Contributions to the Methodology of the Impact Study of Regional Development Projects: Why Do We Not Measure What Can Be Measured?

Abstract

Uneven regional development can be perceived and shown to exist in all the countries of the worlds (irrespective of the level of development). The literature on regional development dealing with the relevant issues represents basically a uniform standpoint on the causes resulting in the development of regional disparities as well as on the questions of the role to be played by the state (the budget) for the purpose of their moderation; it is, however, less uniform in judging the impact and efficiency of the interventions.

Beyond the different approaches of economic policy, this definitely involves the fact that for a long time relatively little attention has been paid to demonstrating the socio-economic usefulness and benefits of the development interventions and their impacts on regional convergences (in terms of the points of views of the distribution of resources). Perhaps the fact the pace of regional convergences has lagged behind expectations in most countries may be attributed to this.

The efficiency of using the available resources (beyond the standards of the projects) depends to a considerable extent on how the domestic planning practices changes, i.e.: 

1. a) Does the decision maker intend to demonstrate the impacts? Does the extent of the impact shown by the experts play a role in the allocation of resources; do the social benefits of the project and the extent of their regional impact have an influence on the decision makers in drawing up their financial plans or do the decision makers eliminate them?
2. b) Are the experts involved in regional planning familiar with the methods of impact studies?
3. c) Are the data supplied by the Hungarian regional statistics system sufficient for demonstrating the regional impacts?
4. d) Is it possible to demonstrate the extent of the impact or the support if it is below the threshold level, i.e. the consequences cannot be quantified; in lack of resources concentration the principle of ‘all those involved should receive a little’ prevails.
5. e) What accountability can be expected, will there be any consequences if the usefulness of the support does not come up to what has been predicted in the ex ante analysis?

The policy makers in Hungarian regional policy (following the change in model after 1989) have not really made use of the opportunities of accountability. The decision makers have not intended (or have not dared) to face the low efficiency of the utilisation of the resources or its failure, the virtual creation of jobs financed from public money, etc.  (It cannot be a coincidence that e.g. in the county of Borsod-Abaúj-Zemplén there was no ex-post impact study prepared in terms of the regional development supports used in the period of 1995-2004, while a series of studies are involved in praising the support provided to the region!)

It seems that politics has chosen a more convenient and safer method; it has developed ‘soft’ methods of evaluation that are suitable to wrap into the appearance of objectivity the subjective intentions (that are selfish and greedy in several cases) underlying the decisions. The planning process designed to provide the foundations for the next period of planning of the EU (2007-2013) may hold out some promise of confidence (and perhaps of greater transparency as regards the use of public money and of curbing the corruption present in regional development in Hungary). (If that were ‘the only returns’ of Hungary having become a member of the EU, it would have been worth it, I think.)

In addition to covering the methodology of the cost-benefit analysis of regional development programs and projects, the paper discusses the econometric model developed at the Department of Regional Economics of the University of Miskolc suitable for analysing regional impacts.