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Mid-Term Evaluation of NDP/CSF: Macro and Micro Evaluation The Economic and Social Research Institute www.esri.ie Introduction Medium-Term Prospects Micro-economic studies Macro-economic framework • Implications Horizontal Principles Supplementary Measures Evaluation Process Macro-Economic Background Potential Growth Rate • Infrastructural Deficit Inflation • Modelling Housing Market Changing Sectoral Structure Strategy Broadly Correct Microeconomics:Infrastructure International experience Model Impact of roads Model Impact of sanitary services Returns to roads • Low in 1980s • Very high 2000 Impacts on productivity Microeconomics: Human Capital Throughput of schemes Transforms from low to high skilled • Reduces supply of low skilled • Increases supply of skilled Participation effect Competitiveness effect Productivity effect Skilled Labour Supply S1L W S2L W1 D2L D1L L1 L2 L Unskilled Labour W W2 S2L S1L DL S=W D2L L2 L1 U L Returns to Education % premium on primary education only 100% 80% 60% 1987 1994 2000 40% 20% 0% Junior Leaving Diploma University Implications Returns on Investment • High at this point in time, c. 14% • Constraint on action – inflation Model of Housing market • Inflationary consequences of investment Medium-term sectoral prospects • Good – services, also high tech. • Poor – agriculture, fishing, tourism, building NDP Effects on GNP 8 7 6 4 3 2 1 20 10 20 08 20 06 20 04 20 02 0 20 00 % 5 Demand Only Total Investment Criteria Rely on Evaluations of OPs Market Failure? Priority and Timing • Inflation Management of Infrastructure • Getting the “best” out of it Competition – reveals information The Menu • Economists and spending money “Envelope” to 2006 Existing Huge Effort • Overall Unchanged “volume” to 2006 High Priority • Economic and Social Infrastructure Regional – Special Funding for NSS Human Resources • broadly unchanged priority Productive Sector • Reduced Priority la n Sp a l U K in d Ir , el 20 an 0 d, 1 20 G 10 er m an Fr y an D ce en m ar k Ir e ce ga re e rt u Po G Investment, share of GDP 2001 30 25 % 20 15 Public Investment, % of GDP Portugal Poland Netherlands United Kingdom Ireland 2002 France Finland Spain Denmark Germany Belgium 0 1 2 3 4 5 6 Examples Social housing • Constrained by inflation Sectoral Prospetcs • Agriculture, Fishing, Tourism, Building • Affects training, R&D Education and health Example - Broadband Where is the market failure? Regulatory Failure Possible Regional Issues Taking the horse to water Horizontal Issues Horizontal Principles • Social inclusion, environment, equality, rural development, regional balance, North-South Proofing? Purpose : • Sensitising policy makers • Policy Evaluation Better: • Targeted policy impact assessment Supplementary Measures Appropriate Pricing • Water • Waste • Tolling Management of Housing Market Planning PPPs Management Issues Management • under resourced Project Selection • No change without evaluation Evaluation Process Terms of reference • All human life is there Length of reports v readability • Best the enemy of the good Do more in house – less reliance on consultants Importance of independence Priorities & Lessons Roads Urban Public Transport Management of Infrastructure • Maximise Usage Appropriate pricing No change without evaluation