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Periodic Report Summary 1 - I-C-EU (Impact of Transport Infrastructure on International Competitiveness of Europe)

Project Context and Objectives:

European Union has just turned a new page with the commencement of the Europe 2020 Strategy (COM(2010) 2020). Replacing the previous Lisbon Strategy (2000 – 2010), the transition process between the two strategy plans happens exactly in the time when Europe is undergoing its hardest economic crisis since its formation. The objective of getting out of the crisis together with the urgent need to remains performance in the context of fiercer world economic competition especially against the new emerging economies has made Europe’s competitiveness and economic performance fundamental issues.

In line with The Europe 2020 Strategy’s flagship initiatives, White Paper 2011 (COM(2011) 144 final) has summarized the main objective of European transport strategy which is to help establish a system that underpins European economic progress, enhances competitiveness and offers high quality mobility services while using resources more efficiently.

Given the above challenges and strategy setting, it is obvious that stronger role and bigger contribution of the transport sector in the improvement of European economic growth and competitiveness are expected. In consequence it is also essential first to clarify the relationship between transport sector and economic growth and competitiveness and second to elaborate a working framework so that transport policy intervention can effectively improve European economic growth and competitiveness.

I-C-EU is a 2-year European Commission FP7 project that clarifies the relationship between investments in transport infrastructure on economic growth and competitiveness. The project consortium works are based on the exploration of the state-of-the-art of the theoretical methodology of the assessment tools, the analysis of the current situation of European economic and competitiveness as well as its present and future challenges and taking into account current European strategy being set to improve its economic performance and competitiveness. Using this triad of concept will later allow I-C-EU to provide recommendations to the European Commission on making political intervention in order to enhance competitiveness of Europe externally, i.e. in relation to the rest of the world and internally, i.e. between its countries and regions.

Departing from this concept, the I-C-EU Project has four distinct, measurable, and verifiable main objectives:

1. to understand the relationship between transport infrastructure, competitiveness and growth. This refers to a broad field of study, with links to project evaluation, Cost Benefit Analysis (CBA) methodology, growth and productivity accounting, regional and transport economics as well as logistics and planning,
2. to contribute on developing a methodology to quantify the impacts of the different investments on transport infrastructure on competitiveness and economic growth,
3. to include these impacts in the assessment methodologies,
4. and to build some recommendations on assessing EU policy in respect of competitiveness and regional growth.

Project Results:

In this first reporting period that lasted from October 2012 to September 2013, the focus of the project was on the introduction of the project into the outside world and making a review on the assessment methodology used in evaluating the impacts of transport infrastructure investment in the competitiveness and economic growth.

In more detail our objectives in this period are:

• to understand the relationship between transport infrastructure, competitiveness and growth,
• to elaborate a sound basis of our contribution on the development of a methodology to quantify the impacts of the different investments on transport infrastructure on competitiveness and economic growth, and
• to prepare a framework in order to include the impacts on competitiveness and economic growth in the assessment methodologies and to build some recommendations on assessing EU policy in respect of competitiveness and regional growth.

We have two milestones in relation to the above objectives which have been reached through the findings and results in our submitted (and accepted) project deliverables. Those milestones (M) are Review of Assessment Methodology, Models and Indicators and EU Policy, Competitiveness and Economic Growth.

I-C-EU partners have joined in numerous dissemination events. We have participated and presented on numerous conferences, among others the International Transport Forum 2013 in Leipzig, Germany, European Transport Conference 2013 in Frankfurt, Germany, G.A.R.S. Workshop of IATA in Geneva, Switzerland and the Colloquium Vervoersplanologisch Speurwerk (Transport Planning Research) 2013 in Rotterdam, the Netherlands.

Main achievements of I-C-EU in this period are:

• sound definition of competitiveness as well as relationship between transport infrastructure, competitiveness and growth,
• determination of the role of competitiveness, regional growth and their indicators in the current literature/state-of-the-art,
• compilation of a set of data containing several representative assessment practice of transport investment infrastructure projects in Europe,
• determination of the place and degree of the effect of competitiveness and regional growth in transport and economic models, and
• sound basis of framework of methodological improvement and policy recommendation.

Potential Impact:

At the end of the project, three main different outputs or results are expected to be delivered:

• A synthesis of the relationship between transport infrastructure investment, competitiveness and economic growth.
• An improvement of the methodology used to assess the impacts of investment in transport infrastructures especially on competitiveness and economic growth.
• A synthesis of recommendations on assessing EU policy in transport infrastructure investment in respect of competitiveness and economic growth.

At this end of this first reporting period, we have fully realized the first output. However we will continue to work in elaborating this synthesis of the relationship towards perfection through the activities programmed in the second period. At this period of transition we are working on realizing the second results, i.e. methodological improvement while starting to analyse EU policy in order to make further recommendation.

At the end of the day I-C-EU will be a project that will significantly contribute towards a better understanding of the relationships between transport infrastructure, competitiveness and economic growth, and a better policy-making in particular for the comparison of policy interventions to promote the competitiveness of Europe.

Sounder underpinning of finance for infrastructural projects will be result of I-C-EU. More specifically, I-C-EU project results will be applicable especially in the area of transport infrastructure project assessment. So far practical guidelines to assess direct effects of transport infrastructure projects have been mainly written based on the conventional Cost-Benefit Analysis (CBA). Wider economic effects are more complex effects to be captured and consequently there are less applicable guidelines available.

I-C-EU is trying not only to explore the most advanced methodology to capture these effects, especially in term of economic growth and competitiveness, but also, one step further, to clarify how to capture those effects by improving the methodology.

Governmental institutions, European Commission, European Investment Bank (EIB), World Bank as well as private industrial sector, i.e. consultants applying CBA will benefit of the I-C-EU applicable results and findings. The inclusion of the private/industrial formal counterpart (section 2.3.3) is one method used in the project to assure the applicability of the results. Potential markets of I-C-EU are among others: TEN-T projects, large scale national projects with international component. Regional growth and international competitiveness will be assessed with more depth and has become even more important due to current economic crisis.

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