Objective:
The objective of this cooperative research project is to design an instrument for economic policy analysis for the Azores, as part of the Azores Cooperative Initiatives Program (ACIP), as jointly decided in May 2003 by the ACIP Technical Working Group held by the United States Government and the Regional Government of the Azores. ACIP, or rather the requirement to engage in cooperative initiatives with the Azores, Portugal, is mandated in the 1995 US-Portugal Agreement on Cooperation and Defense and further defined in the Final Minute to that agreement. ACIP was created and has been implemented through Department of Defense (DOD) financial resources and relationships with civilian federal agencies and other non-governmental institutions as part of the U.S Government's commitment to the agreement. DOD has requested and funded the U.S. Department of Agriculture's Agricultural Research Service (USDA/ARS) to serve as the lead civilian agency and facilitator for ACIP.The agreement calls for the strengthening of the economic and social development of the Azores; the identification of areas within which cooperative activities and programs can promote this development; and this cooperation shall be in various areas outlined in the Final Minute, such as agriculture, education, environment, tourism and cultural exchange, civil protection, and social security and health. This cooperative project directly meets these objectives since the final product of the study would be a simulation model for the economy of the Azores capable, among other things, of analyzing the impact of trade with third countries and the impact of particular policies on various sectors of the economy.

Approach:
The development and application of the model is envisioned in six phases, the last of which is simply a negotiation process for the continuous application of a simulator: Phase I comprehends model specification tasks: Phase II involves the construction of social and economic accounts of the Azores; Phase III involves the estimation of the model's econometric equations; Phase IV involves the development of a web based simulator for the model, which would allow its use on-line; Phase VI includes the publication of the simulator and all its associated documentation; and Phase VI consists on establishing an agreement for ongoing economic policy analysis with the regional authorities.The development of the model would be undertaken by a team of researchers from the University of the Azores, assisted by researchers of departments of the US Federal Government and other specialists that might be considered necessary for a successful finalization of the project.Research collaborator institutions have been identified by the ACIP Technical Working Group as the University of the Azores, Department of Business and Economics and Fisheries and USDA/ US Forrest Service, as well as the Regional Government of the Azores and other institutions. USDA/ARS' Office of International Research Programs will serve as a technical facilitator.