes and projects take account of these “territorial” factors would allow

to specify new policy interventions which can better promote the development of European remote rural areas.

GAND CONFERENCE

Activities Activities (see the PAR for the third year)(see the PAR for the third year)

Partners participated in the TERA meetings with contributed papers.

Some Deliverables are in progress to receive a peer review for the publication on academic journals.

CONFERENCECONFERENCE

• The medium-project Conference was successfully organized in Ferrara in October 2007

• Scholars went from abroad and actively contributed to the works of the Conference

• A large amount of materials from the Conference is on-line

Relationships and VisitsRelationships and Visits

• The exchange of information has been efficient and full collaboration among the partners has always been present

• The quality of the internal scientific debate was good and stimulating

• In the third year too some researchers went and visit other TERA teams. This activity will be duly recorded in the future PAR.

DisseminationDissemination

See future PUDK (as a part of PAR)See future PUDK (as a part of PAR)

MAIN TOOLS:

The TERA web-site www.dse.unibo/tera, which has been continuously modified, improved, and up-dated.

The TERA Working Paper series, which is ready and can be circulated

Media relationsMedia relations

a press release has been provided for each meeting

a press-survey has been obtained from articles published during the meetings (many articles have been published in local newspapers). The press-survey is available on the TERA web site

a press conference has been organized where possible

Printed mattersPrinted matters

Newsletters to promote scientific results and dissemination actions had been prepared. Two yearly Newsletters are already available on the web site

Flyers and programs for the meetings have been standardized, and the EU, FP6, and TERA logo were added everywhere

Printed matters (flyers, brochures, covers) and Presentation-supporting tools (templates, headed writing-paper) were provided to the Consortium for the dissemination activity

Steps forward Steps forward (*)(*)

ScientificFinalization of WP7Final Conference in GandDissemination

Organizational Reporting Activities