Evaluation Units Open days, Tito Bianchi, 3/07/2006 Evaluation of large Scale Industrial projects Evaluation Units’ Open Days Rome, 3/06/2006 Tito Bianchi Public Investment Evaluation Unit (UVAL) Department of Development Policies Dipartimento per le Politiche di Sviluppo del Ministero dell’Economia e delle Finanze s dp Evaluation Units Open days, Tito Bianchi, 3/07/2006 INDEX OF THE PRESENTATION 1. Evaluation mandate 2. Features of the policy to be evaluated 3. Evaluation Method 4. First results Dipartimento per le Politiche di Sviluppo del Ministero dell’Economia e delle Finanze s dp Evaluation Units Open days, Tito Bianchi, 3/07/2006 1. Evaluation mandate I: Debate • Mounting criticism of subsidies to private firm investment • Declining resources for industrial subsidies • Negotiated/contractual approach to large scale industrial promotion disputes resources to “objective-automatic” subsidies • Drafting of new 2007-2013 CSF Dipartimento per le Politiche di Sviluppo del Ministero dell’Economia e delle Finanze s dp Evaluation Units Open days, Tito Bianchi, 3/07/2006 Evaluation mandate II: institutional request for Evaluation In 2003 CIPE - Ministerial Committee for economic planning - debates over the effectiveness of subsidies to firms… … asks UVAL and the network of evaluation Units to conduct an evaluation of incentives for industrial promotion “to base future decisionmaking” (Decree N.16/03) …UVAL chooses to evaluate Contratti di Programma (Negotiated contracts w/large firms) Dipartimento per le Politiche di Sviluppo del Ministero dell’Economia e delle Finanze s dp Evaluation Units Open days, Tito Bianchi, 3/07/2006 2. Features of the policy to be evaluated Contratto di Programma (CdP): Bi-lateral agreement Central Govt Large industrial firm Subsidizes Firm’s Commits to: Investment Plan Employment levels Research activities Destination of equipment Dipartimento per le Politiche di Sviluppo del Ministero dell’Economia e delle Finanze s dp Evaluation Units Open days, Tito Bianchi, 3/07/2006 2. Policy Features cont’d: “Contratti di programma” (CdPs) Funded by domestic fund for lagging regions Started 1987, continuing to present Originally funded only large scale industrial firms.. .. Recently extended to agri-food and tourism ....Extended to consortia of smaller firms; Dipartimento per le Politiche di Sviluppo del Ministero dell’Economia e delle Finanze s dp Evaluation Units Open days, Tito Bianchi, 3/07/2006 Policy Features: Number, size and sector CdPs approved at december 2005 N. Public resources awarded (000 Euro) Average public subsidy % Expendi ture First generation (1987-1996) 16 1.722.510 107.657 83,1 Second generation (1996-98) 14 1.158.501 82.750 51,8 Present generation (1998-present) 85 9.704.499 114.171 12,8 In present generation, Food-processing chains and tourism consortia are the majority. 40 such contracts are only approved by CIPE, not yet signed. Dipartimento per le Politiche di Sviluppo del Ministero dell’Economia e delle Finanze s dp Evaluation Units Open days, Tito Bianchi, 3/07/2006 Policy features: selection process unclear • Lack of a transparency of rules along the pipeline of ex-ante evaluation, approval • Timing uncertain, proposed CdPs are never rejected • Selection criteria specified allow large discretion Dipartimento per le Politiche di Sviluppo del Ministero dell’Economia e delle Finanze s dp Evaluation Units Open days, Tito Bianchi, 3/07/2006 What should be the future of CdPs “negotiated-discretionary” industrial subsidies? • Regions have started to fund similar projects, claim this policy tool is in their responsibility • Attraction of foreign firms remains a priority in the new draft CSF • Eastern EU outcompetes Italy in terms of labor costs and higher State Aid Ceilings Dipartimento per le Politiche di Sviluppo del Ministero dell’Economia e delle Finanze s dp Evaluation Units Open days, Tito Bianchi, 3/07/2006 3. Evaluation Method: Technical Steering Committee A 8-member steering committee appointed itself including representatives of UVAL, the Network of evaluation Units, the Ev. Unit of the Ministry of Industry, 1 expert of industrial policy. …it was put in charge of designing evaluation activities, conducting the evaluation, reporting to CIPE Dipartimento per le Politiche di Sviluppo del Ministero dell’Economia e delle Finanze s dp Evaluation Units Open days, Tito Bianchi, 3/07/2006 3. Evaluation Method: Specifying research questions Impact Evaluation was specified as: 1. Additionality; would the private investment have been done w/out subsidies? Of the same size, in the same place? 2. Was there a sustained economic benefit for the area receiveing the investment? 3. What was the national level impact (on the industrial sector)? 4. Relative impact of CdPs involving consortia vs. Individual large firms. Dipartimento per le Politiche di Sviluppo del Ministero dell’Economia e delle Finanze s dp Evaluation Units Open days, Tito Bianchi, 3/07/2006 3. Evaluation Method: choice of an Intermediate option Number of Cases 0 .. 5 ... 10 ... hundreds... thousands In depth CaseStudy Quantitative study Comparative case-based evaluation Dipartimento per le Politiche di Sviluppo del Ministero dell’Economia e delle Finanze s dp Evaluation Units Open days, Tito Bianchi, 3/07/2006 3. Evaluation Method: components of the evaluation project 1. Main study: comparative study of 9 cases of CdPs, based on data, documents and interviews 2. Additional case-study (FIAT) – outlier largest and most studied – based only on secondary sources 3. Data analisys of recent CdPs funding consortia, testing internal coherence of projects Dipartimento per le Politiche di Sviluppo del Ministero dell’Economia e delle Finanze s dp Evaluation Units Open days, Tito Bianchi, 3/07/2006 3. Evaluation Method: choice of cases for the main study, pragmatic segmentation 1. We picked among those (~40) that had finished the investment plan (first 2 genr.) 2. Included two Consortia, the first to be financed 3. Covering 7 regions of the South 4. Eight diferent Industrial sectors: Electronics (2), Textiles, Shoes, Autoparts, Food-processing, Oil refining, Jewelry, Chemicals Dipartimento per le Politiche di Sviluppo del Ministero dell’Economia e delle Finanze s dp Evaluation Units Open days, Tito Bianchi, 3/07/2006 Dipartimento per le Politiche di Sviluppo del Ministero dell’Economia e delle Finanze s dp Evaluation Units Open days, Tito Bianchi, 3/07/2006 3. Evaluation Method: contracting evaluation experts hired 9 experts in the evaluation of industrial policies through a competitive process: 1. Publication on DPS website of call for bids 2. Experts fees set at € 20.000 for each study 3. Candidate experts were evaluated based on CV and on a two-page proposal 4. Each selected to evaluate specific identified CdP 5. Common meetings have discussed preliminary evaluation findings, shared methodology Dipartimento per le Politiche di Sviluppo del Ministero dell’Economia e delle Finanze s dp Evaluation Units Open days, Tito Bianchi, 3/07/2006 3. Evaluation Method: Comparative Analisys • We did not impose paragraph structure but asked to answer the selected questions • Asked to calculate minimum set of indicators: firm, contract, and territory. • Encouraged to pursue non-considered research hypotheses, calculate additional indicators • Currently steering group is writing comparative part Dipartimento per le Politiche di Sviluppo del Ministero dell’Economia e delle Finanze s dp Evaluation Units Open days, Tito Bianchi, 3/07/2006 4. Preliminary Findings CdPs fare better than the reputation they have Research activies of firms often discontinued, they were unrealistic or non serious Manufacturing plants can take root in the area, but never had strong generation effects Employment goals, especially the purpose to mitigate localized employment crises, are weakening factors Dipartimento per le Politiche di Sviluppo del Ministero dell’Economia e delle Finanze s dp Evaluation Units Open days, Tito Bianchi, 3/07/2006 4. Lessons about evaluation Skills for the evaluation of industrial policies are not abundant Windows of opportunity to evaluate policies arise, have to be timely exploited Managing a comparative multiplestudy evaluation of this kind has advantages and disadvantages Dipartimento per le Politiche di Sviluppo del Ministero dell’Economia e delle Finanze s dp Evaluation Units Open days, Tito Bianchi, 3/07/2006 4. Lessons for Evaluation: ++ and -- of comparative case-study method + Involves larger number of independent intelligences The process itself, not only the final product, contributes to a shared view Virtuous competition b/ween experts _ Risk to Lose control of timing Pursuit of consensus b/ween different views may reduce the sharpness of the method, of the message Dipartimento per le Politiche di Sviluppo del Ministero dell’Economia e delle Finanze s dp