European cities and regional development
Major changes are under way in the European economies, some driven by policies to promote integration (the single market; the launch of the euro; and EU enlargement) and others by global economic factors. CE provides in-depth analysis of the implications of these changes for regions, cities and sectors across the EU27, Norway and Switzerland using a combination of econometric models and the intelligence gathered from a network of industry, country and regional experts.
The analysis makes extensive use of CE's European Regional Economic Model (EUREGM) which provides medium term forecasts of value added and employment for over 280 NUTS 2 regions of the EU27, Norway and Switzerland. Based on Eurostat's Regio database, data and forecasts for value added and employment are provided for 15 sectors including, wholesale & retail, hotels & restaurants, transport & communications, financial services and other market services, using the European System of Accounts 1995 (ESA95) classification. The historical database covers the period 1980-2006 (1990-2006 for new member states), rolling on each year as data comes available, with annual forecasts six year ahead.
The information is contained as part of the European Regional area of the Knowledge Base.
Tools and competence
CE has more than 15 years experience of European regional modelling since the European Regional Prospects annual series was first published by members of ERECO in 1991. From the beginning CE specialised in providing the modelling structure that underpins the regional analysis and developed the European Regional Economic Model (EUREGM). EUREGM has a medium-term focus and tries to capture a variety of factors that can lead to both regional convergence and divergence. Specifically CE offers:
- a long-standing reputation for regional and sectoral modelling
- the EUREGM model, which captures factors that influence regional development
- our experience in using EUREGM to analyse the implications of macroeconomic changes for regions, cities and sectors
- our knowledge and experience in studying regional convergence and divergence in Europe
Examples of our work
Analysis of the Main Factors of Regional
Growth: An in-depth study of the best and worst performing European
regions
European Commission (DG Regio)
In recent years, Governments across Europe have been adopting a more regional approach to economic policy. At the centre of this approach is the challenge of designing policies that are appropriate at the local level. To some degree, the regionalisation of economic policy is a recognition that regional disparities differ across. However, the determinants of growth at the regional level are hard to identify, making the design of effective policy difficult. However, the determinants of growth at the regional level are hard to identify, making the design of effective policy difficult. Many of the studies already in the field suffer from problems of poor data availability and the endogeneity of many explanatory variables – both of which make conducting empirically sound work difficult.This four-year study seeks to bring together the three aspects of policy, theory and observation to help deepen the understanding of how they link together and how those regions that have performed relatively poorly can improve and learn from those that have done relatively well.
Strategic Evaluation of Structural and Cohesion
Funds - Environment and Risk Prevention
European Commission (DG Regio)
European Council Regulations require a strategic evaluation of environmental investment priorities with respect to other EU and national investment priorities and the need for Structural and Cohesion Fund support in environmental projects. The core objectives of this study, led by GHK, were to identify and evaluate the need for investment in water supply; waste water management; municipal waste; generation of renewable energy; and natural risk prevention in the ten new member states, Greece, Spain and Portugal, and identify investment priorities for the Structural and Cohesion Funds for the 2007-2013 programming period.
CE's role in the study was to provide economic forecasts for each of the 15 member states to provide the basis for the assessment of capital investment needs for environmental projects. CE also provided modelling advice and guidance in examining the direct and indirect impact of environmental investment on national and regional economies through the expansion of environmental services and the improvement of environmental quality.
Impact of EU enlargement on growth and employment
in Germany and selected European countries
German Ministry of Economic Affairs
The project was commissioned to enable the German government to better anticipate the political and economic effects of allowing in-migration from the A8 countries from 2012. Post enlargement in May 2004, Germany opted, along with most other Member States, to continue with restrictions imposed on free movement of labour from the new members, a policy that will end in 2012. Three Member States (the UK, Ireland and Sweden) opted for an open-door policy that allowed complete freedom of entry. Along with the other partners, CE is took part in a critical evaluation of studies published following the 2004 enlargement and the open door policy to in-migration adopted by the UK government, and placed this within the contextual differences between the UK and German economies.
European Regional Competitiveness (EU 2003 Cohesion
Report)
European Commission (DG Regio)
This major project for DG Regio provided a chapter in the European Union's 2003 Cohesion Report, the EU's review of the state of European regional development, together with analysis to support other parts of the report. The work involved five main tasks. The first was a survey of the literature on regional competitiveness to help establish a framework for the analysis and identify and provide links between driving factors, policy instruments, and key indicators. The second task was to develop a time series databank with consistent and coherent indicators of regional development, covering all current member states at NUTS 2 level and many of the candidate countries at Level 2. Tasks 3 and 4 covered data and econometric analysis, respectively. The data analysis applied non-technical methods to present the data and draw associations between output and input indicators, while the econometric modelling was applied to test these conclusions more robustly. Task 5 comprised a series of case studies designed to capture the qualitative aspects of competitive factors, including for example institutional issues, for which numerical indicators could not be included in the time series database.
Competitiveness Report 2003
European Commission (DG Enterprise)
This project was undertaken in collaboration with the Wifo Institute in Vienna, and provided a chapter in DG Enterprise's annual series of reports on the state of European competitiveness. The work performed by Cambridge Econometrics examined regional competitiveness and involved three main tasks. The first was a survey of the literature on regional competitiveness to help establish a framework for the analysis. Tasks 2 covered the application of non-technical methods to present the data and draw associations between output and input indicators, while Task 3 (econometric modelling) was applied to test these conclusions more robustly.
East Midlands Tier 2 Targets - Construction of
a spreadsheet tool
East Midlands Development Agency
The project was undertaken for EMDA as part of its strategy review of regional targets, in particular the aim to become a top-20 EU region by 2010 in terms of GDP per capita. A spreadsheet tool was developed to identify the 20th ranked EU region (in PPS terms) and then calculate the gap which the East Midlands had to close between the last available year of data and 2010. This was translated into a required rate of growth for the East Midlands economy if the aspirational target were to be achieved, given the forecasts available for NUTS 2 regions across western Europe from CE's European Regional Service. A similar calculation was then performed for GDP per hour worked.
Analysis of Regional Data on Gross Value Added
(GVA)
The European Commission (Eurostat)
This project contributed to one of the pillars of work being undertaken by Eurostat task forces. These address the consistency and comparability of regional measures across EU member states in regional GDP, population, unemployment and employment. The principal aim of the research was to explore evidence for systematic changes over time in the structure of regional GVA (ie the shares of the regions in national GVA). The work analysed structure at different levels in the hierarchy of Regio NUTS datasets, and their associated characteristics (eg urban/rural, fast/slow growing population). Univariate statistical models were used to assess the significance/existence of trends in the structural data. The results were presented to the annual meeting of the Regional Accounts Working Party in Luxembourg.
Model-Based Regional Indicators
Eurostat
This project developed and estimated model-based indicators to close information gaps in the field of regional statistics. The research had three stages. The first involved a review of the set of indicators proposed in an earlier report prepared for Eurostat (Economic accounts and statistical indicators at regional level, Report of the CEIES sub-committee on economic and monetary statistics on ‘Statistics for Regional Policy’) to establish their theoretical and statistical characteristics. The second stage involved the selection of a sub-set of these indicators based on the theoretical characteristics of the indicator, the existing state of the data and the feasibility of model-based estimation. The third stage involved the development of models for estimation where data are missing, and the demonstration of the feasibility of such methods through practical applications.
Urban Audit
The European Commission, DG Regional Policy
This project defined and established a substantial database to compare the quality of life in European cities. The project was led by Cambridge Econometrics on behalf of ERECO, the network of European economic research organisations, and the ‘core team’ also included ECOTEC, the European Institute for Urban Affairs at Liverpool John Moores University, BoraKasi in Barcelona and EUROCITIES. The project involved the collection of data by a network of national correspondents working closely with relevant city authorities and organisations. A pilot series of transparent indicators relating to four distinct themes (competitiveness, cohesion, sustainability and participation) was established for some 58 co-operating European cities, their wider territorial areas and for areas within these cities. The project delivered a practical presentational tool capable of being used by city authorities to compare their performance with other cities and over time. It also allows cities to be ranked on a number of indicators so as to inform policy discussions. The project outputs were a yearbook and a public forum website ready to be operated by the Commission. The system was designed to allow new cities to be added easily and to enable data on existing cities to be readily updated. The project included a substantial GIS component delivered by CE to present the data in an effective manner.
European Regional Competitiveness Indicators
The European Commission, DG XVI
This project established a set of economic indicators currently available for the NUTS 2 regions of the EU and tested their ability to explain observed differences in growth in per capita incomes among the regions. The analysis distinguished indicators that might be influenced by regional policy (eg infrastructure, education and health) from those over which policy has less influence (eg industrial structure, peripherality, R&D activity). Econometric analysis was used to test the relationship between the values of the various indicators and the actual growth experience of the regions. Finally, the scale of the influence of the various factors was shown by undertaking ‘what if’ scenarios in which a given indicator was set to the European average value for each region (eg ‘what if Scotland were less peripheral than it actually is?’). The results formed an input into DG XVI’s Sixth Periodic Report.
Regional Stabilisation in Monetary Unions
The European Commission, DG II
Emu will deprive participating countries of the nominal exchange rate as a tool for adjusting to asymmetric shocks. Studies of the US experience have found that labour mobility is the main adjustment mechanism there. However, US experience may be a misleading predictor for what will happen under Emu, because labour mobility is probably higher than in western Europe. Countries participating in Emu will be separated by language, cultural and, for some time yet, institutional barriers. The study focused on the experience of countries such as Belgium and Canada where cultural and language barriers limit potential labour migration. The UK experience was also studied and used as a benchmark for comparison. Econometric techniques were used to identify temporary and permanent region-specific and industry-specific shocks and the mechanism of adjustment of the regional economies to those shocks. VARs were estimated and generalised impulse-response analysis applied to output, employment, wages and demographic time series. The implications of the results for future fiscal and monetary policies under Emu were identified.
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