Study on the expected results of Cohesion Policy in Estonia, Lithuania and Latvia within the programming period 2014-2020 : final report

The overall scope of the study is to assess the expected impact of Cohesion Policy (CP) on the main sectors/policy areas in the Baltic States (Estonia, Lithuania and Latvia) during the programming period 2014-2020. This also involves a discussion on the CP contribution to the development of the Baltic States and to the achievement of key European priorities. CP investments under the following Operational Programmes (OPs) are analysed: Operational Programme for Cohesion Policy Funds 2014-2020 (Estonia); Operational Programme for the European Union Funds' Investments in 2014-2020 (Lithuania); Operational Programme Growth and Employment 2014-2020 (Latvia). Under these OPs, Estonia, Lithuania and Latvia will respectively receive around 3.5 billion EUR, 6.7 billion EUR and 4.4 billion EUR of EU funding. The object and the tasks of the study required a complex approach encompassing several analytical exercises. This involved detailed analyses of the OPs interventions specified by the objectives and indicators, financial allocations and the actions to be supported. The sectors/policy areas that the CP was envisaged to affect were examined in terms of EU and national policy objectives and factors external to the OPs, the main trends and overall public financial allocations. In respect of the CP, the impact assessments involved macroeconomic modelling and an assessment of the CP contribution based on the linkages between indicators, case studies and expert judgements. So called "context indicators" were used as the main indicators for the in-depth analysis of the main trends and the CP impact in the Baltic States. In total, the 20 indicators best capturing the main policy objectives and development of the sectors/policy areas were selected for this purpose. The main role in impact assessment terms was played by macroeconomic modelling. In order to carry out the CP impact evaluation, three new models were constructed (HLT16 for Lithuania; HEE16 for Estonia; and HLV16 for Latvia), and equations developed for each linking the context indicators to the relevant macroeconomic performance indicator. These models derived from and were extensions of the system of models previously used by DG-REGIO, namely the Cohesion System of HERMIN Models (CSHM) and experience of previous Lithuanian disaggregated modelling exercises. The specific modelling presumptions are the same for all three Baltic States. The impacts modelled differ between the three Baltic States because of the different values in respect of the CP expenditures and the different parameters and elasticities among economic variables, as revealed by the econometric analysis of the national accounts data. Another sophisticated exercise applied was the assessment of CP contribution to attaining the target values of OP result indicators. The CP contribution was assessed as being low, medium or high depending on the extent to which the output indicators' values achieved would contribute to the attainment of the target values of the result indicators.