MINISTRY OF REGIONAL DEVELOPMENT

Ministry of Regional Development

Impact of cohesion policy on Polish economy

Paweł Orłowski Undersecretary of State in Polish Ministry of Regional Development 1 June 19th, 2013

MINISTRY OF REGIONAL DEVELOPMENT

Impact of the EU funds on the GDP rate of growth

In  the  period  2007‐2012,  Poland was  the country  with the highest GDP  growth in the European  Union  with annual  average of about 4.0% vis‐a‐vis 0.4% in the EU‐27. Polish economy remained on the path of economic growth even in  the crisis years of 2009 ‐ 2010.  In 2012, Poland, with the GDP growing by 1.9% (as opposed to 0.3% in the EU‐27) was in the group of growth leaders together with other NMS (Slovakia, Estonia, Lithuania and Latvia). The access to the EU funds essentially contributed not only to  the relatively high economic growth but also to avoiding recession in 2009.  It  is  estimated  that  the  EU  funds allowed the GDP  growth  in  2012  to  be higher by  about  0.8‐1.1  pp, than  in  the  scenario  without  EU  funds. According to  economic models,  in 2004‐2015 GDP  growth  is higher about  0.7 pp. than  in  the scenario without the inflow of EU funds.

GDP rate of growth in the years 2007‐2012, selected EU‐27 countries 15,0

2007

2008

2009

2010

2011

2012

10,0 5,0 0,0 Estonia

Lithuania

Latvia

Poland

Sweden

Slovakia

EU-27

-5,0 -10,0 -15,0 -20,0

2

MINISTRY OF REGIONAL DEVELOPMENT

GDP changes in the EU GDP per capita (PPS) GDP per capita (PPS) PKB per capita (PPS) wIn 2011 (EU‐27=100) 2011 r. (UE-27=100) In 2011 (EU‐27=100)

to 271 (5) 127 do to 127 (5) 109 do

0,4 0,4

to 109 (5) 85 do

Finlandia

to 85 (6) 67 do

1,4 1,4

to 67 (6) 46 do

Szwecja

Average GDP growth Średnioroczne tempo wzrostu PKB the years 2007‐2012 win latach 2007-2012 3,9

0,4 0,4

Estonia

-0,2 -0,2

Irlandia

-0,6 -0,6

£otwa

-0,5 -0,5

0,2 0,2

Dania

Wielka Brytania

1,2 1,2

Litwa

0,6 0,6

Niderlandy

0,8 0,8

Belgia

11

3,9 3,9

1,2 1,2 1,2

Polska

Niemcy

Luksemburg

1,2 1,2

Republika Czeska

0,4 0,4

Francja

3,4 3,4

S³owacja

1,1 1,1

Austria

0,2 0,2

-0,8 -0,8

Wêgry

1,3 1,3

S³owenia

-0,6 -0,6

Portugalia

-0,1 -0,1

Hiszpania

Rumunia

1,6 1,6

-0,9 -0,9

Bu³garia

W³ochy

-3,1 -3,1

Grecja

1,8 1,8

Malta

ród³o: Eurostat Source: Eurostat

11

Cypr

0

200

400

kilometry km

Poland has recorded the higest GDP growth, i.e. thanks to the highest cohesion policy’s 3 monetary transfers in the country’s history. 

MINISTRY OF REGIONALImpact of the EU funds on the level of GDP per capita (at PPS)  DEVELOPMENT compared to the EU‐27 average In  the period  2007‐2011,  the  gap  between  Poland and the EU‐27  average level of GDP per  capita (in  PPS)  decreased  markedly  ‐ by  12  pp.  Due to  the  relatively  high rate of GDP growth,  Poland was  the EU  leader  in term  of the speed of convergence in economic development. The impact of the EU funds on bridging of the gap  is estimated at least 15‐20%. Nevertheless, the difference in the level of development between Poland and the EU remains significant (in 2011 Poland’s GDP per capita was about 64% of the EU‐27 average).  It  is  expected  that  in  2015,  the progress in „catching‐up” process due to  the EU  funds will amount to 5.0  pp.,  allowing  Poland to reach 70%  of the EU‐27 average level of GDP per capita.

GDP per capita PPS (EU-27=100) in selected countries

100 2006

2012

80

8 10

60

12 11

40

11

5 8

20

4

0 Poland

Romania

Slovakia

Bulgaria

Latvia

Malta

Lithuania

MINISTRY OF REGIONAL DEVELOPMENT

Impact of the EU funds on investment rate Investment rate (%)

25

21,6 20

22,3

21,2

19,7 18,1

19,9

20,2

18,2

19,4

15

10

5

3,4

3,4

3,9

4,6

4,2

5,2

5,6

5,7

4,6

0 2004

2005

2006

2007

2008

Total investment rate

2009

2010

2011

2012

Public investment rate

The investments in infrastructure and support to  enterprises financed from the EU  funds contribute significantly to the revival of investment activity in Poland, leading to both higher growth rate of gross  fixed capital formation and to an increase in the rate of investment. Since the increase in investment takes place simultaneously with the GDP growth,  the resultant impact on the level of the investment rate is not straightforward. However, simulations show that investment growth is faster, leading to an estimated increase in the investment rate of about 2,6‐4,3 pp. compared  to a scenario without the EU funds.  5

MINISTRY OF REGIONAL DEVELOPMENT

Impact of the EU funds on the employment rate (15‐64)

In 2012 the employment rate amounted to 59.7% and in recent years (since 2008) remained stable. At the same time,  an  average employment rate in the EU‐27 fell from 65.8 to 64.2%.  At the time of Poland’s accesss to the EU, the country was  characterized by the lowest employment rate in the EU, and until the end of 2012 it has recorded the highest growth rate of this indicator ‐ by 8.3 pp. The EU funds stopped the employment rate in Poland from falling even in the times of crisis. According to the models, it is estimated that in 2012 the use of the EU funds led to the growth of the employment rate by  2,6‐3.5 pp. In the entire 2004‐2015 period the average annual impact of cohesion policy amounts to about 1.6‐2.4 pp.

Employment rate in the selected EU‐27 countries 70

2006

2011

60

50

40 EU-27

Portugal

Latvia

Lithuania

Poland

Slovakia

Ireland

Bulgaria

Romania

Spain

Malta

Italy

Hungary

Greece

6

MINISTRY OF REGIONAL DEVELOPMENT

Impact of the EU funds on the unemployment rate

In  recent  years,  the  unemployment  rate  (annual  average)  in  Poland  stood  at  roughly  the  EU  average.  The  crisis  has  contributed  to  the  rise  in  the  unemployment  rate,  though in  2012  (at 10.1% in Poland) this indicator was lower than the EU‐27 average (10.5%).  In the period 2007‐2012 Poland recorded the second biggest drop (3.8 pp.) following the Germany (4,8 pp.).  The EU funds allowed to moderate the growth in the unemployment rate in 2012. According to the models,  in 2012 the unemployment rate was lower thanks to EU funds by 3.5 – 3.9 pp., while in the years 2004‐2015  the average annual impact  of  cohesion  policy  on  the  reduction in unemployment  rate  will  amount to  2.1‐ 2.5. pp.

Unemployment rate in selected countries EU‐27 25,0

2006

2012

20,0

15,0

10,0

5,0

0,0 Poland

Hungary

Bulgaria

Estonia

Portugal

Slovakia

Ireland

Lithuania

Latvia

Greece

Spain

EU-27

7

MINISTRY OF REGIONAL DEVELOPMENT

Transnational effects of Cohesion Policy implementation:



Cohesion  Policy  implemented  in  V4  countries brings  also  measurable  direct  and  indirect  benefits  to  other  EU  Member  States (including  in  particular  those  who  contribute  the most to the EU budget);



These  benefits  result  both  from  the  growing  involvement  of  foreign  contractors (11%  of total benefits) in  projects  implemented  in  V4  counties,  as  well  as  from  the  increased  demand  for  goods  imported  from  such  countries (89% of total benefits);



Each  net  euro invested  under  the  Cohesion  Policy  by  EU15  comes  back  in  the  form  of  additional  exports  of  61  cents.  It  is  estimated  that  for  certain countries this result is much  higher.

Comparison of total benefits of EU15 to net contributions of individual  EU15 countries, in the part related to the implementation of the Cohesion Policy in V4

Source: Assessment of benefits obtained by  EU‐15 countries  as a result of Cohesion Policy implementation in Poland ‐ 2010  update – research commissioned by the MRD and implemented by the Institute of Structural Research (2010)

8

MINISTRY OF REGIONAL DEVELOPMENT





 

Transnational effects of Cohesion Policy implementation: Estimation of the additional exports from EU15 to V4 countries as a  result of the Cohesion Policy 2004‐2015 (EUR billion at 2005 prices) 

The greatest macroeconomic benefits are expected for Germany; this result  is  arising  from  the  fact  that  Germany  is  the  largest  trading  partner  of  all  35 four V4 countries;

Comparison of total benefits of EU15 to net contributions of individual  EU15 countries, in the part related to the implementation of the Cohesion Policy in V4

2008‐2015 2004‐2008

30

EU  Cohesion  Policy  has  a  balancing  role  for  the  economies– its  effects  in  25 the  form  of  additional  export  are  not  very  much  sensitive  to  the  emergence  and  scale  of  economic  20 crisis; 15

Additional exports are dominated by  medium tech products (60%); 10 Considerable share of high  tech products (22%)  is a  proof  of a  very 5 advantageous structure of additional exports.  0 DE

IT

NL FR UK AT

IE

BE SE

ES

FI

DK PT LU GR

Source: Assessment of benefits obtained by  EU‐15 countries  as a result of Cohesion Policy implementation in Poland ‐ 2010 update – research commissioned by the MRD and implemented by the Institute of Structural Research (2010) 9

MINISTRY OF REGIONAL DEVELOPMENT

Ministry of Regional Development

Thank you very much  for your attention

Ministry of Regional Development Wspólna 2/4 Street Warsaw, Poland www.mrr.gov.pl www.funduszestrukturalne.gov.pl 10