enlargement and local development: the role of structural funds and international financial...
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Enlargement and local development: the role of Structural Funds and International Financial Institutions Daniel Gros (CEPS) Convegno Unicredito Roma, July 9 2004. Structural Funds or the need for large public investment?. What level of infrastructure endowment is needed for catch-up growth? - PowerPoint PPT PresentationTRANSCRIPT
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Enlargement and local development: the role of Structural Funds and
International Financial Institutions
Daniel Gros (CEPS)
Convegno UnicreditoRoma, July 9 2004
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Structural Funds or the need for large public investment?
• What level of infrastructure endowment is needed for catch-up growth?
• Level of present EU-15 would seem excessive.
• Economic approach look at empirical link between level of GDP and infrastructure.
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Regression Results
GNP per capita PPP CEE8 SEE CIS ASEAN R2
Paved road network (% of all roads) (a)
1.20**** (12.9)
1.50*** (2.8)
1.21**** (9.5)
1.57**** (8.5)
0.44 (0.9) 0.80
Rail network (km per surface area) (a) 0.71****
(11.3) 1.42****
(11.4) 1.34****
(11.4) 1.08****
(4.8)
-0.97****
(-2.8) 0.73
Source: own calculations. All variables are in logarithm. All standard errors are corrected heteroskedasticity-consistent. The symbols: *, **, ***, **** indicate coefficients that are significant at the 10%, 5%, 1% and 0.1% level, respectively. (a) Additional explanatory variable: population density, 118 observations. 1999 data.
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Infrastructure needs: a second approach
• Alternative method: • Look at utilization rate of existing
infrastructure.• For example, road and railway usage.
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Idle capacity on rails and roads?
Freight (in TKM) per km
railway line Passenger cars per km
road EU-15 average 8.5 53.6 Czech Republic 4.1 27.1 Estonia 2.8 9.2 Hungary 2.5 10.9 Latvia 2.1 7.2 Poland 3.2 24.4
Source: own calculations based on data from New Cronos.
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What is being spent in reality?
• The new member states spend only a bit more than the “old” EU-15.
• Revealed preference? Shows that need can be covered without the need for large flows of funds from the EU?
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Share of gross fixed capital formation by general government in GDP
New members: 2003 data Old members: 1990 data Czech Republic 4.2 Portugal 3.3 Estonia 4.7 Greece 2.7 Hungary 3.1 Spain 3.7 Poland 3.5 Ireland 2.1 Source: Commission, DG ECFIN, Statistical Annex, Spring Forecast, 2004.
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Concluding remarks
• Need for (hard) infrastructure often over-estimated.
• What to do with Structural Funds?