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The assessment of the effects of investment support measures of the Rural Development Programmes: the case of the Czech Republic

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  • Ratinger, Tomas
  • Medonos, Tomas
  • Spicka, Jindrich
  • Hruska, Martin
  • Vilhelm, Vaclav
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    Abstract

    The investment support has been considered as a principal vehicle for enhancing competitiveness of the Czech agriculture since the early days of the economic transition. However so far, little attention has been paid to the evaluation of actual effects of the corresponding support programmes. The objective of this paper is to assess economic and other effects of the measure 121 “Modernisation of Agricultural Holdings” of the RDP 2007-2013 on the Czech farms. The counterfactual approach is adopted investigating what would have happened if the supported producers did not participate in the programme and then comparing the result indicators. The quantitative analysis of programme effects is complemented by a qualitative survey on 20 farms which received the investment support between 2008 and 2010. The quantitative assessment showed significant benefits of the investment support in terms of business expansion (GVA) and productivity (GVA/labour costs) improvements. These results were confirmed by the qualitative survey. It showed that production expansion and productivity increase were primary objectives of the investment strategies on most of the farms. The public support enabled farms to achieve these strategic objectives. The respondents of the survey declared that the supported investment was important for their prosperity however, we could not prove it in the quantitative assessment in terms of profit and cost/revenue ratio. Finally, the issue of deadweight of the investment support is discussed: the figures on very low net investment relatively to the provided public support at the sector level and answers of respondents indicate possible significant deadweight, however, the insight is incomplete, since it does not take into account post accession restructuring of the sector and multiannual and multi-enterprise character of investment at the farm level.

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    Bibliographic Info

    Paper provided by European Association of Agricultural Economists in its series 131st Seminar, September 18-19, 2012, Prague, Czech Republic with number 135775.

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    Date of creation: 18 Sep 2012
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    Handle: RePEc:ags:eaa131:135775

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    Keywords: Investment support; counterfactual analysis; propensity score matching; direct and indirect effects; Agribusiness; Agricultural and Food Policy; Q10; Q18;

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    1. Marco Caliendo & Sabine Kopeinig, 2005. "Some Practical Guidance for the Implementation of Propensity Score Matching," Discussion Papers of DIW Berlin 485, DIW Berlin, German Institute for Economic Research.
    2. Karel Janda, 2005. "The Comparative Statics of the Effects of Credit Guarantees and Subsidies in the Competitive Lending Market," Working Papers IES 82, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised 2005.
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    Cited by:
    1. Michalek, Jerzy & Ciaian, Pavel & Kancs, d'Artis, 2013. "Firm-Level Evidence Of Deadweight Loss Of Investment Support Policies: A Case Study Of Dairy Farms In Schleswig-Holstein," Proceedings Issues, 2013: Productivity and Its Impacts on Global Trade, June 2-4, 2013. Seville, Spain 152257, International Agricultural Trade Research Consortium.

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