Econometric Models for Analysing the Structural Funds Absorption at Regional Level – Case Study SW Region [305936]

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Claudiu Tiberiu ALBULESCU

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[anonimizat] 161

Oana GHERGHINESCU Paul RINDERU

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[anonimizat]- struments are absorbed and to analyse this process. After a [anonimizat]- [anonimizat]- [anonimizat]/Union before 2007. [anonimizat]- [anonimizat]- grammes and by realizing a [anonimizat]. [anonimizat]-

[anonimizat] *

Paul RINDERU **

Key Words:

[anonimizat], NUTS2,

regional development.

veloped and applied for realising this analysis at the level of NUTS2 [anonimizat]. [anonimizat].

JEL Classification: R15, R58, G28.

Introduction

The European Union has a strategy to reduce disparities between the regions of Europe. This is called the Cohesion policy and it uses as instruments for its implementation the so called Structural Funds. The implementation of the funds will cover 7 years from beginning 2007 to the end 2013, which is called the programming period.

The Structural Funds constitute the most important financial instrument at EU level for social and economical development from 2007 to 2013. In many European regions they represent the most important source of public funding. The Structural Funds constitute over 35% of EU budget and 43 billion euros annually.

[anonimizat] (those regions under 75% of the EU GDP average). [anonimizat], regional and local. Therefore, the recently approved regulations can be a major driver for a change in European societies (Howells, 1999 and Petrakos, 2000).

The Structural Funds are managed through a de-centra- lised system. This means that once the agreement on the financial allocation and the type of activities to be funded is signed between the European Commission and the Go- vernments of the EU Member States, the national authori- ties have much freedom in the management of the Funds. In Romania the structural funds interventions are realised via seven operational programmes, as described here below.

* Lecturer PhD, University of Craiova, Faculty of Economics and Business Administration, Craiova, Romania

** Professor PhD, University of Craiova, Faculty of Economics and Business Administration, Craiova, Romania

Operational Programmes Architecture

The Regional Operational Programme (ROP)

The Regional Operational Programme is one of the Romanian operational programmes agreed with the European Union and a very important tool for implementing the national strategy and the regional development policies. It is applicable to all eight development regions of Romania.

The legal basis is represented by Commission Regulation no. 1828/2006 setting out rules for the implementation of Council Regulation no. 1083/2006 and of Council and European Parliament Regulation no. 1080/2006, the Council Regulation no. 2988/95 on the protection of the European Communities’ financial interests.

The Regional Operational Programme in Romania is financed by one of the structural funds of the European Union – the European Regional Development Fund (ERDF). This fund supports EU regions with a GDP per capita below 75% of the European average.

The total budget allocated to the ROP is approximately 4.4 billion euros in the first 7 years after accession (2007- 2013). EU funding represents approximately 84% of the ROP budget. The rest comes from national funds, public co-financing (14%) and private co-financing (2%).

The strategic objective of the ROP in coherence with the above mentioned is defined as follows: The ROP strategic objective consists in supporting the economic, social, territorially balanced and sustainable development of the Romanian Regions, according to their specific needs and resources, focusing on urban growth poles, improving the business environment and basic infrastructure, in order to make the Romanian Regions, especially the ones lagging behind, more attractive places to live, visit, invest in and work.

In order to accomplish the strategic objective of ROP, the following specific objectives have been established:

To increase the economic and social role of urban centers, adopting a polycentric approach, in order to stimulate a more balanced development of regions

To increase accessibility within regions and in particular the accessibility of urban centres and their connection to surrounding areas;

To increase the quality of social infrastructure of regions;

To increase the competitiveness of regions as business locations;

To increase the contribution of tourism to the development of regions.

It is expected that the implementation of this programme will create better conditions for the economic and social balanced territorial development of all Romanian Regions and for urban growth poles able to spread the development.

The balanced development of all country’s Regions will be achieved through an integrated approach, based on a combination of public investments in the local infrastructure, active policies to stimulate business activities and support for the valorization of the local resources, by the following priority axes:

Support to sustainable development of urban growth poles;

Improvement of regional and local transport infrastructure;

Improvement of social infrastructure;

Strengthening the regional and local business environment;

Sustainable development and promotion of tourism;

Technical assistance.

The Sectorial Operational Programme Increasing Economic Competitiveness (SOP IEC)

The Sectorial Operational Programme Increasing Economic Competitiveness was elaborated taking into account the Community provisions in this field, according to the Council Regulation (EC) No. 1083/2006 laying down general provisions on the European Regional Development Fund, the European Social Fund and the Cohesion Fund, the Regulation (EC) No. 1081/2006 of the European Parliament and of the Council on the European Social Fund, the Commission Regulation No. 1828/2006 setting out rules for the implementation of Council Regulation (EC) No. 1083/2006 laying down general provisions on the European Regional Development Fund, the European Social Fund and the Cohesion Fund, ERDF Regulation 1080/2006, Cohesion Fund Regulation 1084/2006, EUROPEAN Grouping of Territorial Cooperation 1082/2006.

The SOP IEC is one of the seven instruments (Operational Programmes – OPs), under the Convergence objective, for achieving the priorities of the National Strategic Reference Framework (NSRF) derived from the National Development Plan 2007 – 2013 (NDP), which aims to strengthen the strategic focus of the Economic and Social Cohesion policies across Romania, and to make the correct and appropriate linkages to the European policies and the Lisbon Strategy for growth and job creation.

The general objective of SOP is the increase of Romanian companies’ productivity, in compliance with the principle of sustainable development, and reducing the disparities compared to the average productivity of EU. The target is

an average annual growth of GDP per employed person by about 5.5%. This will allow Romania to reach approx. 55% of the EU average productivity by 2015.

The specific objectives are:

Consolidation and environment-friendly development of the Romanian productive sector

Establishment of a favourable environment for sustainable enterprises’ development

Increase of the R&D capacity, stimulation of the cooperation between RDI institutions and enterprises, and increase of enterprises’ access to RDI

Valorisation of the ICT potential and its application in the public (administration) and private sector (enterprises, citizens)

Increased energy efficiency and sustainable development of the energy sector.

Taking into account both the identified possibilities for improvement of the competitive position of Romanian enterprises to cope with the challenge and to be able to use the opportunities arising from operating on the European Single Market and the areas eligible for the ERDF support, the following Priority axes have been identified in the SOP IEC:

Priority Axis 1: An innovative and eco-efficient productive system

Priority Axis 2: Research, Technological Development and Innovation for competitiveness

Priority Axis 3: ICT for private and public sectors

Priority Axis 4: Increasing energy efficiency and security of supply, in the context of combating climate change

Priority Axis 5: Technical Assistance

Technical Assistance (TA) will assist in the implementation and monitoring of the programme. The priority axes of SOP IEC are in full compliance with the lines of action of the Commission’s proposal regarding the framework for Competitiveness and Innovation 2007-2013, and take into account the guidelines put forward by the EU Council for the cohesion policy for 2007-2013.

The ERDF contribution to SOP IEC budget for the 2007- 2013 programming period is 2,554 million Euro, which represents 13.3% of the Community contribution to the NSRF.

The basic idea of the present model, due to the lack of consistent time-series for the structural funds absorption process, is to use a specific model with a mix input. This mix input takes into consideration data related to the pre- accession period and to the first monitoring exercise of structural funds absorption. Under this approach the time interval for the combined process raises from 3 to 10 years.

The Sectorial Operational Programme Human Resources Development (SOP HRD)

The Sectorial Operational Programme Human Resources Development was elaborated taking into account the Community provisions in this field, according to the Council Regulation (EC) No. 1083/2006 laying down general provisions on the European Regional Development Fund, the European Social Fund and the Cohesion Fund, the Regulation (EC) No. 1081/2006 of the European Parliament and of the Council on the European Social Fund, the Commission Regulation No. 1828/2006 setting out rules for the implementation of Council Regulation (EC) No. 1083/2006 laying down general provisions on the European Regional Development Fund, the European Social Fund and the Cohesion Fund.

The general objective of SOP HRD is the development of human capital and increasing competitiveness, by linking education and lifelong learning with the labour market and ensuring increased opportunities for future participation on a modern, flexible and inclusive labour market for 1,650,000 people.

The SOP HRD general objective may be split into a series of specific objectives:

promoting quality initial and continuous education and training, including higher education and research;

promoting an entrepreneurial culture and improving quality and productivity at work;

supporting entry or re-entry into the labour market of young people and the long term unemployed;

developing a modern, flexible, inclusive labour market;

promoting re-entry into the labour market of inactive people, including those in rural areas;

improving public employment services;

facilitating access to education and the labour market of disadvantaged and vulnerable groups.

The Sectorial Operational Programme Human Resources Development is structured on 7 Priority Axes and 21 Key Areas of Intervention. These seven Priority Axes are:

Priority Axis 1: Education and training in support for growth and development of knowledge based society

Priority Axis 2: Linking life- long learning and labour market

Priority Axis 3: Increasing adaptability of workers and enterprises

Priority Axis 4: Modernizing the public employment service

Priority Axis 5: Promoting active employment measures

Priority Axis 6: Promoting social inclusion

Priority Axis 7: Technical assistance.

The principle of the sustainable development shall be considered integral to all objectives and Axis of the SOP HRD. The SOP HRD priorities have to be met whilst taking into account the protection and improvement of the environment. In particular, specific activities shall be implemented in order to support the development of SMEs in the sectors of environment protection, tourism and cultural services; to develop best practice for SMEs in relation to effective environmental management the adoption and use of pollution prevention technologies, integration of clean technologies to production; to promote publicity campaigns for encouraging the Corporate Social Responsibility of SMEs and for ensuring the effective participation of citizens in environmental protection and controlling pollution.

The Sectorial Operational Programme Transport (SOPT)

The Sectorial Operational Programme Transport is the instrument that elaborates upon the objectives of the National strategic Reference Framework (NSRF), establishing priorities, goals and the allocation of funds for development of the transport sector in Romania. The total budget of the SOP-T over the programming period 2007 – 2013 is about 5.7 billion EUR, which represents about 23% of the overall allocated funds for NSRF for Romania over the said period. Out of these, 4.57 billion EUR represent the Community financial support, while national co-financing will amount to about 1.09 billion EUR. The Community funding will be provided by the Cohesion Fund and the European Regional Development Fund.

The SOPT uses as its basis the EU legislation (Reg. (EC) No 1080/2006, (EC) No 1083/2006, (EC) No 1084/2006)

establishing the provisions applicable to the ERDF, ESF and the Cohesion Fund for the 2007-2013 programming period.

In addition the SOPT is coherent with the Community Strategic Guidelines on cohesion (Council Decision No 2006/702/EC), as well as with the relevant harmonised national legislation on transport policy, land acquisition, public procurement, public financing etc.

The global objective of SOPT is: to promote a sustainable transport system in Romania, which will facilitate safe, fast and efficient movement of persons and goods with appropriate level of service at European standards, nationally, Europe-wide and between and within Romanian regions.

The specific objectives of SOPT are:

Promote international and transit movements of people and goods in Romania by providing effective connections of the port of Constanta, as

well as transit transport from EU to the South through the modernization and development of the relevant TEN-T priority axes applying necessary environmental measures.

Promote effective movement of persons and goods among Romanian regions and their transfer from the hinterland to priority transport axes by modernizing and developing TEN-T and national networks according to sustainable development principles.

Promote the development of a balanced transport system of modes, based on the respective competitive advantage of each, by encouraging the development of rail, waterborne and intermodal transport.

Support sustainable transport development by minimizing adverse effects of transport on the environment and improving traffic safety and human health.

The following Priority Axes have been identified in the SOPT:

Priority Axis 1: Modernization and development of TEN-T priority axes aiming at sustainable transport system integrated with EU transport networks

Priority Axis 2: Modernization and development of the national transport infrastructure outside the TEN-T priority axes aiming at sustainable national transport system

Priority Axis 3: Modernization of transport sector aiming at higher degree of environmental protection, human health and passenger safety

Priority Axis 4: Technical Assistance.

The Sectorial Operational Programme Environment (SOP ENV)

The Sectorial Operational Programme Environment is closely linked to the national objectives of the strategy laid down in the National Development Plan 2007-2013 (NDP) and National Strategic Reference Framework (NSRF), which takes into consideration the European Union’s supporting objectives, principles and practices. It is designed to lay the foundation and be a catalyst for a more competitive economy, a better environment and more balanced regional development. The SOP is fully based on the goals and priorities of the European Union’s environment and infrastructure policies and reflects Romania’s international obligations as well as its specific national interests.

The SOP ENV is developed in line with the EU rules on Community funds management during 2007–2013, as foreseen in the Council Regulation (EC) No 1083/2006 laying down general provisions on the European Regional Development Fund, the European Social Fund and the Cohesion Fund and repealing Regulation (EC) No

1260/1999, as well as in the Commission Regulation (EC) No 1828/2006 setting out rules for the implementation of Council Regulation No 1083/2006 and of Regulation No 1080/2006. The areas to be supported through SOP ENV comply with the provisions laid down in Regulation (EC) 1080/2006 of the European Parliament and of the Council on the European Regional Development Fund and the Council Regulation No 1084/2006 establishing a Cohesion Fund.

Relevant Romanian and EU regulations, plans and programme documents in the field of environmental protection are also basic documents for preparation of the Sectorial Operational Programme Environment.

The SOP ENV continues and builds for the future, on national environmental infrastructure development programmes initiated in the pre-accession period, particularly with PHARE and ISPA support. Apart from infrastructure development, SOP ENV is regarded as a tool to complete efficient management structures for environmentally relevant services. As well, the SOP design addresses non-traditional fields of interventions like efficient urban heating systems, risk prevention, ecological reconstructions and Natura 2000 management plans implementation.

The overall objective of SOP is to protect and improve the environment and living standards in Romania, focusing in particular on meeting the environmental acquis. The aim is to reduce the environment infrastructure gap that exists between the European Union and Romania both in terms of quantity and quality. This should result in more effective and efficient services, while taking fully into account sustainable development and the polluter pays principle.

The specific objectives of the SOP ENV are:

Improve the quality and access to water and wastewater infrastructure, by providing water supply and waste water services in most urban areas by 2015 and by setting efficient regional water and waste water management structures;

Development of sustainable waste management systems, by improving waste management and reducing the number of historically contaminated sites in minimum 30 counties by 2015;

Reduction of negative environmental impact and mitigation of climate change caused by urban heating plants in most polluted localities by 2015;

Protection and improvement of biodiversity and natural heritage by supporting the protected areas management, including NATURA 2000 implementation;

Reduction of the incidence of natural disasters affecting the population, by implementing preven- tive measures in most vulnerable areas by 2015.

In order to achieve these objectives, the following priority axes are identified:

Priority Axis 1: Extension and modernization of water and wastewater systems

Priority Axis 2: Development of integrated waste management systems and rehabilitation of historically contaminated sites

Priority Axis 3: Reduction of pollution and mitigation of climate change by restructuring and renovating urban heating systems towards energy efficiency targets in the identified local environmental hotspots

Priority Axis 4: Implementation of adequate management systems for nature protection

Priority Axis 5: Implementation of adequate infrastructure of natural risk prevention in most vulnerable areas

Priority Axis 6: Technical Assistance.

Technical Assistance (TA) will assist in the implementation and monitoring of the programme. TA is expected to contribute significantly to achieving the global and specific objectives.

The programme covers the period of 2007-2013, but its objectives also look forward to Romania’s development needs beyond 2013 by laying the foundations for sus- tainable economic development. It will contribute to Romania meeting its EU obligations in the environment sector offering investment opportunities in all the regions of the country.

The Operational Programme Administrative Capacity Development (OP ACD)

The system of implementation of the OP ACD follows the requirements defined in Article 43 of Council Regulation (EC) No. 1083/2006 laying down general provisions on the European Regional Development Fund, the European Social Fund and the Cohesion Fund and repealing Regulation (EC) No. 1260/1999.

The general objective of the OP ACD is to contribute to the creation of a more efficient and effective public administration for the socio-economic benefit of Romanian society.

In order to preserve the programme logic of the OP, specific objectives are stated for each Priority Axis. The specific objectives were developed to be aligned with the key areas of intervention. This approach is to support the development of direct links between specific objectives and results indicators at the key area of intervention level.

There are two specific objectives:

To achieve structural and process improvements of the public policy management cycle.

To improve the quality and efficiency of the delivery of public services on a decentralised basis.

The Priority Axes of the OP ACD are designed to:

address horizontal management problems at all public administration levels (central and local) with a focus on key attributes that strengthen the reliability of the administration, in particular decision making, better regulation, accountability and organisational effectiveness, and

specifically target improvements to the decentralisation of service delivery in certain prioritised sectors (Health, Education, Social Assistance) and improve the quality and efficiency of service delivery.

Improvements in responsiveness and reliability that lead to enhanced socio-economic conditions should be reflected in a higher level of trust in public administration. These factors, being in line with the overall ESF objectives and the Community Strategic Guidelines for Cohesion 2007-2013, represent the highest level of strategy stated in the OP ACD.

The OP ACD will be implemented through three Priority Axes, including a Technical Assistance Priority Axis as listed below.

Priority Axis 1: Structural and process improve- ments of the public policy management cycle

Priority Axis 2: Improved quality and efficiency of the delivery of public services on a decentralised basis

Priority Axis 3: Technical Assistance

The Operational Programme Technical Assistance (OP TA)

The Operational Programme Technical Assistance is aiming at ensuring that the implementation of the Structural Instruments1 in Romania meets the principles and rules on partnership, programming, evaluation, communication, management, including financial management, monitoring and control on the basis of responsibilities shared between the Member States and the Commission, in compliance with the provisions laid down in the Council Regulation (EC) No 1083/2006 laying down general provisions on the European Regional Development Fund, the European Social Fund and the Cohesion Fund and repealing Regulation (EC) No 1260/1999, hereinafter referred to as General Regulation. Since it addresses needs identified for the whole system of management and implementation of Structural Instruments, sometimes common for a range of actors, the programme is by its nature horizontal.

The other Operational Programmes (OPs) can benefit from the OPTA for implementing operations useful for stakeholders of two or more OPs. At the same time, the OPTA gives enhanced support for the coordination process and the financial control and audit system.

Together with the other OPs, the OPTA will substantially contribute to the achievement of the thematic priority es-

tablished in the National Strategic Reference Framework, namely “Building Effective Administrative Capacity”.

The global objective of the Operational Programme for Technical Assistance is to ensure support for the coordination and to contribute to sound, effective, efficient and transparent implementation and absorption of the Structural Instruments in Romania.

The specific objectives of OPTA are:

Ensuring support and appropriate tools for an efficient and effective Structural Instruments coordination and implementation during the 2007- 2013 period and preparation of the future Structural Instruments programming period.

Ensuring coordinated delivery of general messages related to Structural Funds and Cohesion Fund at national level and implementation of ACIS’s action plan for communication in line with the National Communication Strategy for Structural Instruments.

All these objectives will reflect in the overall absorption and effective use of the Structural Instruments interventions.

To achieve the set objectives, the OPTA has to ensure support for the coordination and the implementation of the Structural Instruments in Romania, to ensure a reliable management and monitoring system for these instruments and to ensure appropriate communication to the public about the financing opportunities and interventions benefiting of EU support. Hence the following Priority Axes have been identified:

Priority Axis 1: Support to the implementation of Structural Instruments and coordination of programmes

Priority Axis 2: Further development and support for the functioning of the Single Management Information System

Priority Axis 3: Dissemination of information and promotion of Structural Instruments.

Methodology

For performing the analysis, an Autoregressive Conditional Heteroskedasticity (ARCH) models has been developed, based on the block diagram presented in Figure 1. Such models are specifically designed to model and forecast conditional variances (Andrews et al., 1992 and Bowerman et al., 2004). The variance of the dependent variable is mod- eled as a function of past values of the dependent variable and independent, or exogenous variables.

ARCH models were introduced in early 80s and are widely used in various branches of econometrics, especially in fi- nancial time series analysis. Another relevant characteris- tic for the scope of this paper is that such models provide a stable behaviour in the case of systems characterized by a high degree of volatility or non-determination (in the

sense that there are exogeneous variables with hard to be predicted evolution) – Storti (2006).

In a classical approach, a GARCH (1,1) model is characterized by the following set of equations (Gujarati, 2003 and Stewart, 2005):

 

ARCH models in EViews are estimated by the method of maximum likelihood under the assumption that the errors are conditionally normally distributed (Gujarati, 2003). For example, for the GARCH(1,1) model, the contribution to the log likelihood from observation t is:

l  1 log2  1 log 2  1 y  x  2 / 2 , (3)

yt  xt

 2    2

 t ; (1) t 2

   2

2 t 2 t t t

t t 1

t 1 , (2)

where:

where the mean equation given in (1) is written as a function of exogenous variables with an error term. Since

 2   y

t 1

x t 1

  2    2

(4)

2 is the one-period ahead forecast variance based on past information, it is called the conditional variance.

The conditional variance equation specified in (2) is a function of three terms:

– the mean;

There are two alternative representations of the variance equation that may aid in the interpretation of the model:

– If we recursively substitute for the lagged variance on the right-hand side of (2), we can express the conditional variance as a weighted average of all of the lagged

2

t 1

– news about volatility from the previous period,

squared residuals:

   2

measured as the lag of the squared residual from the mean equation – the ARCH term;

 2 

1  

   j 1 

j 1

t  j

(5)

2

t 1

– last period’s forecast variance – the GARCH term.

– We see that the GARCH(1,1) variance specification is analogous to the sample variance, but that it down-

The (1,1) in GARCH(1,1) refers to the presence of a first-

order GARCH term (the first term in parentheses) and a first-order ARCH term (the second term in parentheses). An ordinary ARCH model is a special case of a GARCH specification in which there are no lagged fore- cast variances in the conditional variance equation.

weights more distant lagged squared errors.

The error in the squared returns is given by v   2  2 ; Substituting for the variances in the variance equation

and rearranging terms we can write our model in terms of the errors:

PO_AT_V_X – contracted amounts OP TA at regional level PO_DCA_P_X – payments performed at regional level OP ACD

 2      2  v   v

t 1

(6)

PO_DCA_PROC_X – percentage payments/contracted amounts OP ACD at regional level

– Thus, the squared errors follow a heteroskedastic ARMA(1,1) process. The autore gressive root which governs the persistence of volatility shocks is the sum of

   . In many applied settings, this root is very close to unity so that shocks die out rather slowly.

Equation (2) may be extended to allow for the inclusion of exogenous or predetermined regressors, z, in the variance equation:

PO_DCA_V_X – contracted amounts OP ACD at regional level PO_PROC_X – percentage payments/contracted amounts for OP POP_REG – number of inhabitants at the level of development regions POR_P_X – payments performed at regional level ROP POR_PROC_X – percentage payments/contracted amounts ROP at

regional level

POR_V_X – contracted amounts ROP at regional level POS_CCE_P_X – payments performed at regional level SOP IEC

POS_CCE_PROC_X – percentage payments/contracted amounts SOP IEC at regional level

 2    2    2

 z

(7)

POS_CCE_V_X – contracted amounts SOP IEC at regional level

t t t 1 t

The x in equation (2) represents exogenous or predetermined variables that are included in the mean equation. If we introduce the conditional variance into the mean equation, we get the ARCH-in-Mean (ARCH-M) model (Engle et al., 1987):

POS_DRU_P_X – payments performed at regional level SOP HRD POS_DRU_PROC_X – percentage payments/contracted amounts SOP

HRD at regional level

POS_DRU_V_X – contracted amounts SOP HRD at regional level POS_MED_P_X – payments performed at regional level SOP ENV

POS_MED_PROC_X – percentage payments/contracted

amounts SOP ENV at regional level

y  x     2  

(8)

POS_MED_V_X – contracted amounts SOP ENV at regional level

t t t t

A variant of the ARCH-M specification uses the conditional standard deviation in place of the conditional variance. In this case, due to high dynamic of the variables flow, it was chosen a set of constant regression factors, hence preventing the increase of the hyper-reactivity of the model (Fahrmeir & Tutz, 1994).

The significance of all variables used in the model are here below mentioned:

ABS_POAT_P – time serie with payments for OP TA ABS_POAT_V – time serie with contracted amounts for OP TA ABS_PODCA_P – time serie with payments for OP ACD ABS_PODCA_V – time serie with contracted amounts for OP ACD ABS_POR_P – time serie with payments for ROP

ABS_POR_V – time serie with contracted amounts for ROP ABS_POSCCE_P – time serie with payments for SOP IEC ABS_POSCCE_V – time serie with contracted amounts for SOP IEC ABS_POSDRU_P – time serie with payments for SOP HRD ABS_POSDRU_V – time serie with contracted amounts for SOP HRD ABS_POSMEDIU_P – time serie with payments for SOP ENV ABS_POSMEDIU_V – time serie with contracted amounts for SOP ENV ABS_POSTRANS_P – time serie with payments for SOP T ABS_POSTRANS_V – time serie with contracted amounts for SOP T CD_PRE_SV – time serie number of persons RTD sector – SW Region DR_PRE_SV – time serie length of roads – SW Region DRDENS_PRE_SV – time serie density of roads – SW Region DRM_PRE_SV – time serie lengths of modernized roads – SW Region HRD_PRE_SV – time serie pre-accession funds HRD type – SW Region INFRA_PRE_SV – time serie pre-accession funds INFR type – SW Region IRU – table HR indices (regional level – 15 variables)

PIB_REG – GDB/capita at the level of development regions PO_AT_P_X – payments performed at regional level OP TA PO_AT_PROC_X – percentage payments/contracted amounts OP TA at

regional level

POS_TR_P_X – payments performed at regional level SOP T POS_TR_PROC_X – percentage payments/contracted amounts SOP T POS_TR_V_X – contracted amounts SOP T at regional level

RU – table values HR (regional level – 15 variables) SOMAJ_SV – time serie unemployment SW Region

Results and Conclusions – SW Region

One of the main original aspects of the current paper is represented by the fact that, despite the lack of historical data about the absorption of structural funds via the seven Operational Programmes, is to observe what was happening during the pre-accession period and to consider time series characterizing the absorption of pre- accession funds at the level of NUTS 2 development regions (Bradley & Yaleski, 2003; Bradley & Morgenroth, 2004; Paas, Vokb, Kuuskc & Schlitted, 2006; Capello, 2007). In this way it was possible to extrapolate the analysis over a larger interval (from 3 to 10 years) via a function which can induce discontinuities as most up to the first degree one, hence staying within the continuity assumptions when considering such approaches (Rodrigues-Pose & Fratesi, 2004; Dobrescu, 2006; Keyak & Vavra, 2007; Gherghinescu, Iova, & Rinderu, 2009; Gherghinescu, Rinderu & Spulbar, 2009; Gherghinescu, Rinderu & Iova, 2010; Gherghinescu, Rinderu, Spulbar & Berceanu, 2009; Rinderu, Gherghinescu & Iova, 2009; Rinderu, Iova, Gherghinescu & Neagoe-Bacanu, 2009).

After running the models for each region (Figure 2 to 8), the following set of specific conclusions has been depicted.

Due to the differences in magnitude order of several variables it was considered a logarithmic scale in order to facilitate the convergence process. A very peculiar task was to slightly modify the

values of time-series in cases when the same value for two consecutive years appeared, hence to eliminate the overflow errors.

All models converge, but present a quite high degree of volatility. This is explained both by the limited number of observations and by the impossibility of modelling some external factors (e.g. political factors, audit with putting SOP-HRD

on standby etc.).

All applied statistical tests (Akaike, Schwarz, Durbin-Watson) and the corresponding correlograms present normal values and shapes.

It is very much sensitive to assess the quality of the absorption process at regional level.

The model might be used for future analyses concerning the absorption of structural funds in Romania.

The model could be refined by introducing supplementary variables and could be also serve as a powerful instrument in developing future

strategies for absorbing the structural funds in Romania, to have better programming exercises in the future.

In addition to these findings, there is a strong connection between the Strategy for Regional Development 2007- 2013 and the use of funds via the (Sectorial) Operational Programmes. From a total of 20 identified weaknesses within the strategy, 17 are directly targeted by funding via the Operational Programmes, as depicted in Table 1.

The general conclusions of this paper refers to three main aspects: (i) The use of structural funds via the operational

programmes at country/regional level represents the most important tool for sustainable development and socio- economic progress (ii) The proposed models for analyzing the absorption of these funds are highly original and might constitute a precise tool for further programming exercises and assessment of their efficiency and effectiveness (iii) the proposed models could be used for performing the same type of analysis for the other seven NUTS2 development regions in Romania and, further on, a global model at country level could be used.

Acknowledgement

This work was supported by the strategic grant POSDRU/89/1.5/S/61968, Project ID61968 (2009), co-financed by the European Social Fund within the Sectoral Operational Programme Human Resources Development 2007 – 2013.

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