1 Demonstration of the capacity of a bi-regional CGE model to assess impacts of the Rural Development Policy measures IPTS/SUSTAG University of Patras.

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1 Demonstration of the capacity of a bi-regional CGE model to assess impacts of the Rural Development Policy measures IPTS/SUSTAG University of Patras University of Patras

2 26/11/2008Demonstration workshop on a bi-regional CGE approach - SummaryAGENDATimeSubject/presentationPresenter 9:30 Opening and introduction of participants Tomas Ratinger (IPTS) 9:40 Introduction of the background of the workshop, Tomas Ratinger 10:00 Introduction to the bi-regional CGE model Dimitrios Psaltopoulos (U Patras) 10:25 Introduction to the Czech and Greek case study regions and their reflection in the model structure Eudokia Balamou (U Patras) 10:50 Coffee break 11:05 Implementation of policy measures and policy scenarios Dimitrios Psaltopoulos 11:35 Presentation of results i) policy measure perspective ii) regional development perspective Eudokia Balamou/ Dimitrios Psaltopoulos 12;30Lunch 14:00-16:30 Discussion on the future development Chaired by Tomas Ratinger Summary of pros and cons of the demonstrated approach Necessary improvements to make the approach useful for policy Assumptions, robustness, sensitivity analysis Spatial aspects and data requirements Free discussion on future development of modelling instruments for the impact assessment of rural development policy measures (Axis 3)

3 Summary on the bi-regional modelling approach Tomas Ratinger IPTS/SUSTAG

4 26/11/2008Demonstration workshop on a bi-regional CGE approach - Summary Characteristics of the bi-regional model CGE – in generalCGE – in general –Microeconomic nature –Multisectoral links between CAP supported sectors and the rest of the local economy –Commodity and factor markets; CAP effects on employment, investment –Institutions: production sectors, households, government, rest of the world CAP effects on household income capturing a wide range of RD policy effects:capturing a wide range of RD policy effects: –short run (construction process, income transfer) –long-run effects of new business capacity (supply- or demand-driven) –secondary effects based on the migration, commuting and trade patterns of households. Rural-urban relationshipRural-urban relationship –distinction of rural and urban sectors, labour markets and households –commuting (links between labour markets) –(housing markets, transport and migration) Focussed on a region (a pair of rural and urban areas)Focussed on a region (a pair of rural and urban areas) –Link to the surrounding economy by RoW (loose)

5 26/11/2008Demonstration workshop on a bi-regional CGE approach - Summary Pros and cons ProsPros Capacity to analyse effects of CAP, a range of Pillar 2 measures, other policies (e.g. cohesion policy) and external factors (e.g. migration trends)Capacity to analyse effects of CAP, a range of Pillar 2 measures, other policies (e.g. cohesion policy) and external factors (e.g. migration trends) Standardised approach to capturing regional economy and implementation of policy instrumentsStandardised approach to capturing regional economy and implementation of policy instruments Cons Numerous hypotheses and subjective judgements in model specification –Some because of lack of data –Some because of a need of external analyses (not implicitly modelled) The black-box influence of model structure and specification of parameters (in scenarios) on results remains hidden

6 26/11/2008Demonstration workshop on a bi-regional CGE approach - Summary Pros and cons (cont.) ProsPros Standardised approach to capturing regional economy and implementation of policy instrumentsStandardised approach to capturing regional economy and implementation of policy instruments Explicit modelling of rural-urban relationshipExplicit modelling of rural-urban relationship Cons Currently built for 6 case study regions not equally defined (combinations of NUTS5 and NUTS4 regions) Need for additional information to be surveyed (not available statistics)

7 26/11/2008Demonstration workshop on a bi-regional CGE approach - SummaryIssues The current (TERA project) set of 6 model-case studies can be used to show impact of RDP measuresThe current (TERA project) set of 6 model-case studies can be used to show impact of RDP measures –Trustable if the economy is rather stable sensibility analysis needed Selection of case study regionsSelection of case study regions –Selection of urban centres and rural sites –Functional areas? The use of results for the EU-level policy makingThe use of results for the EU-level policy making –Linking the model to a typology Can the approach be extended to NUTS3 regional models with rural-urban breakdown?Can the approach be extended to NUTS3 regional models with rural-urban breakdown? –What will be gained and lost from the features

8 26/11/2008Demonstration workshop on a bi-regional CGE approach - SummaryIssues Implementation of instrumentsImplementation of instruments –Likely needs an additional analysis (e.g. DP – transfers to households and use in business operations) –Axis 1 (investment, human capital) and Axis 3 – need detail knowledge of potential projects (type of investment its composition and effect on production function, size, probability that agents apply/get the project) Midterm forecast – a baselineMidterm forecast – a baseline –To implement only CAP of the horizon year in the base year –To make projection of all regional trends and policies (might be too complex)