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Economic and environmental impact of the CSF: modelling growth and development in the EU periphery

he objective of the study was the design, construction, testing and application of an econometric modelling framework - HERMIN - for the relatively poor, peripheral countries of the EU. This has contributed to an improved assessment of the economic and environmental impact of national and EU policies implemented to promote growth in peripheral countries. The economic model investigates the growth mechanisms associated with public investment in infrastructure and human capital and identifies the possible outcomes of policy decisions in peripheral countries. It also makes an assessment of how these outcomes differ from each other, and how they differ from outcomes in central EU countries.

Three national models for Ireland, Spain and Portugal were developed using the HERMIN framework. These are small, open economy models separated into four sectrors; agriculture, manufacturing industry, market services and public services. The level of disaggregation was purposely kept to the very minimum needed to address structural change. This has the advantage of being "intellectually controllable", and facilitates cross-country comparisons. Data on the micro-economic benefits of infrastructural, human capital, environmental, competitiveness, and research and development policies were collected and incorpoorated into the model. The macro-economic consequences for peripheral countries is derived from the aggregation of this data.

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