The objective of the Regional Economic Modelling (REMO) action is to provide model-based support to EU policymaking on cohesion. For this purpose, JRC-IPTS collaborates closely with DG Regional Policy in developing a system of regional models which relies on the empirical validation of the relation between economic geography and growth. (http://ec.europa.eu/regional_policy/index_en.htm)
In New Economic Geography theory, the agglomeration and dispersion of economic activities are determined by the input-output relations of the production chain, by returns to scale and by the proximity to markets and knowledge centres. The economic performance of a region may depend as much on spillovers from neighbouring regions as on its own assets, but without investments in the region itself opportunities can easily get lost. Such evolutions can only be captured in a system of regional models that explicitly allows for the role of distance in the cross-border movements of goods and people.
Prototype model
The current prototype model covers the regions of five Member States: Germany (NUTS1); Poland; Hungary; the Czech Republic and Slovakia (NUTS2). It will be extended by adding economic models of the other countries and regions, starting with the new Member States and the main recipients of Structural and Cohesion Funds. The system will show the full interplay of cross-border movements when it covers the EU-27.
Structural and Cohesion Funds
The Structural and Cohesion Funds are more than one third of the EU budget. They are spent on four broad categories that are distinguished within the model: infrastructure; human capital; innovation and support to the productive environment; and improving environmental quality. The system of regional models accounts for the multi-level governance of EU cohesion policy, as it is co-ordinated with the policies of the Member States at national and regional level.
Collaboration with other actions
REMO has links to other JRC-IPTS actions. For instance, together with the Industrial Research and Innovation action, it strengthens the micro-foundations of the model by investigating the changes in the behaviour of firms that are brought about by R&D and innovation policies. With ERA-Analysis, REMO does joint work on the free movement of knowledge, ideas and researchers across the regions, resulting in a series of working papers. Operational links are also being established with JRC modelling projects on energy, transport, agriculture, land use and climate change.
