Indirect economic impact of rural infrastructure support of RDP 2007-2013 in Poland and Latvia

Abstract

The evaluation of the EU co-funded programmes is gaining an increased importance in recent years, and the main question to be answered is whether the policy intervention has resulted in achieving the objectives that have been set. While the evaluation process usually is focused on direct effects of the programme with the assessment of specific result indicators, the estimation of indirect, unintended effects is also important. The purpose of the article is to evaluate the indirect economic impact of the rural infrastructure support of the RDP 2007-2013 on rural areas in Poland and Latvia by exploring the implementation of the Measure 321 in each of the countries and by evaluating the impact of the measure on tax revenues in the supported rural areas of Poland and Latvia. The main challenge in the evaluation of indirect effects, especially, if municipalities are supported, is the lack of the counterfactual, and, in this case, generalized propensity score matching (GPSM) method has its advantages over the binary propensity score matching (PSM) method. Therefore, the existing study provides a comparative assessment using the GPSM method. The average treatment effect on treated units is calculated using the changes in tax revenues per capita over the programme period as a dependent variable. A number of economic, financial and social pretreatment variables for rural territorial units were selected as independent covariates for matching. The research results show a strong positive indirect effect of the support on the changes in tax revenues in supported rural territorial units in both countries.