Transcript Snapshots from the Irish border project Bose (Ireland)

Rethinking regional development strategy
in the context of Structural Funds:
Lessons from the Irish cross-border region
John Bradley and Michael Best
Presentation made at the
DIRECTORATE-GENERAL REGIONAL POLICY – EVALUATION NETWORK MEETING,
Brussels, 21 - 22 June 2012
Full paper available on: http://www.herminonline.net/
Early days of Cohesion Policy
macro impact evaluation
• 1988: Initial ex-ante macro impact evaluations of
Irish 1989-1993 Structural Fund programme
• 1992-1995: Application of macro techniques to
Greece, Portugal and Spain
• 1999-2004: Gradual extension to ex-ante
evaluations in candidate states
• 2004-2010: Cohesion System of HERMIN models
(CSHM) for all “Objective 1” states
• 2010-date: Extension of CSHM to all 27 (+1)
member states
Small regions need
different techniques
• The Ireland-Northern Ireland INTERREG project
focused on a small sub-region of the island
• National economy research:
Theory -> Data -> Empirical analysis -> Models
-> Policy impact analysis
• Small region research:
Theory: New, complex, untested, only suggestive
Data: Scarce, often not very relevant
Empirical analysis: Mainly cross-region panel studies
Implications for CP design and analysis
• CP mainly designed at the national level
• But CP programmes implemented at regional
level
• Macroeconomic analysis at national level
ignores spatial aspects
• Macro-type knowledge often not available at
the regional level
• But CP design and impact analysis needs
knowledge of the structure and performance of
the regional economy target
The two meanings of “macro”
• The macro view of any economy, national or
regional, takes into account all relevant aspects
(e.g., production, income generation,
expenditure, labour market, external
interactions, etc.) and their interactions
• Large Operational Programmes (OPs) and the
complete CP programme are referred to as
“macro policies” since they have
macroeconomic consequences for all aspects of
the target economy
The two meanings of “micro”
• Microeconomic analysis focuses on a specific
element of the economy (skill levels;
transport costs between location A and B;
social disadvantage in the labour market)
• Individual CP projects or small groups of
projects (measures) are often referred to as
“micro policies” (e.g., small scale policy
actions that can be assumed to have mainly
specific, localised impacts)
Macro and micro impact analysis
in practice
• It is essential to be aware of where micro
impact analysis and macro impact analysis
overlap
• The overlap challenge is illustrated by two
recent ex-post studies
a. M1 motorway project in Ireland
b. International transhipment port of Gioia Tauro in
Southern Italy
The Irish M1 motorway project
The M1 motorway: wider context
The impact analysis challenge: M1
• The M1 motorway was only one element of a
national network of motorways, inside and
outside the island of Ireland
• The wider network benefits dwarfed benefits
specific to the M1 “catchment” area
• CBA technique was unable to quantify
network benefits
• Wider macroeconomic benefits were
understated
The Gioia Tauro transhipment port:
Regional context
The impact analysis challenge: Gioia Tauro
• Micro analysis and CBA techniques pointed to a
low rate of return on the investment
• An expected spin-off from Gioia Tauro was
development in the regional hinterland of the
port
• This never happened. Why?
• Answer needed a deeper microeconomic as well
as macro-structural analysis of the regional
economy, which was missing from the project
design and evaluation
What to do???
Regional Development Strategy Frameworks
• Macroeconomic analysis is often possible at a
regional level, but requires considerable effort to
make maximum use of available data. Good data
permit development of regional models (Polish NUTS2 regions), but formal modelling usually impossible
• Business strategy frameworks should also be used to
understand the region’s enterprise sector (e.g., Porter,
Best)
• Narrative analysis can also generate insights about
the regional economy (e.g., Jane Jacobs)
A good example of “narrative”
regional economic research
The historical context of the Irish
border region economy
• Island was part of the UK between 1801-1922 (like Scotland and
Wales), integrated into British economy
• Famine of 1847-50 depopulated rural areas. Population of island
two million less than in 1845!
• Second industrial revolution only benefited Belfast agglomeration
(Titanic!); rest of island rural
• Industrial decline and civil unrest in Northern Ireland (1968-1998)
• South (Ireland) industrialised first through import substitution
(1932-1960) and then through export orientation (FDI, as in
Flanders)
• Border region was “bypassed” and decoupled from rest of island
economy; towns isolated from their natural hinterlands
• But tradition of manufacturing in the border region endures, as
case studies showed
Research by walking about
• Officially published regional data tends to be
patchy or not available
• Commercial databases can sometimes be
used (e.g., FAME for many EU states)
• Targeted visits to selected enterprises and
regional organisations can fill in gaps
• But you need to know what you are looking
for! Strategy frameworks act as a guide
The Irish border counties
Snapshots from the Irish border project
• Clothing: Hunter Apparel Solutions, Derry, NI
• Food Processing: Castlecool, Co Monaghan,
Ireland
• Metal Fabrication: Walter Watson Ltd ,
Castlewellan, Co Down, NI
• Electronics: Bose (Ireland), Co Monaghan,
Ireland
Hunters: Hi-tech uniforms
Snapshots from the Irish border project
Hunter Apparel Solutions, Derry, NI
The insights arising from Hunter’s related mainly to the
question of how a firm in a very traditional manufacturing
sector (clothing) can transform itself and survive in a
declining sector and a de-industrialising region. When we
visited the Derry region and spoke to people in local
government and NGOs, there was a tendency to regard
this sector as a lost cause and to want to move on to
high-tech sectors that appeared to offer more promise.
Hunter Apparel Solutions showed us how short-sighted
and flawed this view was.
Castlecool: Food processing logistics
Snapshots from the Irish border project
Castlecool, Castleblayney, Co Monaghan, Ireland
The insights arising from our discussions with Castlecool
related to the complex storage and supply logistic
systems that are essential in supporting the growth of
high added value food manufacturing, much of which is
located in the cross-border area. They also illustrated
how firms that take the island market seriously see the
cross-border region as an important strategic location for
supplying the large population centres, North and South.
Walter Watson: Metal fabrication
Snapshots from the Irish border project
Walter Watson Ltd , Castlewellan, Co Down, NI
Our discussions with Walter Watson gave valuable
insights into how a sophisticated, modern firm
engaged in the production of a range of complex
metal products could evolve in a rural area near the
border and thrive in highly competitive domestic
and export markets. It also illustrated how a firm
can start by manufacturing simple products
destined for local markets, but can grow to become
a large and sophisticated exporter.
Bose Ireland: A lost opportunity for
the traditional furniture sector?
Snapshots from the Irish border project
Bose (Ireland), Carrickmacross, Co Monaghan, Ireland
Our discussions with Bose in Ireland, gave us an example of an
extraordinarily sophisticated, foreign-owned firm that located
in the border region in 1978, originally hoping to source some
of its supply chain locally (i.e. production of wooden cabinets
for the Bose top-of-the-range audio equipment), failed to find
suitable suppliers and then put in place its own supply facility.
It also illustrated how the valuable experience of a firm like
Bose was largely ignored by the existing furniture sector in the
area, which has suffered a catastrophic decline in recent
years.
Towards more integrated policy
design and analysis
• Micro and macro perspectives are needed in
CP design and impact evaluation
• Over the years the two approaches have
drifted apart and do not communicate with
each other
• An integrating approach is needed, and is
illustrated in the following table
What did we learn?
• Micro and macro analysis of CP design and impacts
needs to be carried out in a more integrated way
• Cohesion Policy works better when micro and macro
perspectives are in harmony
• Gaps in macro research can only be addressed by
better formalised micro research (like M1 and Gioia
Tauro studies)
• Only improved macro analysis can provide the correct
economic context for big individual projects like M1
and Gioia Tauro
• Micro and macro are not competing analytical
perspectives, but are essential complements